Property Managers are starting to get into outsourcing services such as maintenance and repair, eviction notices, and other tenant-focused support.
In this article, we are focusing on outsourced maintenance services and how it benefits property managers. Furthermore, we’ll give a rundown of the Pros and Cons of Maintenance Outsourcing – and more importantly, how to make it work!
For the most part, outsourcing is seen as an effective way to save on operational costs. However, the best property managers know that saving on costs shouldn’t be the primary factor to consider.
What you’re looking for when you outsource services – especially maintenance – is a balance between costs and how it can optimize or streamline your operations.
When done successfully, maintenance outsourcing reduces costs by ensuring issues aren’t prevalent. And, when problems do arise for a tenant’s property, then the maintenance and repair process can be somewhat automated. As a result, property managers don’t have to do hands-on work unless a major concern is raised. In turn, more work can be focused on profit-driving tasks.
So, before we continue, let’s first discuss what exactly is Maintenance Outsourcing.
What Is Maintenance Outsourcing
In essence, subcontracting a process, such as product design or manufacturing, to a third-party entity is known as outsourcing. Maintenance outsourcing is the process of contracting maintenance work to a third-party organization.
Outsourcing maintenance services is one of the best ways to lower operating costs. Additionally, outsourcing may be the greatest option for managers facing staffing issues, training budget cuts, aging maintenance workforces, and hard-to-find skilled labor pools.
The benefits of maintenance outsourcing are obvious: budget flexibility, optimization of people and tools, cost savings in employing specialist staff, and training, to name a few. Moreover, the outsourcing structure can be simply altered to meet your maintenance requirements.
It’s occasionally a major factor for Property Managers opting for outsourcing as a maintenance plan. Many businesses have had significant success using outsourcing to boost their competitiveness.
Pros And Cons of Outsourcing Maintenance Services
Contractual and Outsourced Maintenance Services are becoming an increasingly popular trend with Property Managers. Generally speaking, maintenance management services can be done in three ways: In-House, Hybrid In-House and Outsourcing, and Full Outsourcing.
In this part of the article, we’re going to list important advantages and disadvantages that go along with outsourcing maintenance functions for Property Management businesses. Particularly, we’ll be referencing factors such as operational cost, work quality, expertise, equipment, risk reduction management, and core business functions.
Advantages Of Maintenance Outsourcing
- Operational Cost Savings – Most industries are driven by cost management, which is a major reason for outsourcing. Wages and benefits for in-house employees (such as pensions, medical coverage, and vacation) may have become too expensive for the corporation to subsidize. A contractor’s capacity to stretch up and down faster than in-house workers affects cost; also, the contractor absorbs hiring costs. These and other financial liabilities associated with labor are assumed by an outsourced contractor.
- Flexibility – An outsourced contractor can give flexibility in supplying the appropriate personnel level and desired skill set rapidly, with less cost and time investment, as well as providing expertise that may not be available, or is insufficient, among in-house staff. This knowledge will also benefit the work quality. It allows you to use specialized services as needed rather than investing in building in-house skills that aren’t required on a permanent or ongoing basis.
- Tools and Technology – An outsourced contractor can give people that are well-versed in the latest technologies without the organization having to provide training to in-house employees or incurring the cost of purchasing the technology/equipment. The same is true for specialized tools and equipment, in that the contractor must provide the tools and equipment necessary to complete the operation.
- Ability To Focus on Core Business Functions – Outsourcing maintenance work gives property managers more time to focus on dollar-productive tasks. Instead of handling tenant concerns and other issues, things get automated as you outsource maintenance services.
Disadvantages Of Maintenance Outsourcing
- Loss of control – Although outsourcing the maintenance function may save money, there are drawbacks to working with contractors, such as the host company’s inability to control and educate the workers directly. Another example is that meeting all of a client’s needs, such as personnel flexibility or craft availability, within the host company’s standards may be challenging for a service provider. Additionally, the client and contractor may have opposing techniques, management styles, and ideologies, which can lead to disagreement.
- Staff Turnover – In-house personnel is more likely to have more years of experience at a facility than contractor employees, and they are more familiar with the business and its expectations. Outsourced employees, on the whole, do not have as much loyalty to the organization as in-house employees. As a result, their intellectual knowledge of a site’s maintenance function, equipment, and business strategy is more easily lost if/when they depart, because their loyalty is shakier.
- Overlapping roles – Within a client and contractor organization, roles may be duplicated, increasing overall costs. Overlapping duties and responsibilities within the maintenance organization can result in inefficiencies, contribute to the appearance of too many supervisors and not enough workers, conflicting priorities, and confusion.
In-House Vs Outsourced Maintenance Services
Determining whether to undertake maintenance in-house or hire a contractor is a constant cause of consternation for many businesses. The debate over insourcing vs. outsourcing maintenance is a strategic one that should be considered based on a variety of factors before making a decision.
The finance of in-house and outsourced maintenance can be complicated in some organizations because funds may be controlled by numerous departments and budgets. In general, three approaches to maintenance management will be considered: in-house personnel, a hybrid of in-house and outsourcing, and pure outsourcing.
How To Make Outsourcing Maintenance Work
To make this outsourcing venture work, you need to identify the two major types of maintenance work – Commodity Maintenance and Skilled Maintenance.
Contrary to popular belief, outsourcing is not a “plug-and-play” option where you could just pay for service and expect things to run smoothly. There’s always going to be effort required for managers to ensure that they can reap the rewards of their outsourcing decision.
With that said, let’s get into the two types of maintenance work you need to know before outsourcing your services:
What Are Commodity Maintenance Activities?
Homeowners will clearly have their own expectations of how they want to upkeep their property. Usually, you see this in the form of basing gardening, cutting the law, and in general – making the property look acceptable or what the kids call “Aesthetic”.
Now, why is this type of maintenance important? The answer is simple – it’s easy to do! And, when you have something that can be easily done then it’s perfect for outsourcing.
Tasks like blowing leaves out of the lawn, trimming bushes, or removing snow off the driveway don’t take much skill to do. So, with that in mind, it would be better to outsource these tasks rather than to use in-house maintenance technicians for this.
And, looking at it from an isolated perspective, it might seem small enough that you wouldn’t need to outsource. However, multiply those simple jobs with a couple of dozen clients and you got yourself a problem.
That said, when looking into outsourcing this type of work, here are a few things you need to look out for:
- scope of work
- quantifying quality measure
What Are Skills-based Maintenance Activities?
I’m referring to skilled labor and taking inventory of existing multi-craft technical maintenance abilities in mechanical systems, electrical distribution systems, hydraulics and pneumatics, welding, machining or fabrication, and carpentry when I say skilled maintenance.
Managers considering outsourcing maintenance should strive to strike a balance between cost and service that optimizes operations. Managers can cut maintenance costs by hiring a contractor with more expertise and abilities than in-house resources can give if this approach is successful.
If you’re ready to start your outsourcing journey, Global Strategic can help with your business needs and give you the Strategic Advantage needed to edge out the competition. Contact us today and learn more about how offshore outsourcing to the Philippines can help your business and future business growth.