Open-access content Tuesday 15th October 2013
The experts say outsourcing is becoming more popular, but John Bowen thinks companies are beginning to recognise that improving services is best achieved in-house.
15 October 2013
FM World ran a lead story the other week about outsourcing being on the up.
I found the quotes from those behind the survey typically ambiguous, but certainly I would agree that the public sector is a potential source of growth, with the London-based tri-borough scheme being a good example.
But I would actually disagree with the overall premise.
Outsourcing is primarily a way of getting someone else to do something better than you can do it yourself. In business it is relatively easy to take an organisation from poor to reasonable, but it is much more difficult to get it from reasonable to good or better.
This is a version of the Pareto principle, whereby 80 per cent of the benefit can be achieved with 20 per cent of the effort, but the other 20 per cent of benefit will cost you 80 per cent of the effort. This can be applied to outsourcing where the supplier can make significant early gains, but then there is a question hanging over how much further they can take things. That isn't to say that they will not make the extra effort, but the question of what would motivate them to do so is one that clients need to consider.
As a client I always sought to drive through as much efficiency as I could before outsourcing a service. Or, if business pressures gave me no time to do that, I would work closely with the supplier to make the greatest improvement that we could generate and do so on a shared benefit basis.
There is still a lot of scope for outsourcing in the public sector.
As is common, they are trailing the private sector in these trends, but I see the private sector now going the other way, with a great deal more insourcing being undertaken. Those organisations which have long since outsourced are questioning the wisdom of paying someone to manage something that they could easily take back on board, especially when there is a perception that there is little incentive to improve services beyond existing levels. For people who see things that way, bringing things back in-house also improves their control over service levels.
With the economy clearly on the road to recovery there may be some organic growth in existing outsourced FM contracts. But I see the public sector as the key target if the folks behind that survey are to be proved right.
John Bowen is an FM consultant