PwC: Shared service centers, the solution sought by Romania’s public administration

The Romanian government has adopted an emergency ordinance for administrative reform that officially acknowledges what experts have been saying for a long time: public administration is oversized, fragmented, and financially unsustainable. The explanatory memorandum to the ordinance leaves no room for interpretation, referring to “systemic dysfunctions,” “excessively bureaucratic procedures,” and “staffing structures that are insufficiently adapted to the real needs of citizens.”An analysis by Dinu Bumbăcea, Partner PwC România, and Cristian Cortez, Senior Manager PwC România

But beyond the proposed staff and cost cuts, the ordinance does something truly significant: it formally defines support departments—finance and accounting, procurement, human resources, legal, audit, IT, communication, logistics—and opens up the possibility for chief authorizing officers to take over these functions, in whole or in part, from subordinate institutions.
In other words, the legislator creates the legal framework for centralizing support functions. What is missing is a concrete model showing how this can be done without paralyzing the administration. And this model already exists and is called a shared services center.

A case study
A preliminary study we recently conducted in a county in Romania shows that the model is directly applicable in our country. The analysis covered over 100 localities with a total population of over 500,000 inhabitants. The publicly available data allowed us to make a detailed assessment of 67 of these units, representing 90% of the county’s population. Within them, we identified about 3,000 employees, of which 266 were in finance and accounting and 88 in human resources.

In the financial and accounting area, between 60% and 70% of processes have the potential for centralization. Of the 266 positions, between 90 and 100 roles could be taken over by a service center, with a 20–30% increase in productivity after the first year and a 30–40% reduction in long-term costs.
In the area of human resources, approximately 70 of the 88 roles could be centralized, with similar productivity gains. The gap with international practice is telling: the current ratio at the county level is 1 HR specialist per 30 employees, while in the private sector the standard is 1 per 150, or even 1 per 200–300 for payroll and personnel administration.
This is exactly the type of “functional overlap in support departments” that the explanatory memorandum to the GEO identifies as a source of “excessive personnel costs.”
A three-step plan: from pilot project to administrative system
To centralize support functions, we propose a gradual implementation model designed to reduce resistance to change and validate results step by step.
Step 1: Voluntary clusters as a pilot project. A group of 4-6 neighboring localities form a cluster and voluntarily share accounting, payroll, and personnel administration functions through a joint center. The county council assumes the role of facilitator and source of initial funding. Proven success becomes the best argument for expansion.
Step 2: County-level service center. After the model is validated, a single center is created, organized as a public institution. Mandatory participation is implemented gradually, function by function. The advantages become more visible: economies of scale, complete standardization, a single IT platform, and equal access to expertise for all localities.
Step 3: Selective outsourcing. After a minimum of 12-18 months of stable operation, functions such as payroll processing or IT infrastructure can be transferred to specialized external providers, while retaining full governance and internal control. Sensitive functions (accounting, financial reporting, public procurement) remain internal.
It is worth noting that the GEO already introduces instruments that facilitate precisely this type of approach: the possibility of centralizing support departments at the level of the chief authorizing officer, the multiannual financing program for administrative consortia based on milestone 310 of the PNRR, the obligation to register all UATs in the National Electronic Online Payment System, and even the possibility of outsourcing local budget debt collection services.
From cuts to structural reform
The recently adopted Emergency Ordinance does what is necessary by forcing the reduction of an oversized administrative apparatus. But linear job cuts, without a structural alternative, risk affecting precisely those communities that most need functional public services, namely small rural municipalities without qualified human resources. Shared service centers offer exactly this alternative. They allow for a reduction in the number of jobs without reducing the quality of services.
Romania no longer has the luxury of postponing public administration reform. The budget deficit, European commitments, and pressure on local public services require immediate but also sustainable solutions. Job cuts may produce short-term savings, but without structural reorganization, they risk affecting precisely those communities that most need functional public services, namely small rural municipalities without qualified human resources.
Shared service centers are an internationally validated tool, and our studies show that they can generate increases in productivity and service quality, as well as long-term savings. And the Government Emergency Ordinance already provides the legal framework in which such a model could be implemented.
The next step is the first pilot cluster to demonstrate, with real figures, that local public administration can be more efficient, more professional, and closer to citizens—not through cuts, but through reform.

Source: PWC. An analysis by Dinu Bumbăcea, Partner PwC România, and Cristian Cortez, Senior Manager PwC România