3 reasons why diversity is important in service outsourcing

The topic of diversity in both management and non-management teams and its advantages for companies has been around for several years now. All for a good reason. Today, we explore how diversity relates to service outsourcing and how it can add new business value for both customers and service providers.

The topic of diversity is an important topic in outsourcing. For many years, service providers and Facility Management service providers in particular, have employed a very diverse set of employees. Cleaning services, as an example, are already largely diverse and for many years IT outsourcing has used talents from many different countries to deliver its services.

Today, client organizations have also become more diverse, which makes the topic of diversity equally important for both parties. Here are the 3 reasons why:

1. Diversity creates a cultural fit between customers and service providers

Companies are increasingly assessing the cultural fit between their own organization and potential service providers in outsourcing projects. The more two organizations are culturally aligned the greater the chance of a successful outsourcing relationship.

Various research show that in terms of outsourcing, people are more likely to share values, culture and to fit with the other organization if they match each other on dimensions such as color, handicap and race. In other words, a diverse service provider is more likely to match the culture of the client organization than a non-diverse organization.

Another important dimension to bring to this context is the transition of employees. In most facility management outsourcing contracts, employees transfer to the service provider. This is when the contractual collaboration is most vulnerable.

Several studies have proven a direct correlation between integration satisfaction and the long term success of the contract. Thus, the more diverse the service provider, the higher chance new employees will be integrated successfully.

2. Diversity minimizes the overall contract risk

Selecting a service provider with a diverse workforce minimizes risk related to service delivery and thereby the overall contract risk – and this is for at least three reasons. First, a diverse workforce has lower employee turnover and lower absenteeism. This means fewer disruptions to day-to-day service and less risk of failure due to lack of coverage when employees are away. The second reason why diversity leads to higher contract stability is recruitment. It allows a company to tap into a greater pool of talent, recruitment costs are lower and filling available job positions is quicker.

The third reason why the execution of the contract is better with a diverse outsourcing provider is due to better staff retention during the transition period. It has been well documented that a successful transition leads to a successful contract, and as mentioned before, the more diverse the service provider, the more it can include and integrate the new employees successfully.

3. Diversity improves Corporate Social Responsibility (CSR)

CSR involves more than simply acting in a correct manner with regard to voluntary initiatives, ethical values, people, communities and the environment. It is also about improving the bottom line.

A company’s choice of service provider in an outsourcing situation will not only affect the service quality of its Facility Management delivery but also its overall CSR accounts.

Even though CSR accounts have yet to be standardized within and across countries, many customers still include the outsourced FM employees in their CSR accounts for true transparency even though these employees no longer work for the company. The choice of facility management provider may therefore be significant in terms of overall CSR accounts – especially if such services comprise a relatively significant proportion of the overall company.

Eager to know more about how diversity can generate business value? Read our blog post: Why companies must embrace diversity in the workplace and our newly released White Paper: A diverse leadership yields higher earnings.  

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