Modelling of outsourcing decision-making process in the Finnish market

Paula Pietilä and Anna-Kaisa Kauppinen

ERES from European Real Estate Society (ERES)

Abstract: In Finland, the real estate business is going through a fundamental structural change, which has brought forth a need to develop new ways of managing real estate. One indication of the change is an increasing interest within organisations to outsource real estate related activities. However, the culture of buying and providing management services is rather immature in the country. Further applied research in the real estate discipline is needed in order for outsourced real estate management to be able to advance as a business. This paper presents insights into outsourcing market conditions in Finland and the level of real estate management related activities outsourced in Finnish corporations. Companies acting in this field of business in Finland are categorized and leading professionals are identified. Based on literature review, international experiences and in-depth case studies among companies participating in the project (e. g. Catella, Nokia Service Center, ABB), a theoretic modelling of outsourcing decision-making process is sketched. The outsourcing process is based on the core business strategy of the company, and finding an optimised boundary between core business and activities to be outsourced. The next steps are to define the desired characteristics of the outsourcing relationship, analysing the effects of outsourcing to the organisationís business and performance, planning the implementation and negotiating the outsourcing contract. The paper proposes some critical success factors in the process, and assesses outsourcing as carried out within companies in Finland. VTT Building and Transport, in co-operation with KTI (Institute for Real Estate Economics), is carrying out a three-year research project on ìoutsourcing as a potential means of strengthening real estate managementî. The starting point in terms of multidisciplinary research is to look into the subject from both the perspective of corporate real estate and that of a service provider, aiming at an optimised outsourcing contract and partnership benefiting both parties, as well as tools to manage and monitor the outsourcing relationship. This paper summarises the outcomes of the first phase of the project.

JEL-codes: R3 (search for similar items in EconPapers)
Date: 2001-06-01
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