Volume 21: Article 10

Implementation of Shared Service Centre on Financial Performance of Publicly Listed Malaysian Companies

Kh Khaled Kalam

Abstract: Cost reduction and efficiency are one of the company’s primary motives in implementing the shared service center, an internal outsourcing business model that centralizes back-office support functions for operating business units. This research aims to examine the effect of introducing the shared service center on productivity, as experienced by publicly listed Malaysian companies. This research has analyzed, using comparative techniques, whether substantial changes in cost structure, return on investment, efficiency, productivity, competitiveness, and profitability have occurred due to developing shared service centers. The relationship between these financial performance metrics is evaluated for five years using regression methods. Secondary data has been collected from financial reports and other publicly accessible documents such as business gadgets. The study also aims to recognize the advantages of shared service center implementation for financial results. The study has clearly indicated that SSC implementation is not always for the better, however. The increasing cost structure ratio indicates that the growth of total revenue due to SSC implementation is not as fast as the growth of operating expenses. Asset turnover is observed to be generally decreasing after SSC implementation. The graphical trending has rejected the claim that all the variables or financial performance indicators have improved after establishing SSC. The results of the ordinary least squares regression method have corroborated 4 out of 5 hypotheses – only the asset turnover ratio has revealed a relationship that is different from what has been predicted. The payback period can be included as an additional variable or determinant to further corroborate the time-specific benefits regarding future research

Keywords: Shared Service Centre (SSC), Business Unit, Comparative Techniques, Financial Performance, Regression Method.

* Lecturer, Business School, Shandong Xiehe University, China
Email: khaledkalam135@gmail.com