Outsourcing - pain or gain?

 

Client organisations are generally seen as leaders in thought and action when it comes to the delivery of innovative property services to workplace environments.  Service Providers, unfortunately, are barely keeping up with the impact of the changes their clients are pushing on their business.  As a result, this arm of the outsourcing industry is generally moving away from the needs of its clients; providing a service of declining quality. It is becoming apparent that the outsourcing industry is not keeping pace with the necessary changes in technology, compliance requirements and transformational workplace innovations that their clients are demanding.

 

 

Many client organisations outsourced property and facilities management years ago and are in their second, third or later generation of outsourcing.  They may have been through a number of renewal or go-to-market cycles, and a transformation of the number and volume of services that they source from the external market.  Incumbent providers are too often well positioned to retain, or renew contracts - not due to the quality of their services but due to the pain, expense, and resource intensity of the alternative.   Changing providers, even successfully running a serious and credible sourcing process to change providers, is a significant undertaking. Even if alternate providers are chosen, commitment to a transition process is resource intensive and potentially disruptive to business continuity. Finally, there is little incentive to motivate clients to change; lack of diversity in the supplier market and lack of differentiation in offerings of the major providers. Technology changes over the last several years have dramatically lowered the costs of running integrated property management information systems. This provides a greater incentive for clients to manage their own information, transactions, and projects. Previously, these tools were bundled with the outsourced service provider. Now, however, organisations have become aware that their services procured externally need no longer be a bundled service with IT. This can be simply the provision of skilled labour and processes without being committed to service provider IT systems and all that goes this entails.All these factors have led some organisations to consider completely insourcing property services teams, processes and technology, however cultures within many client organisations tend to prevent this occurring. Whilst there is often a reluctance to increase headcount, or ‘reverse’ an established outsourcing ratio of staff; economically, this is now proving a more prudent and risk averse business strategy.In this environment, with massive shifts in the external availability of technologies to support large-scale property and FM/asset services and also the significant shifts in delivery of workplace services that increasingly position employees as customers, how best should you approach an outsourcing contract that is up for renewal? Or significantly restructure the contract to respond to transformed service provision or IT changes?

 

 

 

BeyondFM understands that there is a wide range of complexities including internal challenges in making a case for change and generating a sense of urgency for fixing issues in existing service provision.   Each client's circumstances and goals are unique. We have a broad range of experience with global, regional, and country-based projects .

 

 

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