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The outsourcing debate continues

4 November 2013

In the last issue of FM World John Bowen wrote an article stating that he believes that companies are beginning to recognise that improving services is best achieved in-house.

After some friendly banter on Twitter we agreed to disagree.

Firstly, I should point out that our facilities management business Incentive FM hasn’t lost any of its clients in the past 12 months and we have in fact significantly increased our business both organically and through new wins, despite the continuing challenges of the economic climate. We see absolutely no sign of clients looking to insource, in fact quite the contrary. We could of course be the exception, but I don’t think this is the case.

My experience in service provision - TFM, cleaning and security in particular, is that there is an opportunity for constant evolution within the service delivery and all aspects of its client drivers, be that quality, customer service, CSR, cost, environment or anything else.

Testament to this is the fact that we enjoy a number of long-term partnerships with extremely demanding clients where we continued to deliver value. Earlier this year Nottingham Building Society (NBS) has extended its contract with us for a further 5-year term, building on a 13-year partnership that has resulted in significantly improved efficiencies.

John’s article addressed the key issue of how businesses can get that elusive final 20 per cent efficiency and/or performance. His view is that the first 80 per cent is relatively easy to get and that a third party supplier can make significant early gains achieving it. However there is little motivation for a supplier to out the significant effort required to continue to improve.

My view is that to improve standards and get the extra 20 per cent efficiency and/or performance you shouldn’t insource – far from it. Many in-house FM teams are understandably interested in maintaining the status quo rather than challenging the model and improving efficiency.  It’s a bit like asking turkeys to vote for Christmas as they tend to automatically assume that any suggestions they make are actually a criticism of their working practices and the outcome will inevitably involve cutting heads.

That said, I do feel that John has a point about motivating the supplier. There is definitely a need for workable, sensible and motivational contract structures. The increasing trend of the commoditisation of contract services whereby client organisations and buyers are procuring FM as if it were bags of flour from the supermarket shelf is not helping. Nor is the constant squeezing of margins, which I believe is damaging to the industry as a whole and risking its reputation.

At Incentive FM we operate a risk & reward system, based on performance, designed to address this issue. Any savings are split between the client, our company and our staff and the result is a win-win situation for all parties. n addition, the client benefits as they receive the highest possible service delivery.
While my experience and examples of longevity are within the private sector, I don’t disagree with John that the public sector potentially presents the greatest opportunities as, in fairness, this is the one which is least agile, responsive and also generally less creative. The challenge is here about education as they rarely have the skills and expertise to successfully procure the right outsourcing solution.

My premise that remaining outsourced gives the greatest potential for change and service improvement is based on experience, both past and present. However, as John said on Twitter, it would be boring if we all held the same view.

I personally welcome this kind of debate within our industry and wish more people would find their voice.

Jeremy Waud is managing director at Incentive FM Group