Outsourcing. Developing a Service Level Agreement

Introduction

In today’s world, the business environment has become very competitive; firms have been forced to use every means at their disposal to achieve results. Outsourcing has been the main focus for companies seeking to turn around their fortunes and or speed up their pace of innovation. (Babu 2005) However, outsourcing has received mixed reactions from different players, some look to outsourcing as the savior of their company; others see outsourcing as an evil job-killing tactic of management. (Gibson 2006) Different situations may render outsourcing a cheap beneficial or expensive venture. Individual companies conduct their analysis to determine whether outsourcing is the best thing for them. However, a company must understand the implications and meanings of outsourcing before it embarks on developing outsourcing strategies. (Jignesh 2005) This paper seeks to define outsourcing, identify the benefits and the contraindications.

Definition of outsourcing

Outsourcing is any task, operation, job, or process that could be performed by employees within your company but is instead contracted to a third party for a significant period. (Accenture 2003) This should not be confused with replacing a sick employee or one that is out for some other reason. For instance, hiring a temporary employee while your secretary is on maternity leave is not outsourcing. (Biswajit 2005) The third-party who has been contracted to oversee the functions in the outsourcing arrangement can carry out the duties on-site or off-site.

The most common model of outsourcing that is currently in practice is that which production units are being set up in countries that offer cheap labor. (Koboyashi 2007) For instance, the jobs that are being sent overseas to countries like India or China. This is more commonly “referred to as offshoring.” (Jignesh 2005) Examples include telephone call centers, tech support, and computer programming. However, other areas have not been fully developed to fit into the outsourcing model. Notable examples that are not being outsourced overseas may include janitorial services, after-hour answering services, and security services. (Ganesh 2007)

What are the benefits of outsourcing?

When it is utilized well outsourcing may lead to far-reaching positive outcomes for an organization. The specific benefits vary from one organization to another and this depends on the nature and prevailing situation in which the organization is in. (Campbell 2006) The following is a list of common attractions that explain why outsourcing is often undertaken by organizations:

• Outsourcing models at times tend to lower costs due to economies of scale
• Outsources may relinquish some activities and provide a firm with adequate time and resources to concentrate on core functions
• Sometimes greater fallibility and ability to define the requisite service more readily may be achieved as a result of an outsourcing arrangement. (Gereffi 2009)
• Through outsourcing organizations may also achieve specific supplier benefits. For example, better security, continuity, etc. (Babu 2005)
• Higher quality service due to the focus of the supplier is a common outcome.
• Organizations involved in outsourcing activities gain improved internal management disciplines resulting from the exercise itself
• Organizations also achieve less dependency upon internal resources through outsourcing and this may increase efficiency or save costs. (Gibson 2006)
• Control of budget
• A faster setup of the function or service may be achieved through outsourcing.
• When some functions are relinquished to a third party an organization may lower the ongoing investment required in internal infrastructure
• Greater ability to control delivery dates is usually achieved for example: via penalty clauses. (Ribeiro 2007)
• In the case an organization is experiencing a lack of internal expertise outsourcing is often a suitable option
• Increased flexibility to meet changing business conditions is one of the main drivers for outsourcing (Penrose 2005)
• Purchase of industry best practice
• Improve risk management
• Acquire innovative ideas
• Increase commitment and energy in non-core areas
• Improve credibility and image by associating with superior providers
• Generate cash by transferring assets to the provider
• Gain market access and business opportunities through the supplier’s network
• Turn fixed costs into variable costs

Specific reasons for outsourcing

There are many reasons why a company may choose to outsource a particular function of their business. Most managers have the end-result-in-mind that they are going to save time and/or money. Other specific reasons may include:

Resource Shortages is Relieved by Outsourcing

A particularly strong reason that compels firms to indulge in outsourcing activities is the shortage of a critical resource especially in terms of skill. (Koboyashi 2007) This can be available to employees that possess knowledge in a certain area (e.g. engineers), availability of material (e.g. petroleum or minerals), and a labor force at a level and price that will offset other more expensive alternatives. (Overby 2007)

Outsourcing Provides an opportunity to concentrate On the Core Business

Some necessary, but peripheral operations are outsourced most frequently. This allows the managers to increase the organization’s ability to concentrate on the core business issues instead of getting distracted by required, yet minor matters. (Norwood 2006) A good example of this can be seen in major hospital that outsources their security operations to a third party company specializing in security. (McCue 2006)

Outsourcing leads to cost savings

The costs of labor and/or materials keep rising while competition from other market players keeps pushing down the prices for products and services. (Koboyashi 2007) When an organization finds itself in such a dilemma then it is important to look for ways to survive. If there is an outsourcing solution that can save the company from losses due to such a scenario then it should be well investigated, developed, and put into practice. (Biswajit 2005)

Flexibility is achieved through outsourcing

Seasonal or cyclical demands that ebb and flow put varying demands on the resources of the company. An outsourcing contract could provide the flexibility needed to stabilize these varying demands. (Gereffi 2009) For instance, A business establishment may bring in extra accountants to assist due to increased workload in situations such as during tax season or when being audited by the holding company that owns the business. (Koboyashi 2007)

Reduction Overhead Costs through Outsourcing

Some functions require a large outlay of money and time to attain a fully useful status. This expenditure and wastage of time could be avoided by contracting a third party in an outsourcing model. (Gibson 2006) For example, when a call center’s capacity is stretched to a point where it exceeds the capabilities of the existing telephone system a third party can be contracted to handle the extra calls. This will be an easier, less time-consuming, and less expensive option than expanding the call center.

Commonly Outsourced Areas

Although many areas and functions can be outsourced, there are specific functions that are almost always outsourced by organizations. The following list includes some of the frequently outsourced areas:

• Information Technology Functions
• Network and Telecommunications
• Human Resources and Insurance Administration
• Accounting
• Marketing
• Security

Outsourcing Assessment

Despite the size and number of outsourcing arrangements that may be available for organizations, every scenario is always different and this depends on the company’s situation. (Ribeiro 2007) There may well be equally compelling arguments against any sort of outsourcing arrangement.

It is therefore important that ALL the issues are considered before embarking upon the outsourcing course. (Penrose 2005) This assessment should take into account all factors, both local and generic. To evaluate outsourcing it is imperative that the organization in question looks at the benefits and challenges and weighs them before it decides on whether the outsourcing should be adopted or not. (Accenture 2003) Just like any other undertaking, there are advantages and disadvantages that an organization should know before deciding on whether to take up the exercise. (Ganesh 2007) The advantages are similar to the reasons why organizations indulge in outsourcing activities and this can be found on the previous page. However, it will be repeated briefly in this section for comparison. (Bray 2008)

Advantages & Disadvantages of Outsourcing

Advantages of Outsourcing

The benefits of outsourcing are:

• Less capital expenditure – For example, by outsourcing information technology requirements, a company does not have to buy expensive hardware and software. And in many cases, the fees paid to providers of this service are often comparable to what the company may have spent in hiring operators and maintaining the systems. (Gibson 2006)
• Less management headache – For instance, by outsourcing business processes such as accounting, a company no longer has to hire and manage accounting personnel. (Bray 2008)
• Focus on core competencies – Outsourcing non-core-related processes will allow a business to focus more on its core competencies and strengths, giving it a competitive advantage.

Disadvantages of Outsourcing

It is advisable that before any organization decides to outsource for services it should exhaustively examine the challenges that may come with it. Some of the common challenges faced include:

• Less managerial control – The outsourced processes are managed by a separate company and thus it may be harder to manage the outsourced service provider as compared to managing the internal company employees. (Norwood 2006)
• If the outsourcing service provider fails – If your outsourcing service provides goes bankrupt or out of business, the company will be faced with an anticipated challenge and this may lead to losses unless the management can quickly transition to a new service provider or take the process back in-house. (Ganesh 2007)
• In some instances the outsourcing model may be more expensive – Proper evaluation will reveal this in such situations it becomes cheaper to keep a process in-house as compared to outsourcing.
• Security and confidentiality issues – In this case, a company is outsourcing for sensitive business processes such as payroll, confidential company information such as salary rates for workers may get into the public domain and be used by competitors to gain an advantage over the company. (Jignesh 2005)

Analysis of a company

XXXXXX Co Limited is a Dubai-based corporate with 700 employees working in various locations. The infrastructure is leased from ZZZ properties that have provided the base build structure with the types of equipment like chillers / Lifts & Escalators/window cleaning machines/landscaping as part of the lease agreement

XXX Co Ltd‘s core business is aviation technologies. To maintain the infrastructure XXX Co has decided to have an in-house managerial team and outsources for non-core business services which include; Security / Janitorial / Pest control/contract management / front office/mail management and MEP services. (Overby 2007)

Comparison between In-house & outsourced services using XXX Co as an example

The above outsourcing example has value for money since the company can save on costs as seen for HR cost / Visa cost / Training cost/uniform cost/travel cost etc. These costs have been taken care of by the company that provides the outsourcing services.

Service plan

The in-house managerial team is required to prepare a service plan to make sure the services are being done as per the plan. For example, various routine activities will have their schedule. Activities such as cleaning services will have daily tasks / weekly tasks / monthly tasks.

And the security services may be accompanied by inspection reports/incident reports / etc…

Monitoring principles

The monitoring procedures will depend upon the in-House managerial Staff, the inspections may be conducted in different modes, and this can be regular basis/random/surprise inspections, etc…

To complement this monitoring process an action plan should be made to evaluate any deviations from the norm and this should be recorded for inclusion in plans and developments

Choosing Contractors

1. To select a suitable third-party contractor an organization should always try to get referrals from other organizations that have used the services of the shortlisted contractors. (Jignesh 2005) More ever attending FM Exhibitions can also be helpful and this provides an organization’s management with an opportunity to see for themselves the actual type of services offered by different contractors
2. After selecting a suitable third-party contractor to offer the outsourcing services organization should proceed on to the hiring process. (McCue 2006)There are many different trade certifications, so be sure to check the title on your contractor’s certification to ensure that it is valid and the contractor is a specialist in the selected area.
3. The contracting organization then checks licenses and insurance with your city’s Contractors Licensing Board. Ask the tradesman for copies of the following documents: Contractor’s Certification, Worker’s Compensation status, and Liability Insurance certificate. A reputable contractor will have no problem providing copies of these documents. (Overby 2007)
4. At least three referees should be conducted to confirm that the contractor is qualified. If the referee is provided by the contractor then the organization’s management should be careful because the contractor will likely provide referees with whom he/she had positive experiences, so the management should be sure to ask them specific questions about the workmanship that are important to the organization. You might be concerned about whether the contractor cleaned up his work area and kept to his timeline or whether the final invoice matched the estimate.
5. The management of the contracting organization should proceed to check with the Better Business Bureau to find out if complaints have ever been filed or are outstanding against the contractor.
6. Requesting a written estimate is the final step. Any contractor who does not provide you with a written estimate should be crossed off the list immediately. At least three estimates should be obtained and then the prices compared among the three and concerning the task requirements. It should always be remembered that the lowest bidder is not always the best.
7. A company representative should proceed to sign a written contract. The contract should spell out all the steps the contractor will take from beginning to end of the specified job, what supplies are included, the payment schedule, and the timeline for the project. (Overby 2007)

Issue a tender document

The tender document should be very specific. It should explain to the contractor what exactly the company is expecting. The terms and conditions should be defined on the exact service requirement.

• Final Selection: once received the proposals from various contractors shortlist the contractors who is matching the service requirements. (Koboyashi 2007)
• Final negotiation: once shortlisted the contractor is called for the final negotiation on the contractual terms & conditions within the set budget. (Overb, 2007)
• Defining the Contract: Define KPI’s SLA’s specifically, the agreement should cover the scope of work, no of staff for each service, work timings, obligation clauses, EHS compliance, Pricing, payment terms & conditions, and 3rd party insurance coverage, etc…

Continuous Improvement

Outsourcing Strategies & Risks From an Iso 9001-2000 Standard Perspective

What is an outsourced Process?

An “outsourced process” is a process in an organization that is provided by an external firm or organization. (Biswajit 2005) Depending on the organization’s situation and needs an outsourced process can be provided in the following forms:

It can be purchased from an independent supplier, provided by another part of the larger organization, provided at your facility or an independent site, or in some other manner

Official Position

Since the publication of ISO 9001:2000, TC 176 has received a number of requests from various quarters to provide a standard definition for the term “outsourcing”, as used in the standard. (Babu 2005)

To date, all the attempts to have an internationally agreed definition have not borne fruit. However, efforts continue today in various working groups.

Registrar Auditor Position

The Oxford Dictionary defines outsourcing; “to obtain…by contract from a source outside the organization or area; to contract …out” (Campbell 2006)Using this definition, any work that is not accomplished in-house which positively influences the organization’s ability to provide “conforming” product is technically an “outsourced” item. (Penrose 2005)

Clause 4.1

“Where an organization chooses to outsource any process that affects product conformity with requirements, the organization shall ensure control over such processes.” (Campbell 2006)

“Control of such outsourced processes shall be identified within the quality management system.” (Overby 2007)

Expectation When of Outsourcing Processes

Outsourced processes typically involve interactions with other processes needed for the organization’s QMS.

As such, the expectation is that the organization will not only ensure conformity of process outputs, but also the process itself, and any interactions with internal processes. (Gereffi 2009)

Control of Outsourced Processes

The organization must be able to demonstrate that it exercises sufficient control over the contractors to ensure that outsourced processes are performed according to the following:

• •ISO 9001:2000 Standard
• •Customer Requirements
• •Regulatory & Statutory Requirements

How is the control accomplished?

The type and extent of control depend on what is being outsourced and the potential risks involved. (Accenture 2003) Examples may include a contractual agreement with the provider along with a clear specification, validation requirements for the process, quality management systems requirements, on-site inspections or verifications and audits, and/or 3rdParty Registrations

The Outsourcing Strategy & Process

Key Points that the management of an organization should include in the outsourcing strategy:

• It should keep a low profile but maintain openness
• Keep in mind that internal message & timing is critical
• Use a cross-functional team approach
• Upfront planning is essential
• Use a fact-based decision-making process
• Consider both short term (0-5 Years) & long term (6-10 Years) information

Gate Process (7 Stages)

Gather & Validate Data

• Establish true costs of doing business,
• Gather performance data on existing processes
• Determine the stability of existing processes,
• Ensure that clear criteria for acceptance of both products is in place,
• Identify fixed costs that may remain regardless of outsourcing activities.

(Norwood 2006)

Establish Indicators

• Define the critical control points,
• Place weights to scoring criteria,
• Understand financial indicators,
• Define specific performance metrics

Prepare for Quotation

• Define the criteria to be used when evaluating potential contractors,
• The more specific the contract scope, the more accurate the proposal,
• Consider establishing an interface procedure and attach it to the RFQ,
• Communicate any requirements upfront,
• Seek at least three potential contractors.

(Overby 2007)

Select Contractor

• Create a multi-disciplinary review team,
• Ask each contractor to formally present his/her proposal, plan and key project persons,
• Mandate the creation and walk thru of a migration plan,
• Apply the previously defined scoring system,
• Witness firsthand the contractor’s operations to ensure capabilities. (Bray 2008)

Migration Plan

• Consider temporarily posting personnel at the contractor’s operation to ease the transition,
• Ensure the plan includes aspects such as resources, infrastructure, performance measures, etc…
• The plan should cover up to 18 months,
• Continue parallel operations until the contractor’s capability is confirmed.

(Overby 2007)

Post Turnover Maintenance

• Limit contract to three-year renewable cycles,
• Allow for a competitive assessment at renewal,
• Establish systematic meetings to review performance,
• Initiate formal corrective actions to resolve issues,
• Include the contractor as part of the internal audit schedule

(Jignesh 2005)

Re-Validation

• Annually conduct an in-depth re-Validation of the contractor’s processes,
• Update the contractor of pending changes so that inputs can be provided upfront,
• Perform a cost assessment on the outsourcing relationship,
• Evaluate your working relationship,
• Assess potential risk exposure by a contractor.

Outsourcing Risks & Gains

Service Level Agreement

Purpose of SLA

• Identifies & defines customer’s needs
• Provides a framework for understanding
• Simplifies complex issues
• Refuses areas of conflicts
• Encourages dialogues in the event of disputes
• Eliminates unrealistic expectations

Introduction

This Agreement provides a framework for the ongoing relationship between the Client, the XXXX Company, and the Supplier, Facilities Management Technical Services

Unit. It has evolved from an examination of service needs of the Client, by the Facilities Management Division, and describes the levels of service to be provided to meet those needs. (Biswajit 2005) It is based on recognition of the mutual responsibility of both parties to contribute to the broad strategies and improvement in the performance of the xxxxx Co.

The Client, the XXXX co Staffs, are responsible for providing sufficient information on requirements or defects, and where non-maintenance issues proof of authorization to expend XXXx Co funds. (Bray 2008)

The Supplier is responsible for maintaining a healthy and fit relationship for the purpose cam+pus, meeting all legal requirements placed on them and assisting in design and work, transferring briefs into action plans that may be efficiently and effectively costed and produced in the minimum time at the least possible cost. (Ganesh 2007)

The Supplier is also responsible for responding continuingly to matters on infrastructure and energy conservation of XXXX Co property and informing staff as to new product and service developments.

It is not intended that this agreement should have legal consequences, rather than it should serve the mutual benefit of both parties by providing a clear understanding of agreed operating arrangements and performance criteria. It is expected that it will evolve. (Ribeiro 2007)

Purpose

The purpose of the Service Level Agreement is for the parties to articulate and understand the agreed Service Levels and how they will be monitored evaluated, measured, and managed. (Ganesh 2007) The Service Level Agreement forms the “agreement” between the xxxxx Co and Facilities Management Technical Services Unit, and the measuring of the level of service delivered will be based on the standards and measures outlined in this document. (Campbell 2006)

Facilities Management Technical Services Unit tasks & Responsibilities

Overview of tasks

Technical Services Processes are:

• Building services operations, statutory maintenance & thermal comfort (heating, ventilating & air conditioning)
• Refrigeration operations & maintenance
• Automated building management systems (BMS)
• Electrical reticulation testing, safety & compliance
• Electrical portable appliance testing administration
• Electronic Building Management Systems (BMS)
• Energy conservation & reporting
• Gas supply reticulation & procurement
• Electrical supply, reticulation & procurement
• Lighting Installation & maintenance
• Power Installation and maintenance
• Fume cupboards
• Fire detection & protection systems
• Lift services
• Standby energy systems
• Building warrant of fitness, compliance & IQP certification
• Internal consulting
• Project management
• Consultant report briefing
• Training XXXX Co staff in the effective utilization of the above services (Overby 2007)

Overview of responsibilities

• To provide a cost-effective operations & maintenance management system by Facilities’
• Technical Services and delivery service that matches or exceeds client & XXXX co needs and expectations for compliance, quality, timeliness, and if applicable, price.
• To provide a cost-recovery service for the energy and chargeable maintenance works where applicable
• To research emerging technologies and business processes and adopt, where appropriate, departmental business purposes and initiatives.
• To liaise with external suppliers/contractors/consultants to assess external capabilities and competencies and their value to the xxx co, and engage as required

Service level details

The Service Package

Supplier

The supplier provides services in the following broad areas:

• Building service’s operations & maintenance of plant & equipment (Campbell 2006)
• Twenty-four-hour seven day a week emergency service provision
• Reticulated energy supply systems operations & maintenance
• Energy utilization & conservation in line with industry best practice
• Standby emergency plant & equipment
• Building fire prevention & protection systems
• Annual building warrant of fitness requirements & compliance

These services will be accessed through the FMD help desk on ext 4001, through the FMDI service web interface, or by email to [email protected], during the hours of 8:00 am and 4.30 pm Monday to Friday, except for gazetted Public Holidays and XXXX co closure dates. For urgent matters after these hours please contact the security of 838 4444.

Note: Technical Services are provided fully after-hour emergency support.

A small team of technical staff is engaged by the unit with specialist services being formal. (Gibson 2006) contracted out to local professional service providers to ensure a maximum of flexibility, service, and cost-effectiveness for the University of Waikato.

A Manager and Team Leader work with technical staff & contractors to ensure that service levels are being met, and are jointly responsible for:

• delivering client-focused services per Facilities Management Technical Service units core competencies and product/service range (Babu 2005)
• organizing and managing the resources to deliver the service to agreed standard;
• Identify and raise issues concerning service delivery and client demands.
• Reporting annually on progress and service delivery

Business services

XXXX Co staff has access to competently trained staff that can:

• provide information and advice & assistance on technical service matters;
• assist in evaluating the costs and benefits of suitable solutions;
• develop proposals and quotations for specific jobs
• assist with energy conservation matters
• Review departmental technical equipment purchasing decisions to ensure it is the correct fit for
• Purpose
• assess technical specifications of job requirements
• enact production processes and procedures to ensure high-quality product and service outcomes
• provide advice for upgrading proposals and additions and systems specifications (Penrose 2005)

The Technical Services Manager will:

• facilitate clear communication and sound liaison between XXXX co customers and respective work units within Technical Services Unit
• monitor service delivery performance and standards
• provide direct support, guidance, and assistance to Technical Services Supervisor and unit

Technical staff

• identify business requirements, current & future opportunities, and client’s needs
• monitor quality standards, resourcing levels, and client demands
• facilitate client access to preferred suppliers, or arrange it for specialist technical products
• Overview strategic and operational variations and changes to requirements ensuring flexibility in service delivery
• investigate and report on complaints and problem resolution
• Report on the progress of issues and service delivery

(Overby 2007)

Period of Agreement

The Agreement will take effect from January 1, 2010, to December 30, 2011.

It may be varied at any time by mutual agreement with the changes noted and the details recorded.

It is the intention that any practical difficulties encountered be resolved by the parties in a cooperative, realistic and practical manner. Consequently, there is no provision for either party to walk away from this arrangement or cancel it prematurely. (Gereffi 2009)

Fees & Charges

Funding – General

Facilities Management Technical Services Unit is a partial cost recovery group of discrete business units. (Ganesh 2007) Generally work which takes place on existing plants, services, and equipment that is located in a building managed by the XXXX co is funded by Facilities Management.

Works for on-campus units such as vvv, ttt & rrr Bodies is chargeable. Energy for these units is also chargeable. Works of a discretionary nature if approved by the capital works committee will also be subject in some cases to charge.

Facilities Management Technical Services Unit is however happy in all instances to offer free advice on any technical issue which relates to current or proposed equipment within the boundaries of the

Performance monitoring, managing, and reporting

Key Performance Indicators

Delivery times

All Technical Services staff & Contractors understand and respect the customers’ right to negotiate the specific terms and conditions of each job on a one-to-one basis. Notwithstanding this flexibility, Technical Services provides service delivery and work completion times for routine tasks. These Timeframes are for information to our customers, which further informs them of our typical responsiveness.

Urgent works – within eight hours

Routine tasks- within forty-eight hours

Planned tasks – within targets agreed

(Penrose 2005)

Performance Management

Overall performance will be managed using the following review process.

• Quarterly: Internal Performance review
• Annually: Total service delivery review with Group Manager

The meetings will review performance against the service levels as specified in this agreement and performance to budget.

Quarterly – Performance Reviews

Performance measured against the service levels described throughout this agreement will be reported by the Manager, Technical Services.

Annually – Total Service Delivery Review

The annual budgeting and business plan process provide a mechanism for the identification of service opportunities and the need for the enhancement of service/resource, where appropriate. The issues covered in this review and planning exercise include:

• Existing services;
• Additional services;
• review procedures;
• Changes to business processes;
• Service levels;
• Service changes;
• KPI’s – Key Performance Indicators;
• Business processes
• Budget (Norwood 2006)

If the agreement is to be extended, this process will define the framework within which services will be delivered in the following year. A change could reflect changed client needs to supplier options as well as an extension of the service open to external competition. (Ganesh 2007)

Performance reporting

Progress Meetings

Weekly manager’s meetings are held within FMD and provide a mechanism for service issues identification and resolution planning.

Regular meetings are held with Divisional managers/administrative staff regarding service delivery, design, and change.

Performance Reports

Annual reports are provided by Technical Services Manager to the Group Manager Facilities Management Division. These reports summarise the business activity, budget requirements, Energy trends, and annual replacement requirements to ensure service levels are met.

Service standards and conditions

Equipment Warranty

In the case of a service that involves the supply of equipment, Technical Services Unit does not assume any liability to warrant performance or reliability of equipment, however, they will on the client’s behalf ensure that any supplier warrants are honored fully. (Jignesh 2005)

Unplanned Changes in Service Scope

Customers may agree to changes within the general scope of the requirements or specifications of the chargeable tasks by a written change request, (typically an amendment to a written job order).

Any such change, whether involving addition to, omission from or alteration to the requirements or specification shall not vitiate the agreement to provide the Service.

Such alterations will in some cases require approval from the appropriate capital funding committee. (Babu 2005)

Changes in External Supplier Services

In the event of a change in the technical specification of a service provided by a third party and used by the Facilities Management Technical Services Unit in the provision of a service, and provided that the Technical Services unit makes all reasonable effort to ensure that performance levels specified in this schedule are maintained, then Technical Services Unit shall not be considered as having breached this Service Level Agreement because of the change. (Jignesh 2005)

Interruption in Service

Facilities Management Division, Technical Services Unit endeavors to provide fully operational plant and equipment, however, no guarantee will be made that some unforeseen events may not at times disrupt operation through a failure of such plant and equipment. In such circumstances, best efforts will be made to provide alternative solutions. (Jignesh 2005)

Planned Downtime

Facilities Management Technical Services Unit agrees to notify its customers concerning planned downtime at least one day in advance, normally longer notice will be given through the Management’s Yellow Circular. Facilities Management Technical Services Division will always endeavour to provide alternatives to its services to enable normal business outcomes to be achieved. (Ganesh 2007)

Escalation procedures

Call Procedure

All calls for assistance in operational matters from 8 am to 4.30 pm Monday to Friday from Facilities Management Technical Services Unit, clients are initially directed to the help desk ext 4001 to enact the service request. (Bray 2008) All problems will initially be forwarded to the most appropriate person in this unit for resolution. For contact outside these hours contact Security on ext 4444

Dispute Resolution

The parties to this Agreement will use every endeavor to resolve, by a process of consultation, consensus, and application of common sense, any disputes arising between them. The preference is for these matters to be dealt with at the operational level as they arise.

If resolution at the operational level cannot be achieved expeditiously, the matter will be referred by the nominated contacts of both parties to their respective Managers who will resolve it in the best interests of the XXX co within seven days. (Gibson 2006)

Project Conclusion

However big or small an organization may be, various services are always required that are outside the organization’s routine. Thus, outsourcing is an inevitable practice for any given organization. (Overby 2007) Initially, the need for outsourcing was occasioned by organizations’ need for services that were not internally available. Nowadays, however, outsourcing has grown to encompass different varied functions occasioned by today’s business reality. (Babu 2005) The present study has conducted extensive research on outsourcing. It has been established that the need for outsourcing depends on the specific needs of an organisation. Organisations seeking to outsource for particular services should carry out an extensive evaluation to ensure that the outsourcing will be beneficial. After ascertaining this, management should proceed to carry out a careful selection of the contractors to provide the outsourced services. This step is very important, as it will determine the success of the outsourced service and ensure that the company is working with a qualified contractor in addition to being in tune with the legal requirements. (Koboyashi 2007)

Outsourcing is a good practice that should be encouraged in many organisations; however, a cautious approach should always be taken.

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