Business

Why not all support services firms should be tarred with the same brush

Cleaning parliament, securing the perimeter fence at Britain’s atomic weapon’s establishment, feeding the nurses and doctors at the NHS’s busiest hospitals, repairing the telephone masts across our isle.

Such services are provided by firms like Mitie. We clean, protect, repair and care for the working and leisure environments that 5m people pass through every day. From the Hebrides to the Scilly Isles, you might not see us – but we are most definitely there.

The facilities management (FM) industry is a subset of the wider outsourcing industry and in the UK, it is worth over £100bn each year and employs over 1m people.

The outsourcing sector has been in the spotlight in recent weeks: the collapse of construction-focused Carillion, the recent £1bn wiped off the value of IT-led Capita and the very concept of outsourcing has become the focus of business, political and public scrutiny.

Undoubtedly the outsourcing sector is facing some headwinds, but the herd-like thinking that the industry is doomed, that there is no merit in outsourced contracts or that all companies in the sector have the same drivers or fate is misplaced.

Read more: Mitie chief: Sector must boost reserves to absorb Carillion-style “knocks”

Why?

Not all outsourcers are the same.

We are all specialists, with expertise and scale, and we all look to correctly price the transfer of risk. But there is as much diversity in this sector as there is in financial services or engineering.

Mitie has no construction contracts, we are not highly leveraged and we self-deliver almost all our services. We are one of the UK’s biggest employers with 53,000 people and we do not rely on any one group of customers.

And as a specialist FM provider, we look to offer value and insight to our customers. It is not unusual to immediately save big companies five per cent in their annual facilities operating costs. This means company and government money can be put to good use elsewhere.

FM providers are specialist innovators. Firms are highly skilled at what we do, and many increasingly use technology to provide additional insight so our customers work and operate in an environment that focuses on efficiency, well-being and operational excellence. Mitie, for example, now widely deploys state of the art sensors, thermal imaging and scanners alongside skilled guards to protect some of the UK’s most important establishments.

In the current environment, alternative models to FM, such as using a managing agent – directly subcontracting for services yourself or even self-provision – may look attractive. But the reality is service costs increase, synergies and building optimisation are lost, employee and customer experience is compromised and, eventually, delivery deteriorates. FM companies offer simplicity, consistency and efficiency.

And yet, as recent events show, not all is rosy in the wider outsourcing sector. Not all contracts are being correctly priced for risk across the industry. In some instances, there has clearly been a disconnect between delivery, value, transfer of risk and price.

Whilst the collapse of Carillion has been devastating for its employees, its supply chain and for its customers, it has perhaps provided the brutal but necessary catalyst for the industry to ‘stop and think’.

Across the sector, we need to be more confident about the expertise that we bring and the savings we deliver. And we need to make sure that contracts reflect the value guaranteed. And equally, our customers need to pay a fair price for our skills.

Technology is changing how we work and the outsourcing industry needs to change as well. Yet what will not change are our expectations for a clean, safe and increasingly “connected” workspace.

Read more: Woodford sticks to his guns despite "poor investment" in Capita

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