Outsourcing outsourcing – a case study in consolidating service providers

Despite all of the bad press that outsourcing has received over the last few years, it seems to only be an issue in the technology sector and telecommunications, primarily when we are trying to get the tech support that we so desperately need.  Elsewhere, outsourcing is the latest tool for maintaining a slim, agile workforce and focusing exclusively on addressing profitable (hopefully) business opportunities.

When I began to read the article entitled 110 to One: Global Consolidation of Food and Soft Services (The Leader, p. 20-24), I was surprised to find out that “consolidation and preferred partnerships” are a relatively new phenomenon in the world of corporate real estate.  Although I am a relative youth in the industry, I always got the impression from colleagues that this was the status quo and had been taking place for decades.  Although this article reads like a tale of two giants – showcasing the partnership between Procter & Gamble’s facilities group and Jones Lang LaSalle’s global outsourcing engine – there is still a lot of insight to be gleaned from this case study.

Is domestic outsourcing not as hot as a few years ago?

I haven’t historically posted about a specific organization, but after reading Susan Diesenhouse’s Chicago Tribune article, Lincolnshire office tower, once occupied by Hewitt Associates, up for sublease, I decided that it was noteworthy enough to mention.  It’s not every day that a firm vacates roughly 20% of its real estate portfolio, a whopping 400,000 square feet.  My curiosity led me to one of my favorite financial news sources, the mash-up known as Google Finance.  I wanted to see what the website and community were saying about this real estate situation.  Although nobody has mentioned it yet, I find it quite telling that there is an unanswered post related to unannounced layoffs at Hewitt.  It seems that the HR consulting and outsourcing firm likes to keep a low profile about their own HR concerns.

A few months back, I had been making calls out to David Kamen, real estate director at Hewitt, in the hopes of winning some of their business but found it difficult to arrange time with him.  I don’t mean to sound like sour grapes, but perhaps it was not a bad thing for me given their recent real estate surplus.  Sublets are a viable option for vacating extra space in a financially responsible way; however, given the market and the recent office construction announcements for the northern Chicago submarket, getting that space leased back up may require some substantial discounting on the part of Hewitt.