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Sun 1 Jul 2007 12:00 AM

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Service success

Outsourcing the operations of a building allows facilities managers to concentrate on a more strategic role, says Becca Wilson.

In a developing economy such as Dubai, it's fairly easy to see why and how people are not used to international models and ways of working. The outsourcing concept is no exception.

The outsourcing process is just being born here.

On an international level, outsourcing originated around 1980 with singular services such as cleaning, being contracted out. Nearly 30 years on and facilities managers are now able to outsource almost anything they like. From cleaning to security, mailroom to data management.

But what stage is the outsourced FM market in the Middle East at? "I believe the outsourcing process is just being born in this part of the world. It's not very well understood," states Hamoud Bennegadi, general manager, Berkeley Services.

A recent report into the sector conducted by Frost & Sullivan, says that 40% of respondents operate a mixed solution (meaning they keep some services in-house and outsource the rest), 33% use contractors and 27% keep their services in-house.

Hotels contribute to in-house and mixed figures being high, while over 50% of commercial properties opt for contractors.

The outsourced market is split into three sections: singular, bundled and total facilities management services.

According to the report, most companies or building owners are choosing to outsource singular components due to the misconception that bundled service providers or total facilities management (TFM), are too expensive.

Companies also think TFM companies only specialise in a few sectors.

Bennegadi agrees and says the bundled service market has not been given the chance to grow in parallel with the construction boom. "The outsourcing business is far behind the developments that are taking place and this could well have a negative impact in the future. By not involving facilities management at the beginning, the end result will be more of a correction process rather than a visionary well-serviced operational building."

The report also states that out respondents who have outsourced an FM service, 79% of them had single contracts. While single service contracts might work well for the hotel industry, due to its desire to keep many services in house for quality control reasons, sectors like retail and commercial would benefit from either a bundled or TFM service provider.

Why outsource?

There are many arguments supporting the outsourcing process. In the Middle East, reputation is everything and with this, businesses should start focusing on what they do best and outsource other functions to an FM service provider.

Yasar Khalili, managing director, Pest Management Consultants, explains that each single service needs a specialist - someone who understands it from A to Z.

"If the building owner really wants to manage their own sub-contractors, for example pest control, they will need a team of terminologists, specialists, inspectors and they will need to establish a department dedicated to pest control.

"Imagine having to do this for landscaping, pest management, cleaning, security etc. You'd have lots of different departments and it's very expensive. Outsourcing these services is much cheaper - why? The contracted company supplies the people, they use experts over a number of projects - this divides the cost making it cheaper."

He goes on to explain that each individual area needs thought. Although most people may think cleaning is a simple job, if a company wants its flooring to last its life cycle the right type of floor cleaner and chemicals need to be used.

The Middle East is a challenging region with high expectations. "Experience is not something you get fresh out of college. For example, those artificial lakes are not supposed to be here so you end up with elements that are not anywhere else. Companies need people who have the experience to solve these problems," Khalili adds.

Saad El-Zein, managing director, Able Facilities Management, agrees with these comments and adds, "outsourcing to an FM company is more beneficial as the company can focus on its image. It has a choice and can choose the best from the market place. This is why people should outsource."

It is up to the person responsible for managing the contract(s) to ensure that the FM service provider fully understands the building and nature of the business. This will ensure the services offered are delivered in conjunction with the service level agreements and key performance indicators.
Financial benefits

The financial benefits from outsourcing can be high. There is a misconception outsourcing can cost more money than keeping services in-house. This can be avoided if you are clear on what you want outsourcing, how you want it servicing and what you expect from the facilities management service provider.

The Middle East needs to implement benchmarking standards.

In the Middle East, cheap labour is one way to keep costs. But are companies being mis-informed?

"Man power is becoming very expensive, from the accommodation to transportation and visas," says Saad El-Zein.

"If a building owner decides to outsource services, the only thing they have to worry about is the management of the contract."

The report also agrees with El-Zein's comments and concludes that due to the local recruitment pool drying up, companies are being forced to import skills which requires a lot of time, money and investment.

Outsourcing takes away all this hassle and leaves the responsibility of finding good staff with the facilities management service provider.

As the provider will have other similar contracts it allows them to buy products they need to help them adhere to the service level agreements (SLAs) and key performance indicators (KPIs), in bulk. This brings the cost down even further.

Benchmarking

Many of the reputable FM service providers in the Middle East originate from an international background. They are used to international standards and developers are taking advantage of the situation.

"A lot of the big developers are importing their resources from abroad, where FM is already established and the benchmarking standards are high," explains Saad El-Zein.

International hotels in the region use companies like Richey - a company that helps the hospitality industry improve service quality and build brand integrity - to help keep benchmarking up to a certain level.

But the UAE and Middle East as a whole is lacking in legislation to make sure services and service providers are of a certain acceptable standard for the international business community.

"What's really lacking is an association or some sort of a union, to implement some acceptable standards.

"There are some unscrupulous companies taking part in the process and this really needs to be corrected by the strong suppliers getting together and setting some standards in the Middle Eastern market," states Hamoud Bennegadi.

He also explains that these standards should be put together by companies that are currently operating in the Middle East, companies who understand this unique market.

"Most importantly, the standard needs to be put together by the operating companies in this part of the world who have experienced the development in the Middle East. This is what is really needed to eliminate the companies who are not acceptable," Bennegadi adds.

The future

The Frost & Sullivan report claims that 59% of companies who kept all their services in-house would outsource in the future. Out of this, the commercial and retail sectors were most interested, with the hotel sector least likely to outsource.

But with the amount of office space increasing and new retail outlets being built, the future of the outsourcing sector certainly appears bright.

End-users cited high quality service levels as top priority, enforcing the need for benchmarking standards to be implemented and met.

Outsourcing services can take a lot of headache out of running a building efficiently. A tightly run contract will result in an increase in the internal customer service delivery and reduced costs.

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