What are the benefits of facility management outsourcing and what to consider before taking the final decision? Here are the key considerations you have to make!
The sentiment toward outsourcing is changing heavily. Whereas companies in the late 2000's focused on insourcing, as a response to changes in political sentiment, wage deflation, and high labour supply, the reality today signals a net increase in outsourcing consumption. When evaluating the risks and benefits of outsourcing, customers no longer reach the conclusion of bringing services back in the house. Instead and as Deloitte puts it in their latest Global Outsourcing Survey; "Companies are broadening their approach to outsourcing as they begin to view it as more than a simple cost-cutting play."
The key benefits of outsourcing
Successful and well-organized outsourcing can grow profitability, improve productivity, reduce business risks, grow competitiveness and let companies focus their efforts on their core business and key competitive advantage.
Most times, tasks are outsourced to vendors who are specialized in their field of business and have better expertise with non-core business processes than the ones at the outsourcing organization. Naturally, expertise and experience in completing tasks often results in a better quality output and tasks can be completed faster and more effectively.
Imagine you are managing a company that produces apple juice. You are most likely an expert in the production methods and processes specific to this product. Things like managing your facilities, improving IT systems or HR fall outside of these specific core competencies. In this case, you might gain a strategic advantage in outsourcing these tasks to specialists that can handle these tasks more efficiently and have the expertise necessary to take your company in the right direction.
Factors to consider when outsourcing
Even though outsourcing comes with many benefits, following factors and considerations should be made before taking a final decision.
Is there a competitive advantage of doing the task in-house?
If you’re not a tech company, then it may not be necessary to have an internal IT department. As long as the task/service does not support your core product, outsourcing can be a cost-efficient and strategically wise option.
Does the task represent a temporary or recurring need?
Does the task represent a temporary need or a one-time event? Then outsourcing the task to a third party, who has the expertise and can deliver a professional quality output can be a better option than hiring a new team of people that possess the skills you desire.
Can the task be handled more efficiently (with regard to knowledge, costs) externally?
Referring to, what previously has been mentioned - expertise and experience in completing tasks often result in a better quality output and tasks can be completed faster and more effectively.
Are the costs of the service lower than what it would cost in time and manpower to do in-house?
Naturally, if a third party can fulfil the task with a better output and for a lower cost than what you can do internally - outsourcing can be a great way to improve your balance sheet.
Besides clarifying those questions, you also need to set your expectations for a potential outsourcing relationship. Would you feel more comfortable with a conventional transaction-based approach which keeps you and your outsourcing vendor abstracted to the extent of your contracted agreements? Or would you prefer to adopt a Vested Outsourcing Approach that is highly collaborative and enables true win-win relationships in which both parties are equally committed to each other’s success?
There are many considerations and clarifications to make before taking the final outsourcing decision and finding just the right outsourcing partner. When it comes down to everything, all that counts is what you and your managing partners believe it takes to continue winning in today’s rapidly changing environment.
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