Nearly all buyers currently outsourcing real estate and facilities management (REFM) activities expect to maintain or increase outsourcing usage in the short to medium term, according to the inaugural KPMG 2011 global real estate and facilities management (REFM) outsourcing pulse survey.

The KPMG survey polled both users of REFM outsourcing and REFM outsourcing providers, with the majority operating in the U.S. and approximately 30 percent operating globally or in theEuropeandAsia Pacificregions. In the near term, buyers were more bullish than service providers about the projected increase in outsourcing.

Among the buyers surveyed, 50 percent said they plan to increase outsourcing of REFM services over the next one to two quarters. In comparison, just 21 percent of service providers expect demand levels to increase during that period, with an equal number expecting demand levels to decrease. Longer term, over the next 12 months, 44 percent of buyers plan to increase their REFM outsourcing, while a much greater 72 percent of service providers expect outsourcing demand to increase in that time frame.

"The differing outlook between buyers and service providers is likely due to estimations of when new business will go into service provider pipelines from the buyers, compared to the service providers' projections of when that business will actually consummate into new deals," saidStan Lepeak, research director in KPMG's Shared Services and Outsourcing Advisory group. "Service providers may also have higher longer-term demand projections due to expectations for an improved economy in 2012."

"Although some organizations are considering outsourcing REFM services for the first time, others that are already outsourcing are looking for opportunities to outsource more sites and services, as well as consolidate or restructure their current contracts to realize additional savings," saidRon Walker, principal and REFM sector leader in KPMG's Shared Services and Outsourcing Advisory group.

Walker added, "As for REFM service providers, while their business continues to grow, the marketplace remains very competitive. There is more pressure on service providers to deliver additional cost savings and share more risk, and those providers with the right talent, strong innovation, and continuous improvement programs should be most successful in meeting this need."

Both buyers and service providers identified reduction of operating costs as the top driver of REFM outsourcing, with 70 percent and 75 percent of respondents, respectively. The second most common driver cited by buyers (41 percent) was improvement of the performance of REFM processes, which was identified by 32 percent of service providers. The benefit ranked second by service providers (45 percent) was improvement of global delivery and operating models, cited by 33percentof buyers.

Among organizations that are currently outsourcing REFM activities, the most commonly outsourced REFM process area was workplace services, which includes janitorial, cafeteria, and amenities services. Among buyers, 60 percent have already fully outsourced workplace services, 27 percent have partially outsourced them, and just seven percent have no plans to outsource this type of work. The second most frequently REFM outsourced area was facilities (HVAC, electrical, mechanical, building repair), which were fully or partially outsourced by 85 percent of survey respondents.

According to the service providers polled, 75 percent cited increased demand for facilities management services (e.g., management of facilities services, workplace services, property management), and identified portfolio strategy and planning services as the next greatest area of increased demand.

"While most organizations still tend to outsource tactical REFM services and perform many strategic activities in-house, a growing number of service providers are able to integrate outsourcing into existing business operations to provide more high-value and strategic services," said KPMG's Walker.

Lepeak added, "Where an end-user organization needs to be in their REFM outsourcing continuum should be a constantly evolving process, where ultimately an organization should move to what KPMG calls an 'extended global enterprise,' incorporating a broad range of service delivery models and techniques."