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Outsourcing

Outsourcing

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Published by Shinji

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Published by: Shinji on Jul 05, 2011
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11/21/2012

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ASSIGNMENT AND FORREPORTING OF GROUP 1Facility Management Outsourcing
Definition
What to outsource
When to outsource?
Benefits of outsourcing
Factors affecting outsourcing (business change, process change)
What is Service Level Agreement SLA
Suggested reference:
Functions of contract FACILITY MANAGEMENT: Human OutsourcingSolutions to Clients
By DHEERAJ MANN
 
Outsourcing today is an increasingly common way of doing business. There aresound financial reasons for not employing permanent staff – who must be fully paidregardless of work flows – when you can buy in outside expertise which may be ableto do the job better, cheaper and more quickly.Facilities managers’ time is, therefore, increasingly dominated by managingcontracts with external suppliers. This has required facilities managers to developnew skills. Whereas before, facilities professionals had to be multi-skilled, multi-functional and good managers of people from a variety of backgrounds, now – ontop of all that – comes the responsibility for continuing to motivate those over whomthey have no immediate line management authority, while managing outcomesthrough a third-party employer with their hands tied by legal contracts.Successfully working with contractors on a strategic level is another challengefacing the facilities manager. Today’s outsourced contractors are ‘partners’ who‘add value’ to a company’s operations. Command and control, as a managementstyle, would be as self-defeating here as anywhere else. Partners are looking forlong-term relationships, where trust means more than mere on-time delivery. It
 
means sharing cost bases, profit ratios and business objectives. To a degree, it alsomeans sharing information you might prefer to keep in-house.What to Outsource?When outsourcing first entered the management arena in the 1980s, it was allabout saving money on essentially manual task; premises’ cleaning was a typical anearly example. The focus is now on access to skills, with outsourcing expanding toinclude areas closer and closer to the centre of business; companies are nowlooking to buy in outside expertise so that they can concentrate on their own coreactivities, and contract with external suppliers to provide many or most of thetactical elements. The shift from those early tasks has seen us move through other administrative andinfrastructure areas, towards innovation: how can the company move further aheadfaster than the competition? Outsourcing today, and the expertise that comes withthe specialist contractors, has now embraced R&D, design, product management,marketing, communications, even personnel supply and management. That development has not finished. Already into strategic functions, it is not unlikelythat outsourcing of core business areas – even the strategic direction of thecompany – could follow. Outsourcing should not be seen as just a money-savingmanagement device or tactic, but considered in terms of the potential value it canbring to a business.It may cost more to outsource, but the job may be better performed, the companyimage may be enhanced and it may release expensive management time for coreactivities. However, the year 2005 saw the possible critical turn of opinion regardingoutsourcing with some high-profile industrial activities. Some companies arereviewing how they define ‘core’ activities, which begs the question ‘are we seeinga start of the move to bring stuff back in-house?’Notwithstanding that development, what, in your specific business, should youconsider outsourcing and what should you retain in-house?Core and non-core activitiesA first assessment in considering whether or not to outsource is defining what youconsider to be your core business activities. Current practice dictates thatcompanies retain control of these areas. The thinking behind this is thatorganization should be left to concentrate on their core business activities withoutthe distraction of providing and managing non-core activities.
 
 These are better provided by an outsourced commercial organization whosepersonnel can be better motivated and rewarded in an environment that recognizestheir special training and skills.Of course, what is defined as ‘core’ activities will vary significantly fromorganization to organization? A good example here would be the law firm thatoutsources its conveyancing work on the basis that its core skill is commerciallitigation and it is from the latter that it earns the majority of its income.Consider next the degree to which any selected function is routine and well defined.If it can be easily defined, then it can be more measured, and managed at arm’slength - and remember, you are not devolving responsibility, just functionality. So,is non-core function can be defined and measured, it may be worth considering foroutsourcing.Anticipating PitfallsBefore embarking on any outsourcing initiative, there are a number of potentialproblems which should be anticipated and evaluated. Many of these are concernedwith the people affected by change in operation; others are to do with changes inthe business itself and the manner in which the business is undertaken.People IssuesIt is unfortunate that outsourcing is rarely welcomed by a workforce, especially thatsection responsible for the function being outsourced. Often it is perceived asdownsizing by other means, and strenuous efforts are made to oppose it – divertingbusiness time and energy from development to fire-fighting. Most of the problemsthat can arise can be pre-empted through intensive discussions and planning. Talkcontinuously with staff; be certain they understand what is happening, why, howand when – and understand that simply telling them is not the same as beingcertain they understand.Do note that when you transfer staff to another company, you send them a verystrong message. You are telling them their work is a commodity, which they arewelcome to continue performing under new management. You are informing themyour business needs to concentrate on what is really key, and that does not includethem or their work. Also, you are telling them you expect to obtain more for lessunder a new regime.From that point, the messages they receive will devolve from the vendor’smanagement team – and it is unlikely these people will be pushing for healthy ITsection (say). In place of the professional environment based on common goals theteam once shared, or the partnership with an experienced and knowledgeableorganization you were seeking, you will find you have a commodity-based service

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