Positive view of outsourcing
Attitudes towards outsourcing support functions are generally positive in the Nordic countries, according to a survey of the private and public sectors carried out for Coor by business intelligence company Demoskop. The main driver behind decisions to outsource support functions is financial benefit, although time pressure and quality are also given as important reasons.
All operations within a company or organisation can be divided into core activities and support activities. Core activities refer to a client’s specialist areas within that specific industry. Support activities are other vital operations over and above the core activities which the client carries out at or in connection with its facilities, such as property maintenance, reception services and cleaning. There are four main service areas in support activities: back-office services, IT services, production-related services and facilities management services.
The tendency to increasingly outsource support functions is continuing. Demoskop’s survey shows that both private companies and public administration generally have a positive view of outsourcing support services. Finland stands out as the country where both the private and public sectors are most positive, while Norway is the least positive, particularly in the public sector.
Several reasons to outsource
The most important criterion for outsourcing services is cost cutting. Other key reasons are higher quality and service level, and the ability to focus on core activities rather than peripheral services.
In all the Nordic countries, the greatest perceived problem in conducting service activities in-house is a shortage of time for developing new ideas and solutions. Or simply that there is not the right expertise in-house to manage and develop internal services effectively.
Many would gain from an action plan
All the countries have a requirement to reduce costs for internal service, and this is most pronounced in Norway. But despite this, fewer organisations in both the private and public sectors have drawn up an action plan for reducing internal service costs.
In all countries, a larger proportion of commercial enterprises have an action plan than public organisations. Among Swedish companies that are required to reduce costs, 63% have an action plan, compared to 87% last year. Despite high demands in Denmark on cost efficiency and quality, Denmark is the country where the lowest proportion of private and public organisations have an action plan.
Greater interest in total solutions
Another trend among companies on the Nordic market is an interest in outsourcing support functions to suppliers that can offer integrated total solutions (IFM or service management companies).
“We can discern a higher interest in integrated total solutions – throughout the Nordic region. More and more companies are realising the benefits of letting an expert manage and develop the entire service requirement,” says Jan-Olof Backman, SVP Business Development at Coor Service Management.
The difference between suppliers of individual or combined services and an IFM supplier is very much about responsibility. In addition to the actual services, an IFM supplier also takes responsibility in close co-operation with the client to manage, streamline and develop the client’s services.
“A really good IFM company doesn’t only take responsibility for co-ordinating the service delivery, but also understands the client’s needs and manages the delivery in a way that creates added value for the client’s core operation. It’s essentially about being able to add genuine customer benefit in both the short and long term,” Backman explains.
About the survey
The target group was large companies (with 500 employees and at least 250 people in one workplace), county councils and local authorities. The primary interview subjects were MDs, Deputy MDs, County Council Directors and Local Authority Directors. Secondary subjects were buyers, property managers, administration managers and heads of finance, and a final group were HR managers. The survey entailed a total of 466 telephone interviews in Sweden, Norway, Finland and Denmark between 21 May and 5 June 2007. Research company Demoskop conducted the survey on behalf of Coor.