Facility Service Outsourcing May Reduce Costs, Bring Other Tactical Gains

By Vince Elliott  
OTHER PARTS OF THIS ARTICLEPt. 1: Outsourcing Facility Services Can Bring Strategic Advantages Pt. 2: This PagePt. 3: Seven Reasons That Traditional Facility Services Outsourcing Is Not SuccessfulPt. 4: Facility Service Outsourcing Problems Start with Lack of Common InterestsPt. 5: Facility Management Outsourcing: More Barriers to a Good Relationship

In addition, facility service outsourcing can reduce costs and bring other gains that, while still strategic, are somewhat more tactical than the ones just addressed.

Reduce Operating Costs: Perhaps the most often quoted reason for outsourcing is to reduce costs. Through this effort the company seeks to avoid the direct and indirect costs of performing the service internally, through outsourcing to achieve a lower operating cost. Frequently, this is achieved by simply asking for (or demanding) a lower price or by, mistakenly, reducing the scope of work. Regardless, the goal is to enhance the price-competitiveness of the company and to free any savings for more important, core value projects

Improve Control: There are circumstances when the in-house facility management department seems unable to implement a sufficient amount of change to its internal systems to adequately achieve the competitive advantage needed by the company. Barriers may include lack of management know-how, insufficient resources, union/management impasse or poor information systems. Outsourcing can establish the change structure and controls needed to bring strategic value to company competitiveness.

Acquire Best Practice Systems: Sometimes, in-house facility systems and technical skills are weak in a specific area. Contractors that have invested in developing best practice systems can bring higher levels of performance to the buyer more quickly. The facility management department is able to focus on its goals more quickly, while acquiring the best capability available in the market place. The growing interest in green services and the emerging chemical-free cleaning technologies are recent examples.

So why are companies outsourcing facility services? They are outsourcing to be more benefit- and price-competitive. Companies have pursued a tactical strategy to reduce internal operating costs, staffing and resources by outsourcing facility support services. Strategically, companies are looking for providers that can help them compete in a highly competitive market place. If facility managers are clear about the goals they are trying to achieve, they stand a greater chance to be successful. From a contractor perspective, clear buyer goals enable the service provider to design and deliver the most important resources to achieve the buyer's goals —often at a bargain price. Yet, even with clear goals, the outsourcing process itself can create a barrier to success.

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  posted on 10/30/2012   Article Use Policy

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