Stan Lepeak, Global Research Director, KPMG LLP Advisory
Patrice Gilles, Managing Director, KPMG LLP Shared Services & Outsourcing Advisory
Doug Burr, Director, KPMG LLP Shared Services & Outsourcing Advisory
KPMG recently released the results of the 2013 edition of its annual REFM (Real Estate and Facilities Management) Outsourcing Pulse survey. The findings from the REFM Outsourcing Pulse are taken from end-user organizations that are actively exploring or undertaking REFM outsourcing efforts, leading REFM global business and IT service providers, and third-party legal counsel and sourcing advisors supporting clients’ REFM outsourcing efforts. The REFM Pulse is part of KPMG’s Pulse family of research studies. Over 300 respondents participated globally in this year’s REFM Pulse survey with end-users represented across all major geographies and industry groups.
The global REFM outsourcing market remains very healthy and continues to grow (see Figure 1). Demand for REFM outsourcing is highest in the Asia Pacific region and among larger, global buyer organizations. Demand in the United States and EMA is weaker than in other regions although the existing level of outsourcing is higher in these markets. From an industry perspective, the greatest current level of demand for REFM outsourcing comes from the banking, financial services, and insurance (BFSI) industry group, followed by healthcare, pharmaceutical and biotech, and public sector.
Overall REFM outsourcing penetration levels are high in major markets. Most end-user organizations today have undertaken some level of REFM outsourcing (see Figure 2). Tactical REFM services are the activities most commonly outsourced. A growing number of service providers, however, are demonstrating improved capabilities that potentially enable them to move up the value chain in terms of services offered into areas such as REFM strategy and planning and research and development support services. While the deal size and volume of potential work in these areas is smaller than with more tactical activities, the strategic value to the client is much higher. To promote growth in these areas, providers much continue to become better at integrating services into existing business operations to provide more high-value and strategic value.
Reducing costs remains the top driver for REFM outsourcing, though buyers increasingly seek more strategic goals such as improving global delivery and operating models and improving process performance above and beyond reducing costs. One of the top trends in the market today is bundling of REFM services under the fewest number of service providers and operating under an integrated model to further reduce costs, drive consistency, and improve governance, controls, service level agreements, KPIs, and performance reporting.
Organizations need to continually assess what is the optimal mix of outsourcing, shared services, and internal operations to support their REFM services needs. This requires a careful evaluation of the performance of their current operations, business needs and challenges, capabilities available in the market, and the benefits, risks, and costs of making a change. There is no right answer or single best-fit model, but maintaining the status quo legacy model is not prudent.