Coming Trends in Corporate Services Sector

Executives across corporate America have been under increasing pressure to reduce costs and improve earnings due to adverse economic conditions in the past few years. Real estate has been a notable component of generating these operating efficiencies, and accordingly, outsourcing has been a popular approach to achieving this goal. Many corporations have outsourced real estate transactions, asset management and facilities management to large service providers suited to providing brokerage services at scale; however, today the corporate services-client is both demanding and sophisticated about the relationship with its service providers.

Clients are seeking more than simply large-scale brokers. Corporate-service clients are asking providers for better information-management, higher levels of quality, more strategic partnerships and greater bottom-line impact. This has resulted in intense competition, and providers are seeking to offer services that add value, leverage innovative technology and position them for broad scale relationships.

With that as backdrop, here are some trends we see in the corporate-services sector:

First, corporate real estate clients are outsourcing more functions and relying on expert service providers to manage non-core business activities. Clients, demanding that providers be true partners, are developing increasingly complex, global relationships with providers. Clients are also demanding that providers deliver more services at higher levels of quality for less.

Second, more outsourcing is helping to drive consolidation among providers. In several years many predict that there will be only a few large, truly global providers. This will allow smaller boutiques to remain viable by offering local expertise and addressing specialized client needs. The survival of firms that do not have the right model or expertise appears threatened.

Then there's the competition among real estate service providers, which has increased as more firms converge to compete for revenue. Advisors are competing with service firms and both are competing with owner/developers, all trying to meet the same needs. Advisors are capturing revenue by helping clients optimize portfolios and develop cost-saving strategies. Service firms are advising corporate clients and executing the resulting transactions. Owner/developers are taking a principal role in executing transactions on behalf of their clients.

With the continued evolution of outsourcing, consolidation among firms and intense competition, how are service providers responding from a talent perspective to position their firms for success? With the nature of the service product changing, providers have had to move from traditionally transaction-based skill sets to a greater emphasis on business acumen and general management skills. Some traditional brokerage/service companies are adding corporate-services talent that will help drive the platform to the next level. We have seen several firms that are seeking senior executives to create a more visible brand, enter new markets, improve the consistency of selling services and capture business from larger national clients.

Also, as they expand and build bigger delivery platforms, service firms are offering more specialized lines of business and supporting talent. They seek brokers who focus on industry sectors or type of business. In all cases, these firms are seeking to offer clients niche expertise and subject matter excellence to improve their positioning.

In addition, as client-provider relationships change and the service product becomes more complex, the demand for revenue-producing talent has put a number of firms in the market for senior producers who are also strong managers. These firms seek executives with proven performance records who also effectively manage teams and lead offices.

Many firms are still reluctant to add staff given the persistent unknowns in the market. The economy, while showing signs of life, is still not robust enough to justify hiring for employers with concerns about their cost structure. These firms are not aggressively building staff or hiring ahead of the growth curve. Firms not adding talent seem content to stay the course and remain positioned in a local market or geography.

As corporate outsourcing evolves, consolidation creates a few global providers and competition intensifies, providers must continue adapting to changing conditions. What can be done from a talent perspective? Providers that add people to increase their presence will position themselves for greater success. More specialized skill sets will provide a competitive advantage by allowing providers to meet their clients' specific needs. The hunt for rainmakers who are also effective team leaders and sales managers will continue. Firms that choose not to add talent will remain only to fill a smaller niche or will be absorbed by the larger players seeking to acquire expertise.

James D.S. Pruett is managing director of Equinox Partners in Chicago .