Outsourcing has become one of those words that raise the hair on the back of a union workers neck. Politicians have given the word outsourcing a bad rap as they blame each other for taking away American jobs. While outsourcing is about saving money it isn’t always about sending jobs overseas. Outsourcing portions of the process to other local companies is one way for a small firm to compete with much larger firms.
My firm’s commercial real estate development division is a good example of how outsourcing can be used to save on overhead and still compete with much larger developers. As a boutique Denver real estate firm we don’t have a long pipeline of projects in different phases of development and can’t justify employing a full time architect, electrical engineer or mechanical engineer. Instead we outsource those portions of the development process and provide professional oversight of their work product. This technique provides the additional benefit of being able to select design people that are best suited to a particular project rather than having to rely on a staff designer’s ability to adapt to varying scopes of work.
However, outsourcing isn’t just for times when a firm needs individuals in a skilled trade, it can also be used for semi-skilled and non-skilled services. The most basic example is when a firm hires an outside company to provide cleaning or maintenance services rather than employing its own staff. Utilizing outside vendors for semi-skilled and non-skilled services can make sense even if it may be slightly more expensive than a firm hiring their own people as it can reduce the work load of operational and accounting staff who can than utilize their time elsewhere.
The biggest argument in support of outsourcing services is that it allows a firm to concentrate on their core product or service. I’m an avid believer that a firm should concentrate on what they do best and outsource the rest. This statement holds true for the companies that you are considering to hire to provide services. The value they can provide to you is through the economies of scale they gain in concentrating their efforts in a minimal number of related disciplines. For example, my firm’s services are marketed only towards commercial property owners and managers. While the skill set our staff has would make it possible to services single family residential property owners or managers, our infrastructure is not set up to accommodate their needs. Likewise, a firm marketing towards single family residential could not service commercial properties as effectively as they do single family properties.
With the challenges that a slow economy places upon firms today, it is a great opportunity to consider outsourcing as part of your firm’s employment strategy. As the economy continues to expand outsourcing can still be an effective way to utilize your firm’s resources to do what you do best.
CEO, Employing Broker
Katchen Company, founded in 1962, is an integrated real estate company with its corporate headquarters in Lakewood, Colorado. The company offers real estate development, redevelopment, property management, brokerage, consulting services, construction oversight and maintenance services to individual and institutional real estate investors throughout the greater Denver metropolitan area with satellite offices in Chicago, Las Vegas and Miami market areas.
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