Japan Viewpoint - CRE Management Outsourcing July 2019
Although outsourcing has taken hold in various sectors in Japan in recent years, the country has been relatively slow to adopt corporate real estate (CRE) outsourcing.
As well as having lower labour productivity than other major countries, Japan will soon face a shrinking labour force. Under these circumstances, it will be increasingly important for companies to make efficient use of management resources. Outsourcing, which encourages companies to be more selective and focused, is an effective means of doing so.
Outsourcing takes many forms, but Business Process Outsourcing (BPO) can be used for a particularly wide range of tasks and is now well established. BPO is defined as outsourcing everything from planning to implementation and control regarding the whole business process of any non-core function. The objective of utilising BPO is to improve management efficiency by streamlining a series of operating processes.
Comparisons of companies that use BPO and those that do not shows that companies using BPO have higher operating profit margins, ROA and labour productivity. In particular, non-manufacturing companies that use BPO had labour productivity 38 points higher than those that do not.
There are significant opportunities to utilise BPO in CRE management. This is because real estate management is labour-intensive and requires a wide range of specialist knowledge and know-how. As real estate is a management resource that directly affects business performance, a company-wide perspective is required to effectively utilise it. For that reason, having cross-organisational human resources and project teams, centralising real estate information, and building strategic partnerships with providers of outsourced services, are all essential for BPO in CRE management.