What Is a Shared Services Agreement?

In the business world, shared services agreements serve as a paradigm for providing corporate support. It does this by merging and combining services across business divisions and headquarters into a single independent organization that operates on principles similar to those found in the marketplace. Businesses utilize shared service agreements to supply corporate support services to their customers and employees. These services are merged and consolidated for the purpose of including administrative or other services from the business units and headquarters in the overall picture.

Other templates are available on our website, and you can use them whenever you need them. They are as follows:  business proposal, construction service agreement, professional services agreement, service agreement, purchase agreement,  labor contract, position agreement, staffing agreement, work agreement, permanent employment contract, and other similar templates are available. This post will not only provide you with templates but will also provide you with important information that you need to know in order to complete your template.

What Is the Importance of a Shared Services Agreement?

Competing with other outside vendors is critical for the shared-services corporate entity to be successful. Business units must operate within the constraints of the marketplace. The ability to access support services that meet the same high standards must also be available to them. Best practices must be implemented in order for business units to have a competitive edge, and the corporate culture must be eliminated.

The internal clients will subsequently be responsible for specifying their own service requirements. The suppliers must meet their standards, and their performance will be evaluated based on specified criteria that are simply quantifiable and measurable. When effectively implemented, the shared-services strategy makes use of the benefits of centralization while also including the benefits of decentralization.

Why Is Shared Services Necessary?

While shared service models have numerous advantages, there are some drawbacks to using this paradigm as well. Some business unit managers are uncomfortable with the loss of control and are frequently concerned about the responsibility of the service providers. Some say that the cost reductions are accompanied by a decline in quality as well. In fact, many individuals prefer a shared services model as the “best of both worlds” because it incorporates both centralization and decentralization aspects of the organization. Using a centralized business model, there will be a single corporate headquarters that will set policies and procedures, as well as oversee the company’s personnel and resources.

A shared services environment will treat the organization as if they were consumers, and it will be responsible for providing external services. In this scenario, both parties must agree on the degree of service, as well as the amount and pricing of the goods and services being provided. As a result, the service unit has the flexibility to draw on resources from both internal and external sources, such as through outsourcing and joint ventures. Shared services differ from centralized services in that they have the authority and ability to buy or shop elsewhere, as long as they do so within specific boundaries, whereas centralized services do not have this power or ability. As part of their onboarding process, many organizations will prohibit outsourcing for the first year or even longer to provide their internal service units the time they require to become fully operational.

Why Is the Shared Services Model So Appealing?

The shared services paradigm can be particularly desirable for a variety of reasons, some of which are as follows:

What Are the Benefits of a Shared Services Agreement?

The arrangement between parent and subsidiary to exchange services is not new. This has been long-standing practice and is critical in the corporate world. You may require the parenting agreement templates found below to assist you in rapidly drafting the agreement. There are several advantages to downloading the models from our page, including the following:

1. Maintaining a Concise and Dynamic Document

Generally, agreements contain lengthy clauses that could be summarized more succinctly. As a result, the person reading the paper is frequently puzzled, and most of the time, they discover the ambiguity in the contents. However, by utilizing this template, you may create a professional-looking document.

2. The Templates Use Plain Language

The agreement template comprises simple-to-understand sections and terminology. It’s even simpler to learn from our model and sample essays, as well as determine what to write.

3. For Numerous Agencies

The nicest feature of this template is its simplicity. Our approach is intended to be generic, allowing it to be used by a variety of agencies. However, you are free to alter and customize the template. Include your terms and conditions. Simply study the sample agreements and templates we give and then begin drafting your own.

4. Flexible

Another advantage of this template is its adaptability. The agreement provides terms and conditions that are compatible with the agreement for shared services.

5. You May Use the Pre-Existing Template

We always ensure that the model is professionally designed and appropriate for the corporate environment. This is why you may rely on our template and adhere to the document’s existing content. You must include various details.

What Are Some Tips in Shared Services Agreement?

The concept of shared services is not new. Historically, it has been used since the establishment of the federal government. In today’s society, having a shared service agreement is absolutely necessary. So, here are a few pointers that will assist you in creating a co-parenting agreement template quickly and easily, including:

1. Keep the Agreement Brief and to the Point

When establishing a shared service agreement, make every effort to keep the agreement as brief and as simple as possible.

2. Make Use of Simple Language With a Reading Level Appropriate for 5th Graders

The language of the agreement should always be straightforward and to the point, as this will aid in the approval process being completed more quickly.

3. Make it a Mutually Beneficial Deal

Create a draft agreement for a number of different agencies.

4. Make the Agreement More Adaptable

The adaptability of your agreement will be totally dependent on the degree to which the terms and conditions of the agreement are flexible.

What Is the Purpose of Shared Service Agreement?

For a variety of reasons, it is necessary to implement a shared service agreement. One of them is responsible for providing corporate support. Therefore, the contract should have five elements, including clear pricing, a customer-centric service environment and culture, business management, the spread of best practices, and process standardization. The ability to compete with a third party (vendor) is critical for a person who is running a business in order to fulfill all of the business components without spending a lot of money. It is thought to be more successful than creating a separate department, which would necessitate spending additional time and resources to build.

Shared Service Principles

There are six major concepts that will lead your organization through the process of implementing the shared services agreement, and they are as follows:

Transparency in Pricing: Essentially, this idea is based on the understanding that every service should have a price, and that each business unit has the ability to determine how much it wants to charge for its services.Management of a Company: The service should be managed as if it were a separate business unit, rather than as a shared cost that was formed to serve both internal and external clients.Sensitivity of the Market: Instead of providing the service levels that the business units desire, it should deliver the service levels that the business units require.The Proliferation: The organization will have to identify and then implement best practices on a worldwide basis, and it will have to do so quickly.Process Standardization: There should be a well-developed and efficient framework in place so that standards can be readily maintained and upgraded when the need arises.Service Culture: Business units should be treated as if they were customers, and services that business units would find desirable should be made available to them at a cost per service.

How to Write a Shared Services Agreement

In today’s litigious world, it is critical to have a strong agreement in place before entering into any Legal Proceedings. When a shared services agreement is written in a concise and succinct manner, it is more likely to be authorized legally. A simple, concise agreement makes it easier to bring other public agencies on board with the same vision.

  • Step 1: When Drafting Your Agreement, Keep it as Simple as Possible

    Another crucial point to remember when establishing a shared services agreement is to use simple language that everyone can comprehend. In order to be maintained in a court of law, it is not necessary for a prepared agreement to be written in legalese that is difficult to understand. Make use of straightforward language that might be understood by a fifth-grade student. As long as the wording and language used in the agreement accurately represent the terms and clauses of the agreement, there is no need to overcomplicate matters. Google’s Terms of Service is yet another excellent example of a well-written shared services agreement.

  • Step 2: Multiple Parties can be Included in a Shared Services Agreement

    When drafting a shared services agreement, the best practice is to include all parties who would be affected by the agreement. An agreement with multiple parties, rather than a two-way agreement with only one other party, is referred to as a multi-agency agreement. Using language like “this agreement has been reached between the signatory parties,” you have the opportunity to increase the number of jurisdictions that are able to join the agreement.

  • Step 3: Do Not Include in Your Agreement Any Restrictions that Are Not Absolutely Necessary

    Always keep in mind that the more flexible your agreement is, the more adaptable it will be to your changing circumstances. When crafting the agreement, avoid being overly particular and restricted in your language. For example, you do not need to specify the precise types of equipment that will be utilized or the specific services that you are promising to deliver in order to be considered a General Contractor. An agreement that is overly particular binds you and forces you to abide by the provisions that are too specific for you. In the event that you wish to share services that were not considered when the agreement was created, you will be bound by the restrictions that have previously been drafted.

    For a shared services organization to be successful, it must be able to compete with outside providers on an equal footing. Business units should be subject to market discipline in all aspects of their operations and should be able to seek support services as needed. Business units can acquire the competitive advantage that they require by adopting best practices and displacing proprietary standards and corporate cultures with industry standards and best practices.


What can shared services do for your business?

As we all know, shared services can help a company decrease expense, improve productivity, and even drive a philosophical shift in the organization.

What are simple service agreements?

Simple service agreements are included in sales contracts and warranties. The contract guarantees both the service and the craftsmanship.

What are the advantages of a shared-services approach?

When effectively implemented, shared services combine the benefits of both centralization and decentralization.

It is critical for sample service level agreement business owners to compete with third-party providers while maintaining strict adherence to the disciplines in all aspects of their operations. They should also be able to quickly find assistance if they require it. The success of a business is determined by how effectively the firm is promoted to the general public. Organizations must come up with a variety of strategies in order to be successful in their operations. And one of the most useful methods is to write joint marketing agreement templates, which will aid in the security of the company’s financial future.