BPO means handing over a selected process — e.g. accounting, payroll, customer service or IT support — to an external company that performs it under a contract. SSC, i.e. a shared service centre, is a unit belonging to the same group that handles the processes of several group companies. Both models aim to reduce costs and standardise work, but they produce different legal effects: in BPO the key issue is the contract with the provider, and in SSC — settlements between related parties and transfer pricing.
BPO vs SSC — a comparison
| Criterion | Process outsourcing (BPO) | Shared service centre (SSC) |
|---|---|---|
| Who performs the process | an independent provider | a company or branch from the same group |
| Basis of cooperation | a commercial contract with measurable quality parameters | an intra-group agreement, a settlement policy |
| Control over the process | indirect — through the contract and reports | direct — common standards and management |
| Entry cost | low, you pay for the service | high — office, team, systems |
| Main tax risk | VAT and documenting services from a foreign provider | transfer pricing, documentation, mark-up |
In practice, the models are often combined. A group may set up a shared service centre in Poland and outsource part of its tasks — e.g. night helpline support — to an external provider.
Which processes are most often handed over
- finance and accounting — invoice recording, settlements, month-end closing, reporting,
- HR and payroll — payrolls, ZUS and PIT returns, personnel files,
- IT — technical support, infrastructure maintenance, software development,
- customer service — helpline, chat, complaints,
- purchasing and logistics — orders, warehouse, settlements with carriers.
A practical rule: processes that are repetitive and well described are handed over. Strategic decisions and knowledge that represents a competitive advantage usually stay in the company.
The BPO contract — what it must contain
A well-drafted contract protects against a situation in which the process works worse than before the handover and the company has no tools to change that. It is worth taking care of:
- Description of the scope — list of activities, volumes, working hours, languages of service.
- Service level — measurable indicators (e.g. response time, error rate) and the consequences of failing to meet them, e.g. a reduction in remuneration.
- Data protection — a provider processing personal data on behalf of the client acts as a processor; a data processing agreement compliant with RODO (GDPR) is needed, with rules on the use of sub-processors.
- Business secrets — scope of confidentiality, also after the end of the contract.
- Rights to the results — especially for IT services: transfer of copyright or a licence.
- Exit plan — how to hand the process back or to another provider, transition period, release of documentation.
More on the controller's duties when cooperating with external companies is in the article on RODO in the company.
Transfer of a department and labour law
When the company hands over to the provider an entire organised department with its people, equipment and tasks, there may be a transfer of a workplace or part of it within the meaning of Article 23¹ of the Labour Code. The consequences are far-reaching:
- the new employer, by operation of law, becomes a party to the existing employment contracts — no new ones need to be signed,
- for employment liabilities arising before the transfer, the previous and the new employer are jointly and severally liable,
- if there are no trade unions in the company, the employees must be informed in paper or electronic form at least 30 days before the transfer of its date, reasons and consequences,
- the employee may, within 2 months of the transfer, terminate the contract with seven days' notice.
Skipping this procedure is a common cause of court disputes after implementing outsourcing. Where only tasks are handed over, without the employees and assets, a transfer of workplace usually does not take place — but this must always be assessed against the specific circumstances.
Taxes: VAT and transfer pricing
VAT in cross-border services
Services provided to another entrepreneur are generally taxed in the country of the recipient's seat (Article 28b of the VAT Act). A Polish centre serving a group company in Germany therefore issues an invoice without Polish VAT, and the recipient settles the tax on its side. In the opposite direction — when a Polish company purchases services from a foreign provider — it is the Polish company that settles VAT under the import of services rules.
Transfer pricing in SSC
Settlements between the centre and group companies are controlled transactions. The CIT Act requires their terms to correspond to market conditions, and above the thresholds — the preparation of local transfer pricing documentation. For service transactions the threshold is PLN 2,000,000 per year for a homogeneous transaction. Typical support services, such as accounting or HR, may be qualified as low value-added services: with a mark-up of no less than 5% of costs (for the provider) and when the other conditions of Article 11f of the CIT Act are met, the authority refrains from verifying the amount of the mark-up. Current guidance is published by the Ministry of Finance on the podatki.gov.pl portal.
Example: a small company and its first outsourcing
A Polish trading company employs 25 people, including two in accounting and one in HR. After the chief accountant leaves, the board decides to hand over finance and payroll to an external firm, and to move the remaining people to the sales department. Because no organised team or assets are transferred, there is no transfer of workplace. The company signs a contract covering the schedule of month-end closings, an agreement on the processing of employee data and a documentation handover plan. The cost of the service turns out to be lower than the salaries with on-costs, and the company gains cover during holidays.
Most common mistakes in implementation
- handing over a chaotic process without first describing it — the provider then recreates the existing errors,
- a contract without measurable quality indicators and without an exit plan,
- no personal data processing agreement,
- ignoring the rules on the transfer of workplace when handing over an entire department,
- within groups — no transfer pricing policy and documentation for intra-group services.
How Good Balance can help
We support companies that want to scale their teams flexibly — under the specialist leasing service we provide experts for projects and processes. We also prepare contracts with service providers together with data processing agreements, and as an accounting firm we take over accounting and payroll in the outsourcing model as part of full accounting.