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If you’re building, acquiring, or running multiple businesses under one umbrella, chances are you’ve thought about ways to save money without cutting corners on quality. That’s the core challenge for many holding companies: you want to streamline operations, boost efficiency, and reduce redundancy between subsidiaries. One surprisingly straightforward strategy is implementing shared services.
But what does that really mean, and how do you do it right? Below, we’ll dive into how shared services can help your holding company trim costs, free up resources, and position your entire enterprise for long-term success.
Shared services involve consolidating activities common to multiple subsidiaries—such as human resources, finance, IT, or marketing—into a single operational unit. Instead of each company in your portfolio having its own HR manager, for example, you set up a centralized team of HR experts who handle recruitment, payroll, and benefits for everyone. The main advantage is clear: you no longer maintain multiple fragmented departments doing essentially the same work.
By pooling your resources in one place, you gain economies of scale and reduce duplication of tasks. But shared services do more than save funds; they also help create consistent processes. Instead of having one subsidiary follow a different onboarding procedure than another, you can keep everyone on the same page. That not only streamlines training but also fosters a unified culture across your portfolio companies.
One of the biggest perks of shared services is cost reduction. Think about how many line items on your budget can be consolidated: software licenses, office equipment, paper trails—these straightforward expenses can pile up fast when each subsidiary is handling them independently. When you unify these tasks, you can often negotiate bulk contracts with vendors and reduce your overhead.
At the same time, staffing becomes more efficient. Instead of hiring separate teams for each subsidiary, you hire once—perhaps with a few strategic experts—and they service the entire group. That can free up the businesses in your portfolio to focus on their core competencies rather than juggling administrative duties, which often do little to spark growth or innovation.
Keep in mind, any enterprise is ultimately about people, so good communication is key. After all, if employees feel like their HR or IT needs are being lost in a big corporate quagmire, you could face pushback or low morale. Being transparent about changes and clearly demonstrating the benefits of shared services to your teams is essential.
If you have five, ten, or even more businesses in your holding company, each subsidiary can feel like its own planet with distinct processes, policies, and teams. Centralizing services naturally encourages a certain harmony across the group. You can standardize compliance protocols, unify branding, and ensure every business meets a consistent standard of operation.
This uniformity isn’t just cosmetic. It can significantly enhance how quickly you respond to market changes. When all your financial data flows into the same system, for instance, you get an instant snapshot of how each subsidiary is performing and can identify inefficiencies far more quickly. That could be the difference between pivoting in time to capitalize on new opportunities or being stuck waiting for slow-moving, siloed reporting.
Moreover, uniform processes can highlight best practices that can be spread from one subsidiary to the whole group. If a particular technological tool works well for a subsidiary, you can replicate that success across the board.
Technology can make or break your shared services strategy. If you’re cobbling together outdated systems or letting each subsidiary pick its own software, you risk creating more chaos than clarity. Instead, consider investing in an integrated enterprise resource planning (ERP) system or another centralized platform built for cross-company collaboration. You can unify HR, accounting, and CRM tools under one digital roof, smoothing the handoff of critical data.
A robust technological approach also reduces communication bottlenecks. Tools like secure intranets, Slack alternatives, or project management software can keep teams connected, even if they span different geographical locations or time zones. Ultimately, the right technology allows your shared services model to evolve as your holding company grows—so pick solutions that offer the flexibility and scalability to adapt over time.
Shared services aren’t all sunshine and roses. If poorly implemented, you could run into issues like:
To mitigate these pitfalls, keep lines of communication open and remain receptive to feedback. Ask subsidiary leaders about the services they need most, then tailor a plan that incorporates those needs without creating wasteful excess. It’s also crucial to pilot or phase in the rollout of shared services, so you have time to address hiccups before going big.
While shared services inherently focus on standardization, there’s value in letting each subsidiary retain some latitude. For instance, a creative agency in your portfolio might need a different approach to project management than a manufacturing or logistics company. If you impose the same cookie-cutter rules on everyone, you risk stifling creativity and losing the agility that some subsidiaries rely on.
A balanced approach: centralize the services where uniformity clearly delivers cost savings and efficiency—like accounting or HR—while allowing business-specific processes where specialization is important. That way, you sidestep excessive bureaucracy, supporting each subsidiary’s unique identity.
Imagine you have four subsidiaries: a software firm, a direct-to-consumer retailer, a consulting agency, and a media production house. Each needs its books maintained, invoices processed, and payroll managed. With four separate accounting teams, you’re paying for multiple salaries, software subscriptions, and overhead. Switching to a shared accounting service means securing a top-notch finance team who’s experienced across multiple industries.
This central group develops standardized processes—like a single chart of accounts used by each subsidiary—so you can compare finances accurately. They can also swiftly handle audits, taxes, and compliance for the entire group. By combining efforts, you reduce total staffing expenses, negotiate better software deals, and speed up month-end closing times.
Implementing shared services calls for an up-front investment in both technology and organizational restructuring. Yet for many holding companies, the long-term payoffs more than justify the initial costs. You free up capital that can be channeled toward business-critical projects like product development, market expansion, or strategic acquisitions.
Additionally, centralizing services can reveal inefficiencies you might’ve missed if each subsidiary was operating in isolation. Whether it’s noticing a duplicated vendor expense or spotting underused talent, a bird’s-eye view can drive better decision-making across your entire portfolio. The key is to think through your priorities, budget realistically for system upgrades, and ensure leadership at each subsidiary understands the long-term benefits.
If you’re ready to explore whether shared services is right for your holding company, start by auditing current processes. Look at every team and department within your portfolio to find the most obvious redundancies. Could a single talent acquisition unit handle recruiting across all subsidiaries? Could a central marketing team develop brand strategies that each business tailors slightly to its target audience?
The better you understand where each subsidiary excels and struggles, the clearer your path to implementing a successful shared services strategy. It’s also wise to schedule open discussions with each leader at your portfolio companies. Listen to their feedback on what should be centralized and what should remain unique. This collaborative approach helps prevent missteps and fosters buy-in from the people who’ll rely on these shared services daily.