India’s 6.3 crore micro, small, and medium enterprises (MSMEs) form the backbone of the nation’s economy—contributing nearly 30% to GDP and employing over 130 million people. Yet, many SMEs continue to struggle with fragmented operations, rising costs, limited access to skilled talent, and slow adoption of digital tools.
In this context, shared services—once the preserve of large corporates—are emerging as a transformative model for Indian SMEs, enabling them to streamline operations, cut costs, and compete on a global scale.
Why Shared Services Matter for SMEs
1. Cost Efficiency and Operational Excellence
By consolidating support functions like HR, finance, IT, legal, and procurement into centralized hubs, shared services eliminate redundancies and drive efficiency. According to EY, SMEs adopting shared services can achieve:
- 50–60% savings through labor arbitrage
- 10–15% savings via centralization and standardization
- 12–18% savings from automation and digitization
Global examples reinforce this potential. UK-based SME BrewDog reduced administrative costs by 30% after centralizing invoicing and payroll. For Indian SMEs, the same efficiencies can mean unlocking capital to reinvest in innovation, talent, and customer growth.
2. Scalability Without Chaos
Growth often brings operational complexity. For SMEs expanding across regions or business lines, maintaining consistency becomes a challenge. Shared services provide a scalable backbone that supports expansion without disruption.
Take Canva, which scaled from 10 to 1,500 employees by centralizing HR and IT—successfully onboarding 50 employees monthly. For Indian SMEs, shared services can make rapid scaling achievable without the chaos of fragmented systems.
3. Access to Expertise and Technology
SMEs often lack the resources to hire specialists in HR analytics, financial modeling, compliance, or IT security. Shared services democratize access to enterprise-grade tools and expert talent. Platforms like QuickBooks, Zoho Books, or HRMS Systems bring automation and insights within reach, while shared service providers supply specialized skills on demand—without the cost of full-time hires.
Case Studies: How Shared Services Drive Transformation
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Post-Divestiture Success
A mid-sized Indian tech firm, spun off from its parent, partnered with another Technology Company to establish shared services across finance, order management, and supply chain. Within 18 months, it had implemented ERP and BI systems, built FP&A capabilities, and established 24/7 customer care—transforming into a thriving independent entity with strong investor confidence.
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PE-Owned Medical Tech Firm
After a carve-out, a $1B medical technology company set up an outsourced shared service center in India for finance and order management. Within six months, it exited costly service agreements and gained improved cash management and analytics—driving long-term sustainability.
Hybrid Models: The Best of Both Worlds
For SMEs, hybrid shared services models—outsourcing transactional tasks while keeping strategic functions in-house—offer the right balance of cost savings and control. Benefits include:
- 30–50% cost savings
- Faster implementation cycles
- Greater ownership of customer-facing processes
This flexibility allows SMEs to tailor shared services to their unique growth stage and industry requirements.
India’s Turning Point
Despite India being a global outsourcing hub, domestic adoption of shared services among SMEs has lagged, contributing only 0.16% of GDP compared to 0.26% globally. But the landscape is shifting:
- New industries like retail, fintech, and healthcare are embracing shared services.
- Public sector adoption is gaining momentum.
- Digital platforms are accelerating adoption among SMEs.
A 2025 ICRIER survey of 2,365 Udyam-registered MSMEs found that 50% reported increased turnover and profits after adopting digital tools, with improved access to finance and global markets.
Digitalization as a Catalyst
The rise of cloud platforms, automation, and AI-driven tools is making shared services more accessible than ever before. From automated payroll and compliance dashboards to real-time financial analytics, SMEs can now leverage technologies that were once out of reach—closing the capability gap with large enterprises.
Conclusion: Unify to Amplify
Shared services are no longer a corporate luxury—they are a strategic necessity for Indian SMEs. By centralizing operations, embracing hybrid models, and leveraging digital platforms, SMEs can:
- Reduce cost pressures
- Accelerate growth without operational chaos
- Access expertise and technology at scale
- Strengthen compliance and governance
As India’s SME sector aspires to global competitiveness, shared services offer a clear path to efficiency, agility, and resilience. The future belongs to SMEs that unify to amplify—using shared services not just to save costs, but to unlock sustainable, innovation-driven growth.
The Bottom Line
Shared services are no longer just for large enterprises. For Indian SMEs, they’re a strategic lever for growth, efficiency, and innovation.
If you’re an SME leader, now is the time to ask:
What can I centralize to scale smarter?
