During my working life, I have worked with both Total Facilities Management (TFM) outsourcing providers as well as in-house TFM teams. This experience has given me some concerns which you might find to be beneficial to hear.
When I worked at Xercise4less I had 50 gyms look after based from Scotland to London and Swansea. I had to rely on the outsourced service provider and was always conscious of being overcharged, but had limited time to spend on reviewing costs and service level agreements.
On the other hand, when I was responsible for FM in Hallmark, I had security guards and a small limited technical team to manage the majority of issues. Nevertheless, we still had some tasks such as fire alarm testing, fire risk assessments, PAT testing, emergency light testing, etc. which we outsourced. I felt the need for outsourced services because of legislation issues, but the other reason was my in-house FM team which was just too busy to manage everything itself.
It is never a clear-cut decision to go with either model and it can raise many question and thoughts over if it is right for your organization or not. Understanding the main advantages and disadvantages of outsourcing vs. having in-house TFM team could help your company to see the wider picture and make the best decision.
Advantages of Total Facilities Management Outsourcing
It allows the business to focus on core business needs since it has more time resources for top-level questions.
TFM outsourcing is cost-effective since outsource service provider have the advantage through their specialization and resources in Facilities Management.
Facilities Management can benefit by having the perfect mixture of staff because the outsourced contract can provide the correct level and skill mixture of human resources at less cost.
Your business will save money on business overheads since the outsourcing service supplier will be able to provide the necessary management specialists at lower costs.
Outsourcing TFM can provide an opportunity for both the business and the outsourcing service provider to grow together since they share costs and even customers.
Cost-effective way to have multi-skilled team with high expertise in their specialities
Disadvantages of Total Facilities Management Outsourcing
There will be less control over management and since business and outsourcing provider objectives are normally and naturally different, this can lead to conflict between these two parts.
Although TFM outsourcing usually is cost-effective sometimes there are hidden costs incurred in the procurement and selection of outsourcing suppliers and in the mobilization of the contracts.
TFM outsourcing might include sharing proprietary business data and knowledge, which put the business at risk to security and confidentiality. In this case, it is important that the contract would include penalties for any breaches.
When outsourcing TFM, all our staff is transferred to an outsourcing company. From a legal perspective, they become employees of the outsourcing company even though they are still working to meet your business goals. This can lead to bad publicity and ill-will.
There is a risk of potential conflicts between business and outsourcing supplier because of different approaches.
Your business might be at risk in terms of security and confidentiality.
Advantages of In-house Facilities Management
In-house employees normally demonstrate higher levels of ownership what can turn out to become a competitive advantage for a company.
Having your own in-house Total Facilities Management team allows creating opportunities for further career growth within the company. This motivates staff and is one of the main reasons why staff turnover is generally lower within the in-house team.
The in-house team normally respond to issues more rapidly if compared with an outsourcing service provider. This results in better company's performance and greater client satisfaction.
When you hire people for your own Total Facilities Management team, you are able to select the best candidates matching your own preferences such as personality, attitude or future goals, which might not necessarily be met by outsourcing supplier’s employees.
Even though outsourcing might seem like a cost-effective solution in short-term, long-term financial analysis usually supports in-house option.
Staff turnover is generally lower within the in-house team.
Disadvantages of In-house Total Facilities Management
Increased Management costs are one of the main reasons for companies starting TFM outsourcing.
TFM requires having experienced professionals with different skill sets which sometimes might be too expensive for a company.
Lack of communication with in-house stakeholders can lead to misunderstanding of direction. In-house TFM team needs clear descriptions of everyone’s roles and responsibilities, as well as set KPI’s, otherwise, there can be a lack of measured performance and decreased client satisfaction.
Complacency within long-term on house members can result in low productivity.
Sometimes the in-house team can find it to be difficult to adapt to changing business environment and learn new skills and methods.
Increased costs and lack of measured performance are some of the challenges for in-house TFM team.
Personal TFM Outsourcing Experiences
In my previous experience with TFM outsourcing I have found that even though both KPI and SLA’s were set up correctly and with great thought, different FM service providers have still managed to take their own advantages.
For instance, there was an electrical fault reported by a site to the outsourced Helpdesk. The service provider had an engineer who met their own specific requirements (e.g. IE within 2hrs). However, after further investigation, I found out that the engineer who attended the site was actually a plumber or joiner. I was really disappointed and frustrated about his, even though technically all the requirements were met. You can imagine that when you are managing 50 sites nationwide this is only the tip of the iceberg.
Another example is when a manager or site member would log a light out - let’s say in a kitchen. When the engineer turned up to complete the job, the site would have another light out in another area that had failed between a job being logged and engineer attending. Instead of fixing both the engineer would insist that they only had time to fix the originally logged job.
I have also noticed that the outsourcing company was not interested in driving efficiency or cost savings, which just shows the commonly spoken-of attitude of outsourcing companies.
Lack of transparency on materials and labour is another subject of concern when it comes to TFM outsourcing. It is commonly known that most outsourcing providers add incredibly high “uplift” costs to the materials. For me, it was a normal practice to find 100%,200% or even 250% to be added to material costs. For example, a plug being charged at £10 a time seems to be crazy. But as I mentioned before, when you are managing 40/50 sites with 50-60 jobs being logged each month, you just accept the prices of all urgent jobs and such details get lost in your everyday routine.
It is a very similar situation when it comes to outsourcing to subcontractors as well. It is common to add 50% uplift in labor and invoicing from the sub-contractor to the client. Just today I was with a client who has experienced tendering a service only to find out that the service had been further outsourced 2 or 3 times. This results in not only poorly managed service but also leaves the clients wondering about how much they overpaid if 3-4 companies could still make profits from the service.
Finally, I felt that there was a lack of quality and 1st-time fixes from the outsourcing supplier. There was so much time waster for re-logging and arranging return visits to fix the original issues that at times situation felt unmanageable. Moreover, I was surprised to find that sometimes the quality of engineers from outsourced service providers can be very poor. For example, once I was visiting a site I was managing in Stoke. There was an engineer on site so we had a quick chat and it appeared that the outsourcing company had found this engineer from the yellow pages! Again, a practice that is more common than it should be.
Sadly, this and previously mentioned examples are not just coincidence - these are common practices which can leave you without confidence in industry standards, quality of job and cost efficiency. Probably this is one of the biggest challenges you would face if outsourcing TFM. However, everyone has different experiences and it would be interesting to hear your stories and notes about both TFM outsourcing and having in-house team.