Pros & Cons of Outsourcing Property Management Services

Posted on:
May 30, 2023
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What are the benefits of outsourcing to developing countries?
What are the challenges of outsourcing to developing countries?
Top 5 Most In-demand Developing Countries for Outsourcing
What are some successful examples of companies that have outsourced to developing countries?
What are the best practices for outsourcing to developing countries?
Pros & Cons of Outsourcing Property Management Services
KDCI Outsourcing
September 6, 2023

As the property management industry evolves, many real estate professionals are considering outsourcing their property management services to gain operational efficiencies and cost savings. One destination that has emerged as a popular choice is the Philippines. With its skilled workforce, English proficiency, and cost-effective solutions, the country offers numerous advantages for outsourcing property management tasks.

However, like any other business decision, you need to consider the pros and cons to ensure that it aligns with your goals. Today, we’ll explore the benefits and drawbacks of outsourcing your property management services to the Philippines, providing you with valuable insights to make an informed decision for your property management business.

What Happens When You Outsource Your Property Management Services?

When you outsource your property management services, you entrust the responsibility of managing various aspects of your properties to a third-party service provider. Below is an overview of the process that the company goes through.

  1. The company assesses its current operations and identifies which tasks can be outsourced while retaining core responsibilities in-house.
  1. Thorough research is conducted to identify potential outsourcing vendors.
  1. The company engages in contract negotiations with the selected vendor.
  1. Once the vendor is finalized, the company shares the necessary information to facilitate a smooth onboarding process.
  1. The company maintains regular contact with the vendor to track performance.

You can check out this article for a full step-by-step guide on how property management companies like you can outsource to the Philippines.

What Are the Pros of Outsourcing Property Management Services to the Philippines?

As a property management company, you can enjoy many benefits once you decide to outsource your property management services to the Philippines. Here is a list of the pros that you can expect.

Significant Cost Savings

Outsourcing to the Philippines can help companies save around 70% to 90% on labor and operational costs. This is because of the developing country’s lower labor and operational expenses compared to other first-world countries like the US.

Consequently, companies can expect significant cost savings that they can use for their other core operations, such as acquiring new clients and properties and managing tenants. Property management companies may also be able to reduce their overhead costs and allocate resources more efficiently.

Skilled Workforce

The Philippines has a large pool of talented professionals with expertise in property management. A big part of the country’s workforce is trained in property-related fields such as real estate, facility management, and community support. This makes them well-suited for roles dedicated to property management services and back office operations.

The advantage of outsourcing property management services to the Philippines extends beyond expertise and experience. The country's workforce also exhibits a strong work ethic and a commitment to delivering high-quality service. Filipinos are known for their dedication, attention to detail, and professionalism — traits that are highly valued in the property management industry.

Excellent English Proficiency

English is widely spoken and understood in the Philippines. The Philippines has a long history of English language education, with English being one of the official languages of the country. As a result, the workforce in the Philippines boasts a remarkable level of English proficiency, which is a significant advantage when it comes to outsourcing property management services.

This high level of English proficiency ensures little to no language barrier when it comes to communicating with the company’s clients and stakeholders. It also means that the property management company can benefit from smooth communication, enhanced customer satisfaction, and an overall high service quality.

Time Zone Advantage

The Philippines operates in a similar time zone to many Western countries. This allows seamless collaboration and communication between the property management team and its clients. Companies can also expect timely responses to inquiries and faster issue resolution.

The overlapping time zone allows property management companies to offer extended hours of service, providing 24/7 availability to clients. This is particularly advantageous for companies with clients located in different time zones, as they can ensure continuous support and assistance, regardless of the time difference.

Scalability and Flexibility

Outsourcing property management services to the Philippines provides scalability and flexibility to adapt to business needs. As the workload fluctuates, outsourcing allows companies to easily scale up or down their operations based on demand, without the need for significant infrastructure investments or hiring challenges.

Property management companies often experience variations in their workload due to seasonal fluctuations, market dynamics, or specific project demands. With outsourcing, companies can seamlessly adjust their workforce and resources to match the demand without undergoing significant infrastructure investments or facing the challenges of hiring and training new employees.

Better Focus on Core Competencies

One of the primary advantages of outsourcing property management services to the Philippines is the ability to redirect resources to core competencies. Property management companies need to focus on core areas such as property acquisition, investment analysis, market research, and client relationship management.

The said activities require specialized knowledge, expertise, and strategic thinking. By outsourcing non-core functions like administrative tasks, maintenance coordination, accounting, and tenant support to reliable service providers, companies can offload these time-consuming and routine responsibilities, allowing their internal teams to focus on value-added activities.

High Technological Expertise

By outsourcing property management services to the Philippines, companies can tap into the vast pool of talented professionals with in-depth knowledge of property management software and digital tools. These experts are well-versed in industry-leading platforms, such as property management systems, customer relationship management (CRM) software, accounting software, and online reporting tools.

Skilled professionals can implement property management software solutions that simplify administrative duties, automate rent collection processes, facilitate maintenance requests, and track lease agreements. By digitizing these tasks, property management companies can save time, reduce manual errors, and ensure greater accuracy and efficiency in their day-to-day operations.

What Are the Cons of Outsourcing Property Management Services to the Philippines?

While outsourcing property management services to the Philippines can provide several benefits, it's also important to consider the potential drawbacks. Below are some of the cons that you should know.

Cultural Differences

The Philippines boasts a vibrant and diverse cultural heritage, shaped by various historical influences. This diversity can lead to variations in communication styles, customer service expectations, and approaches to business practices.

For property management companies outsourcing their operations, these cultural differences can impact customer service and the understanding of local market dynamics, potentially leading to misinterpretations, misunderstandings, and misaligned expectations. It's crucial to bridge these gaps and ensure effective communication when outsourcing property management services to the Philippines.

Distance and Time Zone Challenges

When outsourcing property management services to the Philippines, property management companies must recognize the differences in distance and time zone. Operating in different time zones can have a significant impact on real-time communication and coordination. This can potentially pose disadvantages to the outsourcing arrangement.

One of the primary challenges faced is the need to establish efficient communication channels, schedules, and processes to bridge the gap in responsiveness. With a considerable time difference between the property management company's location and the Philippines, real-time communication becomes more complex. Quick decision-making and immediate response to client inquiries may also be hindered.

Difficulty With Quality Control

Another con of outsourcing your property management services to the Philippines lies in quality control. Since you, as the property management company, have existing standards and expectations that need to be consistently met, it can be hard to maintain the level of service quality without proper control measures.

This can open a risk of service quality slipping from the desired level. To address this, property management companies must develop robust processes and standard operating procedures (SOPs) that clearly outline the expected service standards.

Complex Legal and Regulatory Considerations

Outsourcing property management services to the Philippines may pose difficulties with complying with various legal and regulatory considerations.

Compared to regular business operations, the property management company has to consider relevant laws in both the Philippines and where the company itself is located. It's important to thoroughly understand and address any legal requirements, privacy concerns, and data protection regulations to mitigate potential risks.

Dependency on a Third-Party Provider

Outsourcing property management services involves relying on a third-party provider to handle the core areas of the business. However, this dependency opens another drawback.

Depending on the outsourcing provider that you’re working with, there may be risks like potential service disruptions, contract issues, or unconsulted changes in the provider's business operations. Conducting thorough due diligence and establishing strong contractual agreements are essential.

Increased Expenses

Managing an outsourced property management team in the Philippines can lead to increased expenses for the business. There may be instances where on-site visits or physical presence become necessary for effective collaboration and oversight.

The expenses will come in when traveling long distances between the property management company's location and the Philippines. Costs associated with airfare, accommodations, transportation, and other related fees can quickly add up, especially if frequent visits are required. These increased travel costs can strain the company's budget, particularly for smaller property management firms or those operating on tight financial constraints.

Concerns With Data Security and Confidentiality

When entrusting sensitive property and customer data to an offshore provider, property management companies must prioritize data security and confidentiality. It is crucial to carefully consider and implement stringent data protection measures and confidentiality agreements to safeguard the privacy and integrity of the entrusted information.

The sensitive nature of property and customer data necessitates robust data protection protocols. Property management companies should establish comprehensive data security measures to prevent unauthorized access, data breaches, or any form of data loss. This includes implementing strong authentication processes, encryption techniques, and secure data storage systems. Regular backups and disaster recovery plans should also be in place.

Is Outsourcing Your Property Management Services to the Philippines the Right Decision?

Deciding whether you should outsource your property management services to the Philippines requires careful consideration.  Here are some of the things you can do to help you make the right decision.

Conduct a Cost Analysis

Conduct a thorough cost analysis to compare the expenses associated with outsourcing versus in-house management. Consider factors such as staffing costs, employee benefits, training expenses, software and technology investments, and operational overhead. If outsourcing proves to be more cost-effective in the long run, it may be the more viable option.

Assess Core Competencies

Assess your company's core competencies and strategic focus. property management services that are not directly related to your core business may be candidates for outsourcing. By outsourcing non-core activities, you can allocate more time and resources to your core competencies, enhancing overall business performance.

Consider Future Growth Plans

Consider your growth plans and the scalability requirements of your property management operations. Outsourcing can provide the flexibility to scale up or down quickly, depending on your business needs, without the constraints of recruiting and training additional staff or investing in infrastructure. If you want a strategy where you can easily upscale or downscale your operations, then you should highly consider outsourcing your property management services.

Evaluate Employee Requirements

Evaluate whether your in-house team possesses the necessary expertise and experience to handle all aspects of property management effectively. Outsourcing allows you to tap into a specialized talent pool, particularly in offshore locations like the Philippines, where there is a strong base of property management professionals.

Determine Time and Resource Constraints

Assess your organization's capacity to handle property management services efficiently. If your team is stretched thin or lacks the bandwidth to dedicate ample time and attention to property management, outsourcing can relieve the burden and ensure that tasks are handled effectively.

Consider Geographic Reach and Time Zone

If you have properties or clients in different time zones or locations, outsourcing to a service provider with a global presence can provide advantages. This ensures extended coverage, timely response to inquiries, and seamless communication across different time zones.

Evaluate Potential Risks

Determine the possible risks associated with outsourcing. These include data security, privacy, compliance, and quality control. Assess the reputation, track record, and security measures of potential outsourcing partners to mitigate these risks effectively.

Choose a Property Management Outsourcing Company That Can Tailor to Your Needs

If you’re a property management company that wants to optimize your operations, scale your business, or save on operational costs, outsource your property management services to the Philippines!

KDCI offers property management services tailored to your company’s needs to help optimize your business operations at an affordable cost. We can build you a team of property management specialists with expertise in accounting processes, community support, and maintenance coordination, so you can enjoy high-quality service and focus more on your core activities.

Do you want to learn more about our property management outsourcing services? Click the button below to contact us.

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