Outsourcing – Is it the right choice

Industries today in the United States have faced significant sustained competitive pressures over the past few decades. These pressures have led to interest in and adoption of new, more efficient and scalable operating models.  Outsourcing is a major strategy that commercial and industrial facilities (though they have different requirements and constraints) have adopted across a broad range of value-chain activities. One key area where outsourcing is being increasingly adopted as an operating model is facilities management, a major indirect cost category that encompasses commercial & industrial facilities. The role of today’s Facility Management Leaders is to understand an organization’s core business and contribute to its bottom-line by reducing costs, improving productivity, generating revenue, and improving its image. With these objectives in mind, outsourcing facilities management may play a key role in obtaining those objectives.

Typically no one notices a facilities services team until something goes wrong and with so many areas of responsibility and potential points of failure under the FM umbrella, the task to keep everything running smoothly is daunting. Add on top of this new challenges Facility Management Leaders are facing including:

  • Pressure on clients’ cash flows forcing suppliers to make pricing concessions.
  • Tenant pressure on property managers to reduce rental rates.
  • Shorter contracts requested by customers negotiated to give companies more flexibility for the short term allowing them to re-position themselves for future growth if the market turns up.

For these reasons and others, more attention is being given to outsource non-core activities. Businesses are increasingly using an outsourcing strategy, including outsourcing of facility services to focus on their core business activities thus allowing them to improve their competitive advantage and to achieve strategic goals. Core business functions are defined as activities and services that customers pay for, or benefit from. Re-directing resources from non-core activities to core business activities is the fundamental path to supporting core company goals. Facility Management Leaders are improving the competitive market position of their companies by leveraging resources saved by outsourcing to strategic partners that hold facilities maintenance as their core competency. Just like your company has expertise in a particular field, facility management suppliers are extremely focused companies and hold facility management as their core competency.  They stay at the leading edge of technological developments, maximizing the greatest efficiencies possible in facility management services to pass onto their customers.

KPMG reports that the #1 reason for outsourcing as stated by operators in reducing operating costs .followed by improving process improvement delivery and redirecting resources to more important strategic activities.

The switch to outsourcing brings documented advantages including:

  • 10% – 20% cost savings
  • Improved service delivery by well-trained FMspecialists
  • Better attraction and retention of staff by the service providers
  • Improved management of existing resources with state of the art work order management systems
  • The added value of consultancy expertise – especially on mechanical equipment
  • The potential for leveraging the buying power of a partner whose primary procurement strategies are focused in repair and replacements.


Needed for a good relationship

Key elements to a successfully negotiated supply agreement and long term relationship include the following elements:

  • Strategic Fit and Alignment
  • Executive Sponsorship
  • Technology Alignment
  • Relationship Management
  • Alignment of Relationship Incentives (Focus on KPI’s)
  • transparency, cost pass through, and incentives (shared risk & reward)

Ensuring collaboration and communication between the two parties, defining meaningful incentives and building organizational support for the initiative are essential to success.


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  • September 29, 2020
    4:30 pm - 6:30 pm

Finishing out September small social gatherings with a  September Happy Hour. Please join us a the rockin’ restaurant Sambuca’s , located in the Gulch. This too is an in person meeting , but only has seating for 50 people. We will continue our discussion of the new IFMA Nashville meeting format, locations, special events. a (more…) →

  • October 12, 2020
    8:00 am - 5:00 pm

Please join us for a day of golf Monday, October 12th, 2020! CSI and IFMA are excited to co-host our annual golf outing at Gaylord Springs Golf Course