Outsourcing strategy and decision making in property management and sales services

Abstract

Modern organisations adopt outsourcing for many of their non-core activities. It is a strategic decision often based on a model that shows if a supplier can deliver products or services for less cost and of a better standard or quality then outsourcing should be considered. The case study organisation reviewed the delivery of property management and sales of its property portfolio. The decision to outsource was driven by structure, costs, service and risks. It reviewed existing arrangements with agents and restructured the portfolio over a large geographical area. It moved from informal arrangements to contract arrangements with agents to manage about half of its properties. The centralised business model resulted in the creation of a hybrid business model with the other half of the portfolio being outsourced to property agents. The government tender process, which was new to many agents, was time-consuming and difficult for some. An ongoing line of dialogue was provided to assist agents with their offers. The organisation was able to attract offers from new agents as well as existing agents who had serviced the organisation in the past. A comprehensive review system was developed, which will be the real test of success of the outsourcing exercise over the long term.