A big company, for example, a corporation, tends to have hundreds of employees and dozens of company branches across the country. So how do the headquarters manage all its branches and member companies? There are a number of companies out there that would need to adopt a shared service model that is tailored to address business unit requirements in a single structure. This is held together with a well-defined shared services agreement with an expectation that every team uses this service. It is a model for delivering corporate support. To know more about this, let us discuss this further below. And if you need to prepare this agreement, we’ve got a list of shared services agreement samples that are downloadable for free on this page. Don’t forget to check it out!
Shared services are usually used by large companies or multinationals and midsize enterprises alike, and are now used by government agencies and nonprofits as well as the private sector. And is common in human resources, information technology, support desks, data centers, information security, and technology tools that are standardized across the organization. This is cost-effective because they centralize back-office operations that are used by multiple divisions of the same company and eliminate redundancy. A shared services agreement works by combining services between business units and headquarters into one separate entity that is based on principles similar to the market. If the company wants to remain competitive then, this is one alternative. When it is properly executed, the shared-services approach uses the advantages of centralization and combines them with decentralization.
An agreement is a document that states the obligations, roles, and responsibilities each party has between each other. The reason agreements are executed is to ensure that both parties have mutually agreed on what is written in the document. And should any misunderstanding or discrepancies arise in the future, then the agreement would serve as a reference. So when parties are about to combine and consolidate their services, it is important to set things straight by executing a shared services agreement. To prepare this agreement, here are several tips to consider.
The names of both parties or organizations involved in the contract, the addresses, and contact information.
The duration of the agreement must be included in the agreement which is the start date and the end date.
As this is akin to a service agreement, then a detailed list of services that are to be provided should be written down. It is essential that all scope of services required should be complete and properly labeled. As to not cause any misunderstandings or delays in finalizing the agreement. Make sure that everything has been agreed upon beforehand.
List down the possible cost and its equivalent fees when it comes to sharing the staff, usage of equipment, and facilities. Depending on what has been agreed upon there may be a certain percentage both parties have to split the cost of expenses.
You may want to dwell upon how the staff is to be supervised, terms and conditions regarding confidential information that is shared, termination of the agreement, and discussion of remedies regarding certain issues related to the working relationship between both parties.
These are organizations that seek to provide services to their clients and strive for continuous improvement.
The difference between both is that shared services are more adept to the business need since they are part of the same enterprise and have a closer relationship with the business units. While outsourcing normally involves getting a third party to do the work. This third party is its own entity with its own profit targets.
It is legally binding once both parties agree and accept the offer of the other party and signatures are affixed in the document.
A shared service agreement is an important document that will define the obligations and responsibilities both parties have with each other. To make it easier for you to prepare one, download our templates now!
