Enterprise Services Outlook Logo

Navigating the Corporate Real Estate Outsourcing Game

By Paul Garity, Partner, Capstan Advisors

content-image

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.

New Editions

New Editions

Featured Vendors

Leaders Speak

William Miller, SVP & CIO, Broadcom, Inc.

Confluence of Trends is Changing the Landscape of Industry

By William Miller, SVP & CIO, Broadcom, Inc.

Dr. Cheryl Flink, Chief Strategy Officer, Market Force

Boosting Store- Level Performance through Big Data

By Dr. Cheryl Flink, Chief Strategy Officer, Market Force

Paul Kent, VP-Big Data, SAS

Using Hadoop as an Analytics Catalyst

By Paul Kent, VP-Big Data, SAS

Mark Lilien, SVP & CIO, Things Remembered

18 Tips for Retailers Negotiating Software Contracts

By Mark Lilien, SVP & CIO, Things Remembered

Matt Wolken, VP & GM, Information Management Products, Dell Software

Building an Ethical Big Data Practice

By Matt Wolken, VP & GM, Information Management Products, Dell Software