UNIVERSITI UTARA MALAYSIA

MANAGEMENT INFORMATION SYSTEM

LECTURER : DR SOBRI BIN MINAI
UUM college of Business
Universiti Utara Malaysia
06000 Sintok

Name of Student: Rosli Bin Mohamad Said ( 803640 )

: Shaharani bin Sulong ( 803641 )

Assignment title : Outsourcing and the effect of Services performance

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 TABLE OF CONTENTS PAGES

1. INTRODUCTION .…………………………………...... 2

2. OUTSOURCING OBJECTIVES ………………………………………..4

2.1 What the real impact on services after outsourcing take place?.......................4
2.2 THE OUTSOURCING SUPPORTS THE NATIONAL AGENDA………….5
2.3 OUTSOURCING IS UNDERTAKEN TO IMPROVE EFFICIENCY ………6
2.4 OUTSOURCING OF HSS BOOSTS THE COUNTRY’S ECONOMY … .6
3 MALAYSIA OUTSOURCED THE HOSPITAL SUPPORT SERVICE
IN 1997………………………………………………………………………… 7
4 STRATEGY TO ACHIEVE MISSION ……………………………………… ..7
5 THE SERVICE PROVIDER OFFERS CONTINUOUS EMPLOYMENT
AND CREATES JOBS OPPORTUNITIES …………………………………… 7
6 COMPLETE OUTSOURCING OF HOSPITAL SUPPORT SERVICE
BY THE MALAYSIAN MINISTRY OF HEALTH …………………………. ..8
7 WE PERFORM END-TO-END HOSPITAL SUPPORT SERVICES
INTEGRATED FACILITY MANAGEMENT SYSTEM ………………………8
8 FMS OUTSOURCING AGENDA ………………………………………………9
9 IMPLICATION OF OUTSOURCING THE SERVICES TO 3RD PARTIES …..10
10 CONCLUSION …………………………………………………………………12

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 1. INTRODUCTION

Faber Medi-Serve Sdn Bhd (FMS), formed in 1995, is an Integrated Facility

Management Service company undertaking the Hospital Support Services for 74
government hospitals and laboratory with Ministry of Health (MoH) since 1997 in
Perlis, Pulau Pinang, Perak, Kedah, Sabah and Sarawak.

FMS is a subsidiary of Faber Group Berhad, a company listed on the KLSE main
board – involved in hospitality business since 1960’s.

FMS also a member of UEM Group and it was incorporated since 1966 with
diversified activities e.g. pharmaceutical, hospital development and etc.

Currently, FMS services over 100 hospitals and over 300 other healthcare institutions,
both public and private, in Malaysia, Philippines and Brunei.

FMS is one of the largest Integrated Facility Management Service company in

Malaysia and among a few that have been accredited with ISO 9001:2000
certification.

FMS hold a share capital of USD14 million and revenues of about USD90 million per
annum.

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 OURSOURCING TREND IN THE
WORLD

UK:
Regional health districts awarded 15-25 year
hospital management & maintenance contracts
USA:
Public hospitals
outsourced all and
part of services
Arab Saudi & UAE:
Outsourcing hospital management
and maintenance

Brazil:
Malaysia:
State government
Nationwide outsourcing of 5
outsourced
support services
facilities
management of
new public
hospitals Australia:
Increased
private
participation
in public
hospitals

Faber Mediserve has gone for few stages to establish the team to perform the stipulated
task under the concession. For the past few years FMS recorded, as the most performing
contractor among the other 2 concessions with Ministry of Health since the privatization
take place from 1st January 1997.

The rapid growth of FMS are now coming to the maturity stages where FMS started
getting challenges from the other competitors, pressured by the Ministry of Health and
the investors, To face the new era of challenges, few step and strategy was introduced by

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the management include the outsourcing of manpower and services. This step become the
current issues of concern for the management to be discuss further on the advantages and
effect to our services performance.

2. OUTSOURCING OBJECTIVES.

It been defined by FMS the objectives of outsourcing is cost control, reduce paperwork
and to manage workers compensation and unemployment claims toward the end of
concession in 2011.

The management introduces outsourcing manpower and services at beginning of 2007.

There are positive sign on the reduction of cost on manpower captured on the system.
About 68% of staff seconded to third party under outsourcing project by FMS. A part of
the cost reduction, the responsibility of administration department are also reduce
tremendously. The strategy of outsourcing worked to the first eye.

2.1 What the real impact on services after outsourcing take place?

Part of our responsibility under the concession is to establish and maintain our own basic
Management Information System (MIS) to manage the entire project and track the work
performance for all five services that been mentioned earlier. Before the outsourcing take
place the performance of service can be seen as an excellent where FMS able to minimize
complaint on work order , lover fee deduction by Ministry of Health , and high rating of
customer satisfaction through the survey conducted by FMS site office (Hospital). In
general, the performance of FMS in the hospital can be translated through the deduction
fee that can be captured from the CMIS ( Central Management Information System) and
the e_Clips. By evaluating the performance through the e-Clips and CMIS, it shows that
FMS able to manage the services effectively. The Deduction is below target for the
services. For example the FEMS and BEMS services as shown in the table below:

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 TOTAL FEE
SERVICE TOTAL REVENUE % DEDUCTION
DEDUCTION
(JAN – JUNE 2008)
(JAN – JUNE 2008)
FEMS 22,078,410.10 78,237.69 0.35%

BEMS 11,294,840.66 52,704.74 0.47%

From the figure it shows that the deduction impose by Ministry of Health is minimum
and within our control for last year. Most of the hospitals under FMS are performing well
since the privatization. Perak region being the top of the performer among other region.
Customer ( MoH) satisfy with the services and increase the trust and satisfaction toward
our services. Commitment from the staff and management contributed to the success of
the service performance.

2.2THE OUTSOURCING SUPPORTS THE NATIONAL AGENDA

• Enhance Economic Development

• Attain Objectives of the Malaysian New Economic Policy

• Reduce Government Administrative Burden

• Increase Efficiency and Productivity

• Savings on Capital Expenditure

• Longer Life Span - Facilities, Equipment and Assets

• Centralized Administration of Support Service Providers

• One-stop Information Centre for Facilities, Equipment, Assets, Systems and

Support Services
• Availability of a Dedicated Team of Professionals

• Better Focus on Patient Care

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2.3 OUTSOURCING IS UNDERTAKEN TO IMPROVE EFFICIENCY

The decision to outsource is driven by:

• Meeting requirements of Hospital Support Serveices (“HSS”) :-related

infrastructure and capital expenditure.
• Acquiring efficiency for professional and specialised services
• Improving quality of maintenance services
• Focusing on medical services by the public sector

2.4 OUTSOURCING OF HSS BOOSTS THE COUNTRY’S ECONOMY AND

DEVELOP COMPETENCIES

STINGENT REQUIREMENTS OF THE CONCESSION AGREEMENT

CONSUMABLE ITEMS EXPERTISE LAUNDRY PLANTS

DISPOSABLE ITEMS CONSULTANCY INCINERATOR PLANTS
CHEMICALS INTERNATIONAL STANDARDS WORKSHOPS
PEOPLE LINEN ITEMS BENCHMARKS TEST TOOLS
TRAINING IT SERVICES TRAINING CLEANING EQUIPMENT

PEOPLE SUPPLIES METHODS EQUIPMENT

CONTINUOUS EMPLOYMENT
IMPROVED METHODS & PROCEDURES
TRAINED WORKFORCE
NEW TECHNOLOGIES
SKILLS DEVELOPMENT
INTERNATIONAL RECOGNITIONS
SKILLS SPECIALISATION
GROOM SMEs FOR EXPORT
BETTER JOB OPPORTUNITIES
COMPETENCY BUILDING
VENDOR DEVELOPMENT MODERN FACILITIES
NEW INDUSTRIES NEW TECHNOLOGIES
SUPPLIERS IMPROVED INFRASTRUCTURE
SERVICE PROVIDERS
IT VENDORS

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 3 MALAYSIA OUTSOURCED THE HOSPITAL SUPPORT SERVICE IN
1997

• The Malaysian Ministry of Health (“MoH”) outsourced the Hospital Support

Services (“HSS”) in 1997.

• The project was undertaken with the intention to promote and improve the
planned preventive maintenance culture in government facilities and assets.

• Concession awarded for 15 years.

4 STRATEGY TO ACHIEVE MISSION

Patient Care as the Main Focus

 Outsource Hospital Support Services to a single service provider that:
 Utilises local resources
 Develops local skills and competencies
 Possess relevant experience

 With a long term contract to ensure:

 Commitment – customisation of systems
 Flow of Investments

5 THE SERVICE PROVIDER OFFERS CONTINUOUS EMPLOYMENT

AND CREATES JOBS OPPORTUNITIES

5.1 Existing HSS related staff will be offered:

 Continuous employment with the Service Provider
 Opportunities for relevant on-the-job and formal training

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  Skills development and specialization
 Exposure to international service standards
5.2 Local graduates would be sought to fill supervisory and management positions
5.3 Related businesses would emerge and create employment opportunities
6 COMPLETE OUTSOURCING OF HOSPITAL SUPPORT SERVICE BY THE
MALAYSIAN MINISTRY OF HEALTH

The Concession Involves:

 The management and provision of 5 services
 127 hospitals in Malaysia
 A total of 36,320 beds
 Maintenance of:
 Built up area of 4.3 million m2
 81,250 units of medical and electronic assets
 346,000 units of mechanical and electrical assets
 Takeover of about 4,000 government staff
 Takeover of existing test tools and related equipment

7 WE PERFORM END-TO-END HOSPITAL SUPPORT SERVICES

INTEGRATED FACILITY MANAGEMENT SYSTEM

 Building and Facilities Engineering Maintenance – over 50,000 preventive

maintenance orders annually

 Biomedical Engineering Maintenance – maintains over 47,000 biomedical

equipment annually

 Cleansing and Janitorial – cleans over 1.8 million sq mtrs of building daily

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  Clinical Waste Management – processes 8 tonnes of clinical waste daily

 Linen & Laundry – processes 34 tonnes of linen daily

• Central Management Information System (CMIS)

8 FMS OUTSOURCING AGENDA

FMS has outsourcing few services in stages in order to minimize administration matter
and maximizing profit. The service that been outsourcing to third party are involved:

• Cleaning and cleansing services. – In Perak Region, manpower for Cleaning

and Cleansing and Clinical Waste Management services is fully supplied by NS
Medic Sdn Bhd and Pivotal Allied as the main contractor. The supervision and
related management of the services is under FMS responsibility. Through the
manpower outsourcing, FMS is able to reduce staff administration such as
recruitment, medical, claim, leave entitlement and other human resources
management matters. This programs is involved about three quarter of staff been
transferred to the contractor as a take over staff.

Benefit that received by management at Hospital FMS levels are:-

o Reducing delay of getting new staff to fulfill the vacancy. Management

at Hospital FMS level just need to propose to Head Quarters
Management in management paper with a proper justification why
additional staff is needed. While HQ approved the proposal, HR at HQ
level will appoint and produce instruction letter directly to either NS
MEDIC or PIVOTAL ALLIED to supply number of manpower to related
site within 2 weeks upon getting approval letter. Administration work at
site will reduce because no interview session done to select the
appropriate candidate for the available position. After monitoring the
performance of the staff within probation period, if site management feel

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 that the staff was not perform as required they can reject the staff and it
will be replaced another staff by supplier within 2 weeks. It was stated in
contract agreement within FMS and the said supplier.

• Facility Engineering Maintenance Services – Under the facility maintenance

services, Ground maintenance, Sewerage maintenance and Pest Control are outsourced
to the various contractors at each hospital. By outsourcing the services FMS can cater to
the new challenging demands of the customers and able to increase productivity and
services performance and diversify the business opportunity to private Hospital. FMS
only need to monitor the contractor performance in compliance to hospital requirement.
Any serious non compliance to the contract, FMS will impose the fee deduction to the
relevant contractor. By impose a sum of deduction to contactor due to non compliance
matter will ensure that the contractor will perform the task given continuously in quality
manner. FMS reduce the cost of buying tools and maintenance due to matter was
absorbed by contractor.

• Biomedical Engineering Services – Healthtronics (M) Sdn Berhad was given the
contract by FMS to deal with the maintenance of biomedical equipment in the
Government Hospital. Many biomedical expertise from India and other countries
employed by Healthtronics was exposed our local staff to absorb the technical
skill and technology transfer. The art of outsourcing by FMS indirectly open the
opportunity to other small skill contractor sharing the cake that been awarded to
FMS. As per returned, FMS are now able to extend the contract with the JVA in
India and UAE.

9 IMPLICATION OF OUTSOURCING THE SERVICES TO 3RD PARTIES

9.1 Declining the employee morale and motivation

The staff that involved and seconded to the outsourcing contractor didn’t like the
idea of the outsourcing processes and started expressing lack of interest or lack of
quality at work in some area. Few incident happen where seconded staff started
showing their protest when term and condition of the employee they are getting from

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 new employer differed from the one that they get from FMS in term of seniority ,
staff benefit and other related welfare.

9.2 Performance and quality of contractor.

It happens that FMS outsourcing provider not only providing services for FMS
organization. But also catering to the needs of several companies, there might be not
be completely focus on FMS. Base on our monitoring system (CMIS) , there is delay
in action from the contractor especially response time when their staff are involved
with multiple task assigned by their top management.

9.3 Lost control on the business process

In order to comply with the quality process and procedures, FMS are controlling
every single operational process in order to cater to the needs of the customer for
each service that provided. Through outsourcing FMS lose control over certain
process that is out sources.

As a result, when there is declining on services performance, FMS fail to find the
actual root course originated from the contractor. As example, FMS is the best
paymaster and treat supplier as a share partner. This kind of relation are not been
practice by our outsourcing company. Certain conditions the down time captured
from our monitoring system is high due to manipulation by the supplier. They don’t
supply spare part to them when delay or no payment is made. As the main contractor
FMS , high down time will lead to negative implication to the service performance.

9.4 PR and customer Focus

By outsourcing, FMS sometimes forget to cater to the needs of your valuable

customers when certain condition requires negotiation skill and PR. Outsourcing
make FMS suffer from lack of customer focus. The outsourcing contractor will only

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 looks for profits and interest without considering the main contractor responsibility
to satisfy and sacrifices certain thing to customer need.
There can be few more several disadvantages in outsourcing, such as, renewing
contracts, misunderstanding of the contract, lack of communication, poor quality and
delayed services amongst others.

10 CONCLUSION

The disadvantages of outsourcing give FMS organizations an opportunity to think

more matured about what they are stepping into. However base on FMS
performance the disadvantages of outsourcing are less than the advantages of
outsourcing. Outsourcing, and JVA (Joint Venture Agreement) exposed FMS to the
disadvantages and advantages experiences, but with reliable outsourcing partner that
FMS dealing with, FMS are now able to expend the services abroad and
internationally.
In order to smooth running the outsourcing process by the FMS for other services in
future, it is recommend that before FMS outsourcing their business, take the interests
of the customers and employees into consideration and then make an informed
decision. If it is genuinely benefit and interest to the company, let not the
disadvantages of outsourcing stop the trend because it is only temporary measure
before maturity stages take place.

References

1. Concession Agreement. - The Government of Malaysia and Faber Medi-

Serve Sdn Bhd Dated 28th October 1996.
2. Technical Requirement & Performance Indicator.(TRPI)
3. Master Agreed Procedures (MAP)
4. Website Feber Group – http://www.fabergroup.com.my
5. Website Centralize Management Information System
http://www.cmis.com.my

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6. Slide presentation Qatar / UAE contract department.

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