Thursday, March 28, 2024
 - 
Afrikaans
 - 
af
Albanian
 - 
sq
Amharic
 - 
am
Arabic
 - 
ar
Armenian
 - 
hy
Azerbaijani
 - 
az
Basque
 - 
eu
Belarusian
 - 
be
Bengali
 - 
bn
Bosnian
 - 
bs
Bulgarian
 - 
bg
Catalan
 - 
ca
Cebuano
 - 
ceb
Chichewa
 - 
ny
Chinese (Simplified)
 - 
zh-CN
Chinese (Traditional)
 - 
zh-TW
Corsican
 - 
co
Croatian
 - 
hr
Czech
 - 
cs
Danish
 - 
da
Dutch
 - 
nl
English
 - 
en
Esperanto
 - 
eo
Estonian
 - 
et
Filipino
 - 
tl
Finnish
 - 
fi
French
 - 
fr
Frisian
 - 
fy
Galician
 - 
gl
Georgian
 - 
ka
German
 - 
de
Greek
 - 
el
Gujarati
 - 
gu
Haitian Creole
 - 
ht
Hausa
 - 
ha
Hawaiian
 - 
haw
Hebrew
 - 
iw
Hindi
 - 
hi
Hmong
 - 
hmn
Hungarian
 - 
hu
Icelandic
 - 
is
Igbo
 - 
ig
Indonesian
 - 
id
Irish
 - 
ga
Italian
 - 
it
Japanese
 - 
ja
Javanese
 - 
jw
Kannada
 - 
kn
Kazakh
 - 
kk
Khmer
 - 
km
Korean
 - 
ko
Kurdish (Kurmanji)
 - 
ku
Kyrgyz
 - 
ky
Lao
 - 
lo
Latin
 - 
la
Latvian
 - 
lv
Lithuanian
 - 
lt
Luxembourgish
 - 
lb
Macedonian
 - 
mk
Malagasy
 - 
mg
Malay
 - 
ms
Malayalam
 - 
ml
Maltese
 - 
mt
Maori
 - 
mi
Marathi
 - 
mr
Mongolian
 - 
mn
Myanmar (Burmese)
 - 
my
Nepali
 - 
ne
Norwegian
 - 
no
Pashto
 - 
ps
Persian
 - 
fa
Polish
 - 
pl
Portuguese
 - 
pt
Punjabi
 - 
pa
Romanian
 - 
ro
Russian
 - 
ru
Samoan
 - 
sm
Scots Gaelic
 - 
gd
Serbian
 - 
sr
Sesotho
 - 
st
Shona
 - 
sn
Sindhi
 - 
sd
Sinhala
 - 
si
Slovak
 - 
sk
Slovenian
 - 
sl
Somali
 - 
so
Spanish
 - 
es
Sundanese
 - 
su
Swahili
 - 
sw
Swedish
 - 
sv
Tajik
 - 
tg
Tamil
 - 
ta
Telugu
 - 
te
Thai
 - 
th
Turkish
 - 
tr
Ukrainian
 - 
uk
Urdu
 - 
ur
Uzbek
 - 
uz
Vietnamese
 - 
vi
Welsh
 - 
cy
Xhosa
 - 
xh
Yiddish
 - 
yi
Yoruba
 - 
yo
Zulu
 - 
zu
Subscriber Login

KPMG Report Global REFM Outsourcing

by Clean India Journal - Editor
0 comment

“KPMG LLP (KPMG) has released its 2014 edition of the global Real Estate and Facilities Management (REFM) outsourcing Pulse survey. It provides insights into trends and projections in end-user organizations’ usage of Global Business Services (GBS), or shared services, outsourcing, and third-party business and IT services.”

25About 217 respondents were surveyed for this market study. Thirty-eight per cent of respondents were from end-user buyer organizations currently utilizing or in the active process of undertaking REFM outsourcing. Forty eight per cent of respondents were from third-party providers of outsourcing and related REFM services, and the remainder were respondents from law and sourcing advisory firms advising end-user organizations on REFM outsourcing efforts. Approximately one-half of respondents polled are involved with REFM activities in the US market, with 25% of total respondents operating or supporting global REFM efforts, and the balance operating in the Europe, Middle East, and Africa (EMEA) and Asia-Pacific regions.

The global real estate and facilities management (REFM) outsourcing market remains very healthy and continues to grow. Most end-user organizations today, especially larger firms in western markets, have undertaken some level of REFM outsourcing, even if it has been to outsource a few services (e.g., janitorial, cafeteria, and amenities services).

Self-performing REFM work remains more common in emerging markets where the capabilities of the marketplace may not be mature enough to outsource or at small offices in all markets where most of the services are provided by the landlord. Many firms prefer to bundle their REFM services under the fewest number of service providers and operate under an integrated model to further reduce costs, drive consistency, and improve governance, controls, service level agreements, KPIs, and performance reporting.

Americas and EMEA remain as the most mature markets for an integrated REFM outsourcing model. However, the Asia Pacific market’s capabilities and integrated outsourcing interests continue to grow. While outsourcing is common in all industry sectors, the largest increase in outsourcing is in the banking, financial services, insurance, healthcare, pharmaceutical, and biotech sectors.

 In addition to looking for opportunities to outsource more sites and services many users of REFM outsourcing services are assessing options to consolidate what has been outsourced already under fewer providers or to restructure the pricing of their current contracts to deliver additional savings. Tactical REFM services (e.g., workplace and facilities services, lease administration, facilities management) are the activities most commonly outsourced. A growing number of service providers, however, are demonstrating advanced capabilities enabling them to move up the value chain in terms of services offered into areas such as REFM strategy and planning and research and development support services. They are becoming better able to integrate into existing business operations to provide more high-value and strategic services (e.g. portfolio strategy planning).

Reducing costs continues to be the most common reason why organizations outsource REFM services.

While service providers’ capabilities and service offerings continue to improve, most of the services outsourced are tactical as opposed to strategic. Some end-user organizations choose not to outsource because they are satisfied with their current service delivery model, activities are too strategic in nature or there is not a compelling business case to change. Energy costs for most end-user organizations is a large spend and often service providers are used to reduce energy demand.

Organizations are increasingly using a balanced scorecard approach to track and measure service provider performance against financial, customer satisfaction, and operational targets. Typical end-user organization’s expectations are that outsourcing will improve their operational model, introduce leading practices, and drive continuous improvement. There are various means buyer organizations are employing to track and incentivize these improvements. To emphasize the importance of performance, buyers today are more often putting a portion of service provider’s management fee at risk if the balanced scorecard targets are not hit, as well as using management fee incentives or shared savings if targets are surpassed.

In addition to the use of balanced scorecards, a strong governance structure is required to monitor performance as is having good baseline and KPI data to track performance improvements.

When it comes to renewing existing REFM outsourcing contracts, organizations are increasingly seeking bids for services and considering alternative providers rather than simply renewing the contract with existing providers. The goal is to test the waters of the market and understand what differentiated services alternative providers could potentially offer as well as ensure that buyers are getting the best price available for the services in scope and are best leveraging the current capabilities in the market. So many organizations in second and third generation deals are using different providers than originally contracted. As a result, most REFM outsourcing contracts are three to five years in length to provide buyers the flexibility to swap out providers. The end-users that do it best do not merely select the low-cost provider but also use a formal process to measure the service providers against different criteria to ensure the right service provider is chosen. While some firms choose to have a global service provider, most firms choose whom they believe is the right service provider for each region. Effective change management and appropriate executive sponsorship remain as key elements to successfully transition to an outsourcing model.

Organizations need to continually assess what is the optimal mix of outsourcing, shared services, and internal operations to support their REFM services needs. This requires a careful evaluation of the performance of their current operations, business needs and challenges, capabilities available in the market, and the benefits, risks, and costs of making a change. There is no right answer or single best-fit model but maintaining the status quo legacy model is not prudent. Leading organizations have evaluated their current REFM practices, benchmarked them, and identified ways to reduce costs and improve their service delivery quality. They have leveraged the capabilities of the marketplace and have created a roadmap to achieve their desired end state.

You may also like

Leave a Comment

Clean India Journal, remains unrivalled as India’s only magazine dedicated to cleaning & hygiene from the last 17 years.
It remains unrivalled as the leading trade publication reaching professionals across sectors who are involved with industrial, commercial, and institutional cleaning.

The magazine covers the latest industry news, insights, opinions and technologies with in-depth feature articles, case studies and relevant issues prevelant in the cleaning and hygiene sector.

Top Stories

Subscribe To Our Newsletter

Copyright © 2005 Clean India Journal All rights reserved.

Subscribe For Download Our Media Kit

Get notified about new articles