Facilities Outsourcing Trends
The market trend was detailed in a survey conducted by Johnson Controls Global WorkPlace Solutions in partnership with PeopleWise. According to the study, facilities management is the most outsourced service, with 82% of the respondents currently outsourcing some part of facilities management and real estate services.
What’s more, the demand for these services is expected to increase significantly within the next three to five years, growing to 93%. And among the respondents currently outsourcing, 47% expect an increase in demand in the future either for a wider scope in services or expansion across geographies.
Most Outsourced: In a survey by KPMG, facilities services — including HVAC, electrical, mechanical and building repair — were found to be fully or partially outsourced by 91% of survey respondents. (Respondents covered a wide range of industries, including retail.)
Janitorial ranked as the most frequently outsourced facilities management task (88%), followed by pest control (87%) and routine operations and maintenance (85%).
In facilities management, energy and utilities operations ranked as the area with the greatest growth in outsourcing demand, followed by a cluster of other activities, including regulated maintenance, help desk and waste management.
Pricing/Reporting: The performance-based contract pricing model was the most common pricing model cited in the KPMG survey, followed by fixed-price contracts and cost-plus contracts. The least implemented model in the survey was the fixed-price contract with guaranteed savings.
In an age of big data, it’s not surprising that having accurate, timely complete and useful information has emerged as a critical element of a successful facilities management program. A well-designed reporting system provides site information as well as cost and performance information, including service-level data, according to KPMG. Indeed, performance reporting and service-level data and information was the top need in the survey, followed by cost data.
In terms of service-delivery models, three models ranked highest and closely together. The first involves the bundling of individually contracted services, while retaining high-level management functions of these services.
The second is the bundling and outsourcing of an increasing number of individually contracted services and the outsourcing of key management functions of these services. The third: the bundling of individually contracted services and outsourcing key management functions of the services.
Ranking at the lower end of the scale: continuing to manage multiple services with individual contracts.
Challenges: Various factors can combine to complicate and slow a retailer’s outsourcing efforts, and even make outsourcing not always the most productive or cost-efficient option.
The quality and fit of supporting service providers was cited as the top challenge by buyers in the KPMG poll, followed closely by retained organization/transition/governance challenges, and economic uncertainty/inability to plan medium to long term.
Other surveys have identified inadequate data, lack of visibility, loss of control, time inefficiencies and increased risk as problems associated with outsourcing.
Hybrid: Some retailers that want to outsource but are concerned about some of the risks are taking a new hybrid approach.
In these cases, the companies have their outsourcers/brokers use a business intelligence-based facilities management platform supplied by an outside provider. The platform captures all of the outsourced service work, which gives the company independent data and a complete picture across all contractors and work orders.