Paul Garity, Partner, Capstan Advisors
The dawn of the IT era has changed the face of the ever changing dynamics of the Corporate Real estate game. As an industry that sees constant highs and lows in the market, corporate real estate is a lucrative yet unstable industry encompassing zesty competition. The Corporate real estate game changed considerably when IT companies started emerging and taking over the business world. As their growth went global the new face of real estate unfolded in the early 2000s and technology became an integral part of the industry. The reason for this expansion in outsourcing consumers was the fact that the service providers rendering outsourcing services had increased their output potential and had grown stronger in the market. Through the course of the first half of the 2000s several large organizations started adopting outsourcing and sought out the most prominent and established players in the game for their outsourcing needs. Following the participation of the IT sector, several other industries wanted in on this highly lucrative game and this became more evident in the 2007, 08, 09 period when the pharmaceutical companies started leveraging their resources from offshore centers.
Today the outsourcing scene is mainly comprised of companies looking at second and third generation outsourcing, which will aid clients in enhancing their own outsourcing model. The most compelling reason to outsource in today’s market is the need to procure full time processes and technology services from service providers as opposed to the part time services in these departments that they obtain from their own employees. Here the main argument becomes the procurement of advanced process technology and resources which will continue to be the highlight of the company for the next several years to come. The growth of the existent companies in the market due to both consolidation by acquisition and internal growth present a prospective future outlook to the outsourcing industry.
While outsourcing is the buzzword today for organizations that seek to leverage resources; automation is another trend that has been receiving quite a bit of hype in the past years. Automation holds a new edge over the conventional method in the fact that the amount of struggle that service providers go through to render transaction management, processing of work order, project management and so on can be eliminated, and thereby simplified to deliver highly effective results. In the past few years the main focus has been to compile all the information into a data warehouse and then convey it through a dashboard so that companies can obtain some real business intelligence through which they can make business decisions. And this sheds light on the fact that automation has already happened at a transaction level. The next step would be to move on from historic statistical analytics which deals with the monetary and resource expenditure done during a project to creating a proactive future outlook that will help determine the direction in which the market is swaying and turn your organizational focus accordingly. In my opinion, Proactive analytics is the next step in automation and in corporate real estate we’ve just scratched the surface.
Despite the hype surrounding automation in the market, it is a technology that still has a long way to go. Outsourcing on the other hand still has a great deal of appeal with the various companies Worldwide who can benefit largely in today’s IT infrastructure where technology is readily available and accessible. India and China present a great market in this aspect and have been the prime locations for companies to leverage talent and resources from. But that is also their drawback. Because they have been providing outsourcing services for over two decades, their resources have been over exposed and this leaves less room for new organizations to establish themselves. This fact has prompted several companies to look for other untapped market from which they can leverage talent and resources. In my opinion, Middle-East and Africa posses the potential to be the next outsourcing hotspots.
In the corporate real estate industry I’ve found that various companies are seeking to set up base in Africa, but lack of ground infrastructure and the absence of any major service providers in this region pose a great challenge. But the lucrative prospects that these untapped markets present far outweigh the several drawbacks in Africa which also include political and economic unrest. However, setting up offshore corporate real estate facilities outsourcing centres in these locations can pave way for providing BPO services, technical and project management outsourcing services through cost effective means. The Middle East too holds similar prospects for potential investors. Countries like Saudi Arabia where construction has been a prime focus for the past few years present promising chances for the Corporate Real estate investors.
With geographic expansion on the rise for outsourcing sectors, several new trends are coming up in terms of delivering an entire service package encompassing multiple elements of the business. In real estate, services such as project management, invoice processing, back office services and accounts management can be consolidated into a single shared services offering. These services when delivered through giants such as IBM and Accenture, can take both industries ahead in the global market.