According to An Inside Look at FM Outsourcing, a new research report from the International Facility Management Association (IFMA), facility managers remain confident in the ability to save money and improve quality through the use of outsourcing.
Companies are outsourcing with greater frequency today, hiring full-service vendors to provide many functions, with 15% of the respondents’ companies now outsourcing, up from 3% in 1993. Two-in-five companies have brought services back in house after outsourcing the service. Typically the reasons are to regain control of the service, either in terms of cost, quality, or response time.
The use of out-tasking–hiring individual specialized vendors to provide one or more services–has decreased from 91% in 1993 to 77% in 2006. The steepest decline has come in the past seven years.
The report, based on survey responses from 487 of the association’s members, also revealed that most facility managers believe that outsourcing can be the answer if they find the right service provider.
“We’ve seen outsourcing evolve into an accepted practice in running a facility management operation. More facilities are opting to establish longer term contracts with full-service providers or reduce the number of contractors. Yet the majority sticks to what works for them, out-tasking to specialized contractors, retaining management oversight and specifying everything in the contract,” said Shari Epstein, associate director of research for IFMA. “Although outsource providers would like to build upon their relationship with existing clients, it’s difficult due to lack of communication and information offered by the client company. One of the many challenges for a company and its employees is to develop a level of comfort and trust and let go of the day-to-day details of running a facility.”
One-half of companies have consolidated their vendor base to use fewer service providers during the past five years. The result is that for nearly one-half of companies, service providers are in a position of receiving substantially larger contracts than just two to five years ago.
More than one-half of companies have also saved money through outsourcing/out-tasking and one-third have seen a quality improvement. These results are consistent regardless of whether the company is outsourcing or out-tasking.
Architectural/engineering/interior design services were outsourced with the most frequency with 90% of respondents reporting that they outsourced these services, followed by housekeeping services with 77%, property appraisals with 72%, and roads/parking/garage maintenance with 70%. The largest growth among outsourced services between 1993 and 2006 was in the outsourcing of utility system maintenance with a growth of 23%.
The main reasons facility managers are choosing to outsource include financial motives like reducing or controlling costs, and the ability to better adjust to work fluctuations while decreasing turnover and training costs. The key challenges to implementing an outsourcing initiative are ensuring delivery of the correct level of service and developing a level of trust.
The survey was conducted online. A total of 4,816 North American members, including 316 Canadian members, were randomly selected to receive an e-mail invitation to complete the survey. The survey data was collected from July 11-27, 2006. A total of 487 complete surveys were collected from IFMA members for a final response rate of 10.1%. The survey was previously conducted by mail in 1993 and 1999.
The research report, An Inside Look at FM Outsourcing, is available for purchase online in the IFMA Bookstore at www.ifma.org/bookstore.