Over the last few years, the outsourcing market for real estate and facilities management services has evolved dramatically and is maturing at a global level. The increased sophistication of corporate sourcing strategies has created compelling new opportunities for corporations outsourcing for the first time, as well as those in their second or third generation of outsourcing.
New models and approaches that builc on the successes of their legacy outsourcing experiences are being implemented and companies are reaping the benefits. There are unique challenges and opportunities for corporations going to market for the third generation of their outsourcing strategies.
Key Drivers of Industry Growth
The outsourcing industry for real estate and facilities management has grown, enabled by several factors, including the experience-driven maturity of suppliers, market consolidation, broadening of supplier solutions and increasingly sophisticated sourcing tools and strategies.
The continued success of real estate/facilities management outsourcing has led to an increased adoption of the model in corporate real estate divisions of large corporations. Though there are always exceptions to any rule, the general trend is that there's a clear shift toward the increased use of outsourcing models.
Since 2000, the supplier market has matured significantly due to a wave of consolidations. The development of outsourced corporate real estate services became - for the suppliers who concentrated on it - a platform for stability and growth.
Several key drivers have impacted market consolidation in the supplier market. First, suppliers broadened their solutions through these acquisitions from beyond their legacy competencies.
Second, suppliers expanded their geographic reach to offer global real estate/facilities management solutions. Transactions began to be enacted on a wide scale from 2000-2005, and this large-scale transfer of capability from corporations to suppliers further accelerated market development.
Third, the market aligned structurally to better manage large global multinational accounts to yield unified management and scale efficiencies. Finally, in addition to acquisition-based consolidations, many suppliers have continued to expand organically within their client base.
A major corporate trend over the last decade has also been the growth in influence of the procurement organization, also known as strategic sourcing. Leveraged sourcing strategies at site, regional and global levels have further strengthened the position of larger, global suppliers while challenging others into secondary positions.
Global and Regional Suppliers
Today, there is a tiered supplier structure among global and regional suppliers comprising United States and European Union-based facilities management companies. European suppliers are challenging U.S. suppliers...