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Evaluating the Outsourcing Dynamics in the Construction Industry

Industry Developments
Outsourcing
19/03/14

Evaluating the Outsourcing Dynamics in the Construction Industry

A small while back, I noticed that Amazon has outsourced its payment infrastructure to other retail websites. This enabled shoppers of those websites to make a purchase using their Amazon accounts. From big companies to small ones, everyone is into outsourcing.

 

Businesses opt to outsource for different reasons. The convenience of getting the work done outside the organisational structure at cheaper rates is the most common motive. This allows companies to dedicate their own resources towards improving internal processes and providing better customer service.

 

Most Palpable Benefits & Shortcomings of Outsourcing

Delivering impressive quality should be at the core of all your outsourcing decisions. A poorly-executed and outsourced project is less likely to help you promote your services/products or decrease the turnaround time. When managed well, outsourcing projects can make project management easier and help drive profits. Outsourcing presents some other indisputable benefits, like:

 

  • Greater returns on investment
  • Ease of project management
  • More room for product innovation
  • More time to grow organisational competencies
  • Increased speed/turnaround time
  • Optimisation of organisational assets

 

However, outsourcing might lead to some challenges too, like:

 

  • Excessive fractionalisation of key projects, eroding personal responsibility
  • Poor quality that is often synonymous with bulk outsourced work
  • Slower resolution of issues due to one outsourcer handling different clients
  • Lower-than-calculated return on profits
  • Poor customer satisfaction levels due to language based limitations

 

Does Outsourcing Deliver More in the Long Run?

I think outsourcing is a safe bet in the long run. A longer duration allows outsourcing firms to better understand the need of their clients. This invariably means better ROI and increased levels of customer satisfaction.

 

Long term outsourcing relationships allow individual businesses and dedicated outsourcing teams to work together. This includes better exchange of information and skills. Unique issues become easier to handle as outsourcing teams gain from the experience working in a dedicated industry vertical.

 

When results are delivered more consistently along the expected lines, they can be better measured, tracked, and analysed. This allows businesses to create benchmarks for evaluating outsourced work. The outsourcing service provider gains invaluable insight into how the client behaves across different project variables. The service provider can dedicate more time towards trimming typical expenses without compromising the quality of work. The business and outsourcer become more efficient at working collectively and delegating project responsibilities.

 

With most established brands active in the global marketplace, many services/products have gained a uniform delivery pattern. This helps outsourcing teams with different socio-cultural backgrounds to understand and address customer queries.

 

Outsourcing & the Construction Industry: Yes, This Blend Delivers!

The construction sector might have been slow to outsource work, but outsourcing’s increasing presence can no longer be ignored. Many international construction projects have been executed with the help of outsourcing firms that specialise in this niche. Helping construction majors conserve time and money for procuring, planning, and executing projects; outsourcing has proven its worth. Third party service providers have emerged as the preferred outsourcing choice for many construction firms. With payroll, accounting, and administrative data-processing being handled by skilled outsourcing teams; the core team can concentrate on delivering beyond the standard expectations. As more resources can be saved from performing predictable processes, qualified and experienced manpower can be engaged to ensure that the outsourced work is delivered in line with the defined goals.

 

Looking at the Immediate Future

The construction niche has been often hammered by increasing costs. This trend seems to repeat itself often, leaving the industry helpless as costs spiral beyond control. Outsourcing seems like a wise decision to ensure that some operational costs are always kept in check. We expect that outsourcing will penetrate further, taking upon typical organisational responsibilities. However, ensuring ownership of outsourced work and sustaining quality are the key challenges as more construction businesses take the outsourcing route.

 

Smarter Outsourcing

Outsourcing is primarily regarded as a cost saving strategy. However, its true ROI can be realised only when it is combined with focused management. Outsourcing on an ad-hoc basis, for short term, might not be the best way to evaluate its benefits. As a business, you need to invest some time in developing clearly defined outsourcing goals. You should be ready to work with outsourcing teams to drive customer service levels and overall profitability and have the right KPIs in place to evaluate success.

 

I expect the outsourcing trend in the commercial sector to continue, if carefully managed, outsourcing helps clients focus on their core business activities.