5 Essentials for an Effective HR Shared Services Model 

In brief:  

• At a time that HR departments are stretched way too thin, demand for HR shared services models is surging — with HR now the second-largest function performed by shared services organizations. 
• Increased comfort levels with remote work have HR leaders increasing the scope of shared services solutions beyond transactional and administrative tasks to include more complex back-office work like recruiting and analytics. 
• Latin America has emerged as the leading destination for HR shared services, combining nearshore advantages like real-time communication with a deep pool of talent highly experienced with U.S. HR practices. 
• Five considerations are key to building an effective HR shared services model, including the type of model you need, location strategy, and AI and automation capabilities.  

As ongoing labor shortages and turnover push employee engagement and retention to center stage, the number of daily duties confronting Human Resources (HR) teams is nothing short of overwhelming. HR shared services models have emerged as a leading solution to delivering the white-glove HR service that boosts employee satisfaction while giving enterprise teams the bandwidth to focus on higher-value activities. 

While HR leaders previously hesitated to outsource high-touch HR processes, increased comfort levels with remote work in the post-pandemic era alleviated concerns over losing control of employee experiences, sensitive data, and compliance matters. HR now stands as the second-largest function included in enterprise shared services models, after finance, according to Deloitte’s latest Global Shared Services & Outsourcing Survey. 
 
Many HR departments in the U.S. are overburdened and stretched thin, with 75% of HR leaders saying their managers are overwhelmed by the expansion of their responsibilities, Gartner’s 2025 Top HR Trends and Priorities Report found. 

But even as HR workloads increase, only 19% of HR departments expect to add more staff, according to the Society for Human Resource Management’s (SHRM) latest State of the Workplace report. AI and automation can help, but 55% of HR leaders say their current tech solutions do not cover current and future HR needs, Gartner found. 

Enter shared services as a viable option to optimize operational performance and enhance the strategic impact of HR teams. In this article, we explore the HR shared services model as a solution to many of the challenges facing today’s HR leaders. If you are looking to start or augment an HR shared services organization, these five considerations are a must-read.  

What is an HR shared services model? 

HR shared services refers to a centralized organizational approach designed to deliver HR functions efficiently and consistently across an enterprise. It typically consolidates core administrative and transactional activities into a unified service model, spanning HR help desk, payroll processing, benefits administration, recruitment support, employee query management, and more.

By streamlining these processes, HR shared services eliminates duplication, controls operational costs, and creates a standardized framework that promotes accuracy and accountability. These models are often supported by HR technology platforms, such as cloud-based systems and AI-powered automation tools, which further improve service delivery and operational efficiency.  

Ultimately, HR shared services enables organizations ranging from corporations to Professional Employer Organizations (PEOs) to focus strategic resources on talent management and business growth, while ensuring that routine HR operations are handled with precision and reliability. When done well, it leads to optimized service delivery, a focus on operational excellence, and a better ability to drive long-term growth. 

Before you embark on or build upon your HR shared services organization, keep the following considerations in mind: 

1. What functions should be included in your HR shared services scope? 

HR encompasses a wide range of functions that can be delegated to a shared services organization (SSO). HR leaders typically choose to offload some or all of their team’s day-to-day duties to their SSO, leaving behind critical functions like HR generalist roles that work directly with employees on more complex processes.

Common areas in scope include: 

• HR help desk 
• Payroll administration 
• Payroll tax administration 
• Employee benefits administration 
• Talent acquisition 
• New employee administration & onboarding 
• Terminations 
• General HR administration 
• Leave and accommodations 
• Compliance reporting & administration 
• HR reporting 

Recently, the proven success of remote work models has HR leaders also starting to shift more complex HR functions like recruitment, learning, development, and Level 2 HR help desk activities requiring specialized knowledge and judgment to SSOs. 

With improving analytics capabilities a top priority for HR leaders in 2025, HR analytics has also become one of the top processes performed by SSOs, coming in second only to payroll. 

 
2. What type of HR shared services model is best? 

When deciding whether you will run your shared services organization in-house (captive), through an outsourcing provider, or a hybrid combination of both, there are multiple business factors to consider. There are also pros and cons of each model you should know.  

• Captive (in-house) – Standing up a captive HR shared services center involves a much higher level of investment, compared to an outsourcing model. While giant-sized corporations can realize economies of scale that lead to cost savings, it’s nearly impossible to make a payback compared to long-term run costs without 50+ FTEs. 
  
  Implementing captive SSOs (establishing physical facilities, obtaining local business licenses, hiring and training staff, etc.) is also no easy task – and numerous challenges block most enterprises from realizing their full potential. Significant expertise is needed to run a captive SSO effectively – and without it, benefits can erode quickly. 
  
  Even when captives are done right, the implementation and payback period tend to be longer, and the speed to benefit is much lower for most companies. It’s also important to keep in mind that captive solutions are a long-term investment: Once they are built, it’s pricey and difficult to reverse course. 
• Fully outsourced (third-party provider) – Outsourcing is attractive for HR leaders looking to quickly access cost savings, process optimization, technology, and/or talent, with 57% of HR organizations now outsourcing business processes to a third-party provider (Deloitte Global Outsourcing Survey 2024). By leveraging outsourcing, companies can access specialized expertise, scalable solutions, and advanced technologies while maintaining flexibility in their HR operations. 
  
  In a heated war for talent, captives struggle to compete with outsourcers, who typically have better career progression paths that make it easier to attract and retain quality staff. After building a business case for outsourcing vs. implementing a shared services center, an Auxis client discovered that the payback period of insourcing was more than double (>4 years) the positive cash impact of outsourcing (<2 years). 
  
• Hybrid model – The most common shared services model is the “hybrid” approach that combines captive and outsourced operations. A steady 50% of shared services organizations rely on outsourcing to meet their targets every year, and 22% plan to increase the volume of their outsourced services in 2025, according to the Shared Services & Outsourcing Network (SSON) State of the Shared Services & Outsourcing Industry Global Market Report 2025.
   
  In today’s tight labor markets, shared services and enterprise leaders rank “access to talent/skills” as the #1 outsourcing driver – trumping “cost/efficiency” for the first time since the pandemic. Other top reasons for outsourcing include greater agility, service excellence focus, access to automation, and tech-enabling capabilities. 

3. Where will you set up your HR shared services? Location matters! 

When implementing HR shared services, the location you choose can bring valuable benefits, but also some significant challenges. There are three main options for your SSO location: 

• Onshore locations (U.S.) offer easy access to experienced HR talent that create seamless extensions of U.S. teams. But they also confront the same talent challenges as HR departments in the U.S., such as high labor costs and turnover.
• Offshore models (Asia) typically offer the biggest cost savings. But they also can bring substantial time zone differences and language and cultural barriers that make delivery of high-touch processes a challenge. Also, U.S. HR processes are not as commonly outsourced offshore, so it can be challenging to find talent with U.S. HR experience.
• Nearshore regions (Latin America) have emerged as a frontrunner for top-quality HR services supporting U.S.-based operations, with 80% of Latin American SSOs performing HR processes vs. 43% of SSOs globally, according to the 2024 State of the GBS & Outsourcing Industry in Latin America Report by SSON Research & Analytics and Auxis. Nearshoring solves many of the challenges of offshore and onshore models, offering real-time communication, neutral accents, cultural affinity, and cost-effective, highly skilled HR talent well-versed in U.S. HR practices. 

Latin America is a hotbed for HR outsourcing: HR ranks among the top two business functions performed at LATAM SSOs, with the U.S. the largest country supported, the SSON/Auxis report found.

Leading Fortune 500 companies in the U.S. have operated captive HR shared services in Costa Rica for more than a decade, creating a deep pool of HR talent with the same knowledge and experience you can find in the U.S. – but at a fraction of the cost.

After struggling to adequately perform HR functions in India, a Fortune 50 retailer found success outsourcing processes ranging from Level 1 and 2 HR help desk support to its end-to-end HR administrative and recruiting processes at Auxis’ Global Delivery Center in Costa Rica. Read our case study to learn more about how Auxis’ nearshore HR outsourcing solution solved the Fortune 50 retailer’s Asia-based challenges and created a seamless extension of its internal team.    

4. What are the best opportunities for leveraging AI and automation? 

Automation in HR is no longer a nice to have, it’s a necessity for managing the overwhelming amount of work HR teams confront without lowering employee engagement and satisfaction. AI-powered automation creates efficiency that frees up HR staff for more value-added tasks, boosts collaboration, lowers costs, and improves employee experiences with opportunities for self-service.  

Some 76% of HR leaders believe if their function does not adopt and implement AI solutions like Generative AI (GenAI) in the next 12 to 24 months, they will be lagging in organizational success, according to Gartner research. 

But while HR leaders are prioritizing tech to help alleviate the burden of transactional work, many are struggling to incorporate it on their own due to a lack of time or skilled personnel. The cost of digital transformation is also a concern: At many businesses, investment in HR is prioritized last because the function is seen as a cost center and not a revenue driver. 

As a result, many HR leaders are looking to outsourced shared services solutions to kickstart digital transformation in 2025, with more than 87% saying they plan to adopt AI as part of their outsourced services this year (Deloitte Global Outsourcing Survey 2024). 

Quality HR outsourcers deliver instant access to the latest technology and skilled tech talent needed to infuse business processes with AI and automation without a big upfront investment. Their teams are also used to working with emerging technology for clients across industries and don’t require additional training or skills. 

In addition, both captive and outsourced shared services lead to labor savings which can then be used to help fund the cost of transformation.  

Leveraging AI and automation to create self-service capabilities should be a top shared services priority. Self-service opportunities not only streamline current HR processes but also enhance employee satisfaction by eliminating time waiting for assistance from busy HR staff and giving employees greater control over their work-related affairs.   

For example, AI chatbots can speed issue resolution at HR help desks by functioning as virtual agents, providing human-like responses to common inquiries that help users immediately manage simple transactions on their own, such as changes to payroll withholdings. AI-assisted knowledge management bases also support self-service, continuously identifying frequently asked questions and automatically drafting high-quality, informative knowledge articles from existing data sources. 

Top AI use cases in HR typically include:  
 

5. What defines a top-quality HR shared services partner?

A quality HR shared services partner will navigate your business through the challenges and complexities of an end-to-end shared services journey, whether you opt to outsource or establish a captive or hybrid model. The right partner is key to unlocking the value of your operation – combining cost savings with high-quality service and sustainable performance optimization. 

Here is a checklist of key characteristics to look for in an exceptional HR shared services partner: 

• Seamless support. Support staff combine best practices and deep familiarity with U.S. HR practices/regulations, making it easy and seamless for employees to get the support they need without jumping through hoops.
• Cutting-edge tech. Tech enablements such as automation and AI optimize operations and create efficiency so HR staff can focus on more strategic tasks.
• Structured HR help desk support. A high-performing HR help desk capability with strong delineation and structured escalations between levels 1 and 2 ensures high first-call resolution and fast response. It also ensures employees know where to go to meet their HR needs quickly.
• Self-service options. AI-powered self-service capabilities speed issue resolution and increase employee satisfaction.
• Continuous improvement mindset. Well-defined key performance indicators (KPIs) and service level agreements (SLAs) drive continuous improvement.
• Advanced analytics. Robust data and analytics capabilities lead to informed decisions that improve performance and proactively identify workforce issues and trends. 

Why Auxis: Nearshore solutions that create a seamless extension of your HR team 

The proven success of remote work models combined with the growing scope of HR demands has HR leaders increasingly turning to SSOs to reduce the burden on enterprise teams. But with so much at stake in today’s tumultuous job market, they are realizing that success rests on looking beyond the lowest cost to ensure solutions deliver the highest level of service quality and performance.  

Amid the drawbacks of captive models and performing high-touch HR processes in Asia, outsourcing to Latin America has emerged as the top solution for North American companies looking to keep up with the demands of modern HR through shared services operations.  

A nearshore pioneer offering one of the most robust delivery platforms in Latin America, Auxis is recognized annually as a top outsourcing company globally by respected research firms and industry organizations like Everest Group, ISG, and the International Association of Outsourcing Professionals (IAOP). Our high-performing HR delivery platform pulls from the strengths of Latin America’s top markets, offering instant access to the top-quality HR talent of Costa Rica for more complex work, as well as greater cost savings on entry-level tasks in Colombia, where skilled talent combines with the biggest labor arbitrage in Latin America. 

If you do opt for a captive or hybrid solution, Auxis’ shared services experts offer deep experience supporting your journey, whether you are implementing a solution for the first time, migrating from distributed shared services centers (SSC) to a centralized global business services (GBS) model, or re-evaluating your existing support functions. 

As the burden on short-staffed HR teams continues to increase, less than 10% of HR leaders believe their department is achieving “functional excellence,” a Gartner survey found. Partnering with a leading HR shared services and outsourcing provider like Auxis offers the visionary solutions, proven HR expertise, and cutting-edge tech capabilities HR leaders need to power a future-ready and agile HR function. 

Want to learn more about HR outsourcing and shared services? Schedule a consultation with our HR experts today! Or, visit our resource center to learn more HR outsourcing trends, strategies, and success stories.  

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