Outsourcing Facilities Management Pros & Cons

In a recent report, McKinsey revealed that outsourced facilities management services now make up more than half of the total FM market in North America, Europe, and the Middle East. The researchers list several market trends that have made outsourcing a more viable option for facilities management. These include:

• Slowing economic growth in several large countries
• Global trade conflicts that have upset commodity and finished product prices
• Tech disruptions in certain industries
• Higher wages caused by lower unemployment rates

Given the factors above, the impulse for many retail businesses is likely to prioritize cutting costs in the coming years, particularly in facilities management. But as the report goes on to say, “This pattern can lead to deteriorating conditions of buildings and equipment, potentially costing more in the long run.” Not only that, with new strict net zero standards and the increasingly competitive post-pandemic landscape, it’s more important than ever for retailers to resist the urge to put the brakes on investing in efficiencies and innovations.

For facilities management leaders looking to manage costs while achieving greater operational efficiency, outsourcing facilities management makes increasing sense. However, the question of whether or not to outsource is one that each business needs to make for itself. Keep reading to learn more about outsourcing facilities management pros and cons to help you weigh whether or not outsourcing is right for your organization.

Outsourcing facilities management pros and cons

Below are some of the most common advantages and disadvantages of outsourcing facilities management.

Pros: What are the benefits of outsourcing facilities management?

Costs savings due to increased efficiencies

An established facilities management provider brings its own infrastructure, processes, and vetted vendors and technicians to the table. These efficiencies are then passed on as cost savings to you as the customer. What’s more, an FM partner can help your business establish a long-term strategy for further increasing efficiencies and reducing costs. If you opt for an integrated facilities management (IFM) provider, which operates on a total cost approach rather than on an ad hoc basis, you can see additional savings from more streamlined operations.

Access to expert resources

When teaming up with a facilities management provider, you get the benefit of having industry veterans at your fingertips available to offer their POVs, best practices, strategic recommendations, and tactical roadmaps for solving virtually any FM challenge you’re facing in your organization. You also benefit from their robust network of highly experienced vendors and partners, and when working with self-performing FM partners, you get direct access to their team of dedicated experts all in one place. As an example, an external FM partner can offer expertise in energy management, critical for helping retailers meet the latest sustainability standards set forth by the IRA and other recent clean energy legislation.

A holistic approach to facilities management

In addition to fulfilling core facilities management functions, if you opt for an integrated facilities management provider, you can get access to other critical services all under one roof, breaking down silos, increasing efficiencies, and further reducing costs. For example, an IFM provider operating on a self-delivery model with its own team of technicians can offer faster, more efficient disaster support. The provider may also have building and engineering services to help with remodeling projects, new store development, and store expansions from design to completion — with project management services to boot.

Less effort spent on recruitment and employee management

Hiring reliable licensed technicians in your area can involve a tremendous amount of effort, especially in the midst of a shrinking workforce and lower unemployment rates. This may perhaps be one of the biggest advantages of outsourcing facilities management. Not only that, an FM partner will take care of managing and training technicians. This means dealing with technicians who don’t perform up to standards could be as simple as a phone call to your facilities management provider. FM providers also carry the responsibility of keeping technicians up to date on the latest standards and best practices. By shifting these tasks to an outside facilities management company, businesses can save on time and costs, reduce risks, and free up their leadership to focus on more strategic functions.

Staying current with technology

Thanks to COVID-10, the retail industry has seen an acceleration in tech disruptions that are requiring unprecedented levels of investment in new technology infrastructure. An FM partner brings experience and expertise to help you take advantage of the latest facilities management technologies, such as ultrasound predictive technology and IoT energy management systems, without having to invest in costly internal IT resources and system upgrades.

A fresh perspective

There’s nothing like an outside perspective to challenge the status quo and breathe fresh air into your organization. And given the rapid changes unfolding in the retail industry, facilities management leaders need all the innovative ideas they can get to help them adjust quickly to market disruptions.

Which facilities management company is right for your organization? Not all facilities management models are created equal. Learn more about integrated facilities management and how it compares other FM models.

Cons: What are the disadvantages of outsourcing facilities management?

Lack of direct control

The most obvious drawback to an FM company taking control over your facilities management is, well, losing direct control over your operations. On the other hand, an in-house team can bring an intimate understanding of your goals and preferred systems and processes, not to mention a deep familiarity with your equipment. This can be avoided by bringing on a partnership-driven FM provider who strives to bring transparency and a spirit of team collaboration to the relationship. And while you may not have direct control over the way they execute service functions, establishing clear KPIs can ensure projects are met to your satisfaction regardless of the FM company’s preferred processes.

Potential for poor service quality

One of the biggest complaints by facilities leaders when it comes to outsourcing is poor service quality. This is most commonly found with traditional FM service models which rely on multiple third-party vendors to deliver maintenance services, which results in accountability issues and lack of direct quality management. Choosing an FM provider that uses a self-delivery model can vastly improve service quality. For example, at City, we self-perform up to 95% of critical trades using multi-skilled technicians who are carefully trained on our partners’ equipment, an approach that enhances the customer experience while also saving on costs.

Vetting facilities management partners

As you can see, the pros of outsourcing facilities management can vastly outweigh the cons; however, your outsourcing experience will ultimately depend on the company you choose. Make sure to do your research and choose a data-driven partner, who can provide performance benchmarking and continually keep an eye on the numbers to improve outcomes and make sure you’re getting the best return. For more tips on how to find the right partner for your needs, read our Guide to Hiring a Facilities Management Company.

At City, we offer an industry-disruptive approach to facilities management based on transparency and collaboration, which we believe are key to generating the best results. Learn more about how we do facilities management differently.