INDUSTRIES
Outsourcing construction services
Globalization, advances in technology, and sustainability concerns have brought about major changes in the construction industry. Successful construction firms have introduced new processes to handle ever larger and more complex projects with greater efficiency and quality. After the pandemic-induced slowdown, the industry is once again on an upward trajectory, with the infrastructure and renewable energy sectors showing robust expansion.
This growth has intensified the talent shortage within the sector, which is struggling to fill both skilled and unskilled positions. Add to that, Deloitte’s outlook for the engineering and construction industry has noted a shift in skill requirements that will become more pronounced over the next five years as capabilities around digitalization and automation mature.
Besides the wide range of technical professionals and field personnel who are needed to successfully execute construction projects — such as electrical engineers, architects, mechanical engineers, chemical engineers, IT professionals, and support staff — Deloitte sees a growing demand for workers with digital skills such as data and analytics, cloud computing, and software development, as well as soft skills such as people, business, and supplier management.
These challenges surrounding talent can be addressed by outsourcing.
In the United States, for example, the demand for design and detailing work by structural engineers far outpaces the supply of workers who can competently handle the assignment, making outsourcing and offshoring a compelling option for construction and engineering firms. Many companies have already adopted an offshore model where structural design work is performed locally, while detailing work is offshored to emerging economies.
The pressure to reduce costs and maximize resources while delivering high-quality services is another key driver of outsourcing engagements in the industry. For years, US firms have had captive centers in emerging economies to perform design and construction management tasks. However, rapid advances in technology have made offshoring a more attractive proposition than the establishment of captives.
Other challenges facing the construction industry
Large construction firms with a global reach face a unique set of challenges. They must contend with the difficulty of maintaining a steady cash flow, as well as lower margins, operational inefficiencies, fragmented processes, and the demands of sustainability.
Cash flow issues. Late and incorrect payments continue to be a drag on the sector, increasing the risk of delayed projects or cancelled contracts. Firms need to have the financial and fund management skills and to stay on top of paperwork and contracts, among other strategies, to maintain a steady cash flow.
Fragmented processes. Large construction firms with decentralized operations often endure higher operating costs and internal inefficiencies. The sheer size of global outfits requires a new business model and integrated solutions that take advantage of market opportunities and meet the needs of customers.
Low margins. High global demand for raw materials is increasing building, energy, and transport costs, which in turn are affecting trading margins negatively. Companies need to optimize procurement processes to boost margins and operational efficiency.
Demands of sustainability. Construction and energy firms in particular face pressure from many sides to reduce their environmental impact. This requires the use of greener materials and innovative tools and solutions.
Skills shortages. The aging population in developed countries, rapid technological changes that require employees to learn new skills, staff turnover during lean times, and salary conditions in the construction industry are contributing to a talent shortage and decreased productivity.
Outsourced construction solutions
A carefully planned and executed outsourcing strategy can help construction firms develop into innovative, global organizations.
Access to domain expertise. An outsourcing services provider has the experience and resources to position a construction firm for growth. The vendor’s capabilities and domain expertise can be integrated into internal decision-making loops to improve process efficiency. A third party also provides custom, end-to-end solutions and support that include front-end planning, timely decision-making, and management of all project participants. This allows the client to control costs and scale easily.
Improved scalability. Working with a specialist allows a company to expand easily into regions that are less sensitive to economic cycles. These regions have higher demand for infrastructure and facilities, providing new sources of revenue to companies.
Cost efficiency. Project margin is closely linked to purchasing performance. An outsourced construction services provider has sophisticated tools to optimize internal purchasing functions (which account for as much as 60 percent of some construction budgets).
Skilled talent. A third-party provider already has a deep network of skilled professionals who, for highly competitive rates, can be deployed depending on business needs and market demands. Because these professionals are held to the same high standards as in-house staff, they become a seamless extension of the business. After the project is completed, the tight-knit group of construction professionals can be deployed elsewhere.
Outsourcing construction services to the Philippines
Companies now go beyond finding low-cost offshore staffing solutions when outsourcing construction services to the Philippines and other outsourcing destinations. The goal is to find a long-term partner for success, such as Sourcefit, and focus on adding value to the business through the use of innovative and intelligent staffing methodologies.
Please contact us to find out about Sourcefit’s custom outsourced construction solutions.
