Should You Consider Healthcare Risks When Choosing A Shared Service Location?

There are many criteria to consider and stakeholder preferences to manage when choosing a shared service location. It’s a significant decision – one that is never straightforward and requires careful planning.

Historically, cost effectiveness has typically been the primary measure of value in location decisions, but other key factors usually fall into the following dimensions:

• Human resources (workforce planning, language barriers, talent supply, employee transfers, employee training etc.)
• Business viability (operating costs, salary/wage scales, service delivery etc)
• Infrastructure (transportation networks, availability of utilities, telecommunications facilities etc)
• Political and economic environments (regulations, taxes, political stability, local government support, risk profile etc)

But in light of recent events, however, it might be time to add a slightly different dimension into your calculations.

“When China sneezes, the world catches a cold”. We’ve all heard the phrase, but it’s never rung quite as true as it does at this point in time. The coronavirus has already rocked global markets and disrupted supply chains across all seven continents.

Just recently, Apple became one of the first companies to reveal how the coronavirus was affecting its business, saying it was cutting its sales expectations for this quarter.

HSBC is another corporate titan to be affected by the outbreak. The London-based bank which depends on Asian markets for most of its profits say the virus had already caused significant disruption for staff suppliers and customers, particularly in China and mainland Hong Kong.

Ikea has closed all of its 30 stores in China, while McDonalds has shut about 300 restaurants.

The unavoidable truth is that China is one of the most important contributors to the global economy. SSON Analytics data shows us that China hosts over 400 Shared Service Centres across the region (12 are in Wuhan where the viral outbreak originated) – unsurprisingly, ‘business-as-usual’ practice has been pulverised and workforce capacity has hit a new low within these units.

Source: SSON Analytics, Shared Services Atlas

Naturally, the fear of contracting the virus is keeping people away from public areas, and this includes people’s places of work. It’s instigated what Fortune magazine has called "the largest work-from-home experiment” in the world, and many offices are quickly moving meetings onto video chat apps, or leveraging WeChat Work’s collaborative platform.

Despite the disruption and still-very-real threat of the coronavirus, many companies like tech-giant Xiaomi are urging workers to return to the office. But the monumental task of restarting China is becoming more and more evident, and even though factories and assembly lines claw back into action, the freeze is not easy to unthaw. Efforts to contain the virus are clashing with its push to get the country back to work, which means China’s leaders must find a balance between keeping people safe and getting critical industries and economic value back on track.

Considering the monumental impact the coronavirus has had on global business operations, should Shared Services now be considering alternate locations for their centres? And on more general level should healthcare risks be an additional and equally-considered factor for choosing a shared service location?

It’s still too early to measure the full financial impact of the virus on the Shared Services Industry, but given the disruption to date it’s certainly something we should now be directing a very keen eye to.

With this in mind, SSON Analytics has recently launched the BRAND NEW 'Global Health Security' (GHS) Index within its Citycube. This Index is a comprehensive assessment and benchmark of health security and related capabilities across 195 countries, which assess the following indices per country:

• Capacity to prevent epidemic threats
• Capacity to detect epidemic threats
• Capacity to rapidly respond to epidemic threats with international implication
• Efficacy of health systems
• Commitment and compliance with global norms
• Political, socioeconomic and environmental risk factors that can limit response

To understand more about the Health Security Benchmarks where you plan to launch your Shared Service Centre, visit the GHS Index at SSON Analytics here.