Outsourcing Facility Management – from a Client’s perspective

We all know that the process of purchasing services is more complex than purchasing goods.

Facilities Management Services represents a significant cost in most companies. It is vital to reduce cost and consistently improve quality of services. Therefore, choosing the right FM service provider can have a huge impact on a company’s performance.

Since there is a whole gamut of services that fall under the Facilities management umbrella, ranging from Asset Management, Utilities management, Project Management, Contract Management, Human Resources Management, Health and Safety, Building maintenance, Office support services, Cleaning & Security etc, it is imperative to develop a good relationship between the client and the Service provider to reach their objectives mutually.

There has been significant shift in the client’s approach towards service provider relationships over the last two decades. It has slowly moved into Client-service provider partnerships, which is looked at more in terms of longer term, ongoing relationships involving a mutual exchange of advantages, information and ideas.

As the FM market is becoming more dynamic and competitive, earlier approach of maintaining proximity with FM service providers just to avoid dependency and keep prices down have been replaced by the importance of the benefits that can be gained from developing relationships.

Why Clients prefer an ideal FM Partner

In my opinion clients enter into partnerships with an FM service provider not merely to make friends but, to ensure the service provider delivers value to their organisation. The values they look for varies based on their core activities which might include:

• Innovation
• Economy of scale
• Effective management of risk
• Reducing costs without bringing down quality
• Brand / face value of the service provider
• Technology that the service provider can bring along
• Increasing their customer satisfaction (CSAT) scores
• Service provider’s expertise, skills and domain knowledge
• Benefits and advantages of the recommended solution
• More focus on what the client and their customers want rather than what the service provider can do

The successful FM service provider will be the one who is proactive and demonstrates to the client on how different they are from their competitors through their capabilities, expertise in the particular segment, quality of services and value they could deliver at a reasonable cost.

Sourcing strategy for FM Services

The customer might look at three different strategies before partnering with a FM Service provider.

• For a long-term contract, they might look at stability of the service provider, capability to deliver quality services consistently and the solution that meets their organisation’s demands.
• In contrast, for a short term or less frequent one-time services that are purchased with low frequency the focus is only on efficiency and cost.
• A strategic partnership approach is chosen when the importance of a service is high for the client organisation, the services that are to be purchased is complex and there is a need to share sensitive and strategic information or the purchasing volume is high.

In recent times sourcing teams have become more aggressive, armed with domain knowledge and tools like e-sourcing, reverse auction and effective vendor negotiations.

However, I feel that outsourcing would be more successful if the sourcing teams put themselves in to the service providers shoes and think rationally on the cost against the value and the solutions proposed by a prospective service provider than looking only at the cost as the evaluation criteria.

With over 30 years of Facilities and Contract Management experience, Balaji Sunderraj was involved in all facets of Facility Management starting from Operations, Quality, Marketing & Communications, IT Development (for FM specific technology platform) Business Development, Transition & Operations Excellence His broad knowledge in developing solutions to a variety of business segments includes IT/ ITES, Automobile, General Engineering, Residential gated communities, Healthcare and Pharma and has been acknowledged by many leading Corporates across segments.