As with any option, there are disadvantages to outsourcing facilities management services which we will consider in this post.
You should remember that if the disadvantages outweigh the advantages then the decision to outsource should be considered very carefully. You may notice that the advantages of outsourcing are more or less directly opposite to the advantages of keeping facilities management in-house and vice versa.
Loss of Managerial Control
Whether you sign a contract to have another company perform the function of an entire department or single task, you are turning the management and control of that function over to another company.
True, you will have a contract, but the managerial control will belong to another company. Your outsourcing company will not be driven by the same standards and mission that drives your company. They will be driven to make a profit from the services that they are providing to you and other businesses like yours.
You will sign a contract with the outsourcing company that will cover the details of the service that they will be providing. Anything not covered in the contract will be the basis for you to pay additional charges.
Threat to security and confidentiality
The life-blood of any business is the information that keeps it running. Payroll, medical records or any other confidential information that will be transmitted to the outsourcing company, presents a risk that the confidentiality may be compromised.
If the outsourced function involves sharing proprietary company data or knowledge (e.g. product drawings, formulas, etc.), this must be taken into account. It is vital that the contract details the need for confidentiality and the penalties for any breaches.
The outsourcing company will be motivated by profit. Since the contract will fix the price, the only way for them to increase profit will be to decrease expenses. As long as they meet the conditions of the contract, you will pay. In addition, you will lose the ability to rapidly respond to changes in the business environment. The contract will be very specific and you will pay extra for changes.
Tied to the financial well-being of another organisation
Since part of the operations of your organisation will be turned over to another company, you will now be tied to the financial well-being of that company. It wouldn’t be the first time that an outsourcing company could go bankrupt and leave you holding-the-bag.
Bad publicity and ill-will
If you outsource your services the staff that you did originally employ to provide the services will be transferred to the new company under Employment legislation – TUPE, the Transfer of Undertakings (Protection of Employment) Regulations.
The same staff may be working for you but employed by the other organisation.
This can create a feeling of bad will and the apparent loss of jobs can create bad publicity for your organisation.
One of the downsides of outsourcing your services is the risk that the people working on your site are more concerned with the interests of their employer (the outsourcing company) than the interests of their client (you). This is a particular risk with low margin contracts where account managers may look to maximise profitability rather than look after your interests.
What happens when the staff working for your contractor go off sick, on holiday or leave the business altogether? Does the service provider have the necessary resources to provide cover during these periods of time? If not, there’s always a risk that these kind of events can lead to a drop in service levels and potentially lead to major issues, particularly when it’s a critical service that has been outsourced.
These areas relate to outsourcing in general, however in the context of FM it is important to consider the specific advantages and disadvantages of the different outsourced delivery models in facilities management as well.
IWFM (BIFM) Qualifications
This article relates to the following IWFM (BIFM) Qualification Units:
- IWFM (BIFM) Level 3 in Facilities Management
- FM3.01 Introduction to Facilities Management
- FM3.03 Customer and Stakeholder Relations in Facilities Management
- FM3.04 Specification and Procurement of Facilities Supplies and Services
- FM3.08 Understanding Facilities Management within the context of an Organisation
- IWFM (BIFM) Level 4 in Facilities Management
- FM4.01 Overview of Facilities Management
- FM4.04 Understanding Facilities Management Support Services Operations
- FM4.21 Understanding Procurement and Contract Management in FM
- IWFM (BIFM) Level 5 in Facilities Management
- FM5.01 Facilities Management Developments and Trends
- FM5.02 Organisational and Facilities Management Strategy
- FM5.21 Managing Procurement and Contracts in Facilities Management
- IWFM (BIFM) Level 6 in Facilities Management
- FM6.01 Strategic Facilities Management
- FM6.05 Strategic Management of FM Support Services Operations
- FM6.12 Procurement Strategy for Facilities Management