4 key areas where outsourcing will emerge towards 2020

Towards 2020 and beyond, outsourcing will develop in new areas, creating a new future for the FM industry. But what areas of a business will be outsourced in the future?

For years, companies have been moving production or other services abroad in order to take advantage of lower production costs; meanwhile, a more recent development has involved outsourcing single-service basic needs that typically sit outside of an organisation’s core business, such as cleaning and catering.

Although, in the future, outsourcing will evolve to include more strategic areas, as visualised in our graphic below.

trends-in-outsourcing-areas-progress

The era of outsourcing operations and single activities is certainly not over, but there are not many non-core activities left to outsource in mature outsourcing industries and markets anymore. Therefore, businesses in these markets are starting to push outsourcing’s boundaries into more core and advanced business areas, such as idea generation and innovation.

New outsourcing areas will challenge internal limits

Pushing outsourcing’s boundaries into more core and advanced business areas, requires overcoming structural constraints and pushing internal limits without ceding control over the strategic direction of the company.

The companies that can successfully identify new value-creating arrangements in advanced business areas will seize an advantage towards 2020. In order to do so, service providers will have to develop new system-wide perspectives that involve complex relationships with a number of partner organisations and sometimes serve as deal architects.

Idea generation and innovation will be key

To live up to these new realities, facility and service management providers will have to increase their innovation capacity and move into areas, such as idea generation and innovation. This move will enable companies to differentiate themselves and gain new competitive advantages.

Currently, the majority of service providers are not capable of providing this service for two specific reasons.

  • First, there is no economic incentive to provide innovation when service providers are bound by a contract.
  • Second, businesses in general are not willing to pay for advice on innovation, with the exception of very few industries.

Outsourcing areas will become more specialised

With ever-increasing technological sophistication across all markets, the domain of outsourcing will expand into new service areas, creating new market opportunities for both the customers and service providers.

Furthermore, for customers where information and data constitute the primary economic asset, new service opportunities will emerge for industry players who are well positioned to either gather context-specific data and/or process it.

Huge data sets with integrated storage, analytics and applications will drive the efficiency, quality and personalisation of products and services.

Outsourcing and the emergence of the experience economy

The emergence of the experience economy – where the primary economic value resides in experiences and other immaterial attributes – is creating new pathways for service innovation and market opportunities.

Customers will increasingly demand outsourcing services that regard design, aesthetics, culture, storytelling, values and experiences, which are more immaterial in nature. This will entail maintaining a greater focus on service design and the user experience for existing offerings – this type of client-centric approach, with particular emphasis on the emotional journey, will be essential.

With greater emphasis on the health and well-being of employees, it is likely that new organisational wellness solutions will be demanded by customers.  In general, service providers must be prepared to accommodate these new demands and emerging service areas - or at least be willing to partner with those who can provide solutions. This shift will involve providing new on-site professionals, such as therapists, trainers, coaches and doctors, to operate as a human resources or facility management function.

Download our extensive research on the topic to learn more about the Future of Outsourcing and what it means for you as a business leader below.

iss_lead_generation_cta_mockup_05