Agency Risks in Outsourcing Corporate Real Estate Functions
24 Pages Posted: 3 Jan 2007
Firms outsource business functions to focus on core competencies and cut operating expenses. However, companies must consider agency costs in determining the optimal staffing/outsourcing balance. Analysis of the views of corporate real estate managers and real estate service providers indicate that although they share a common vision of the role of corporate real estate, providers focus more on traditional real estate tasks than on corporate business strategy. The optimum balance of staffing/outsourcing may consist of a corporate real estate staff that understands the overall corporate strategy and devotes its resources to strategic planning, program development, contracting and monitoring outsourced tasks.
Keywords: agency cost, staffing, outsourcing, corporate real estate
JEL Classification: L85, D21, D23, D78, D81, D84, D92
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