Why councils are bringing FM and other services back in-house

Why councils are bringing FM and other services back in-house

First rolled out under Margaret Thatcher in the 1980s, with the introduction of compulsory competitive tendering, the outsourcing of public sector services gradually gained in popularity. It subsequently transitioned into a frenzy of outsourced contracts throughout the 1990s and early 2000s.

Simply put, outsourcing is an arrangement in which a public sector organisation or local council allows a private company to run a particular service on its behalf. Everything from leisure centres and libraries to IT services and facilities management has been outsourced, with varying degrees of success.

Outsourcing giants such as Serco, Capita and Kier built business empires on delivering services on the public sector’s behalf. Promising huge cost savings, improved performance and increased efficiencies, private companies took on a range of valuable contracts, to mixed reception.

While many outsourcing partnerships have worked very well and delivered valuable savings, there have also been some notable disasters, where not only have services been poorly delivered, but they have ended up costing public sector organisations dearly.

Against this backdrop, there has been a shift in the attitude towards outsourcing, with contracts not being renewed and many services being bought back in-house.

In this age of austerity, public sector bodies need to manage their budgets more closely than ever before and this has brought the spotlight to bear on outsourced contracts. Councils, in particular, simply cannot afford to sign up to lengthy contracts that may not deliver the cost savings they so desperately need.

In fact, a recent report from the Association for Public Service Excellence has found that many local councils are planning to bring outsourced services back in-house. Known as insourcing, this will see councils take back control of elements such as catering, waste management or building services.

For many councils, insourcing provides a great way to save costs and become more efficient. Ironically, this is exactly what the outsourcing of services was meant to provide in the first place.

The same report from the APSE also found that nearly 80% of councils believe that insourcing will allow them to be more flexible, with two-thirds hoping it will save them money.

In addition, insourcing can provide better pay, working conditions and benefits for employees, as well as improving relationships with unions. It can certainly be argued that by running services themselves, councils can ensure that public money is kept in the local economy, ensuring that they work with local businesses where relevant to help fuel the local economy.

However, it is not always the council’s choice to insource. In some cases, private companies are walking away from deals as they no longer see them as profitable.

However, some councils are really turning the tables and going a step further, setting up their own trading companies to help drive further revenue which can be put back into frontline services.

It certainly seems as though the heydays of outsourcing are drawing to a close, with a marked shift to insourcing. Whether this trend continues remains to be seen, but for the time being at least, insourcing seems set to become the dominant approach.


business people lying on floor in circle

Sodexo says these are the top FM trends to watch for

Due to technological advances and the need to create more sustainable lifestyles, FM teams are generating improved personal and work environments. Safer and smarter environments are being developed by looking at people’s needs and fully understanding those needs.

From technology to recruitment, here are the top FM trends to watch out for:

• Augmented reality glasses are next level tech. Technicians and engineers from various industries are using augmented reality glasses in many ways, including communication, live video and for information and problem-solving.

• Chatbots are becoming more and more popular in the modern workplace. Automating the chat function on your company website is becoming the norm as chatbots can offer 24/7 support to your clients. Using artificial intelligence to answer your customer queries is the next step in offering around the clock support. Chatbots learn as they go, building a catalogue of expanding data and knowledge.

• Ultraviolet lights at certain wavelengths are fighting bacteria, viruses and other harmful microorganisms. Killing mould and bacteria could reduce issues faced by schools, hospitals, nursing homes and other public establishments. When bacteria is exposed to UV light, it is unable to spread or infect.

• Attracting the best talent in facilities management is proving to be an uphill battle. A limited number of young people are going down the FM route, leaving a shortage of skilled workers seeking blue-collar roles. More could be done to introduce apprenticeships to school leavers and perhaps graduate programs could be considered for those completing university degrees.

• Retaining talent is a challenge in many industries. Consulting and engaging with staff are great ways to make your employees feel listened to and valued. Goal setting and assisting your staff in achieving their goals is a key principle in retaining staff. They can then work towards progression in the industry and will appreciate loyalty and investment from their employer. Treating employees well will guarantee good employee reviews which, in turn, will attract the very best talent in your industry.

• Remote monitoring from a 24/7 call centre, 365 days a year will save your clients valuable time and money. System failures, alarm responses and general issues can be dealt with and resolved remotely, without the need for an engineer or technician to visit the client’s sites.

• Building analytics is an innovative FM trend. Systems are customisable and can monitor building control equipment. They can also collect data on output and energy savings, as well as performance.

• Green buildings, also known as living buildings, are growing in popularity. Living buildings are generating their own energy using solar panels, wind energy and other renewable energy. Many occupants of living buildings grow their own produce and operate a swap and share scheme.

• Waste-free buildings produce their own energy and generate minimal waste. The buildings and occupants work together with facilities management teams to achieve sustainable living.

• Wellbeing buildings are the trend of the moment in FM circles. Everything from the paints, carpets and furnishings are ergonomically designed for the benefit of the building’s occupants.


People running up a trend arrow

Every FM manager should know these trends

There are a number of trends set to change the FM and services industry. By identifying changes that will impact the sector, managers can plan for, and even benefit from, future shifts in society and in how we do business.

Economic Growth
The shift in economic growth from the west to emerging markets in the east means industry players must do more to set themselves apart in what will become a crowded market with new competition. Multinational companies should ensure their products can be tailored to a variety of local markets, so they can capitalise on growth in areas with differing cultures.

Commercialisation
Trends in commercialisation will lead to greater competition and innovation, with industry players needing to ensure their customers stay relevant. It will be essential that managers understand key business indicators and how they can help customers achieve optimised performance. Two examples of this would be to use lean management techniques that cut needless processes or the data-driven six sigma method, which seeks to enhance customer satisfaction with continuous process improvements and low defect rates.

Ageing Population
An ageing population coupled with diminishing pension incomes are leading to an increasing number of people working until later in life, which is changing the workplace. When it comes to hiring and retaining staff, the FM industry will need to gain an understanding of the motivation that drives its staff, which will differ widely from generation to generation.

Furthermore, with a four-generation workforce set to become commonplace in European, American, Japanese and Chinese workplaces, recruiters will need to recognise the differences between these generations, along with the challenges and opportunities that this trend will present.

Technological Progression
Advances in technology, including smart security, robotics and sensors, will affect jobs, leading to reduced demand for low-skilled workers, while increasing demand for skilled staff.

Climate Change
Climate change will force most industries and societies to become greener, which could impact on supply chains and the design, maintenance and management of buildings in the future. However, climate change and the urbanisation of mid to low-income countries in regions prone to natural disasters will bring new risk to the industry, which must ensure it is adequately prepared for such an event. This could be by having robust contingency and continuity plans in place.

Health
Meanwhile, the growing focus on human health will lead to the redesign of buildings to encourage staff to be more active and to stave off lifestyle-related diseases such as diabetes. This trend is notable for the industry, as almost a third of Europe’s FM revenue comes from the healthcare sector, but budget cuts could result in governments outsourcing more work.

Flexibility At Work
Lastly, the traditional workplace is changing, with companies of all sizes shifting to models that promote flexible, collaborative, innovative and productive work. This is demonstrated by the growth of coworking environments, homeworking and flexible working options that have become common across the world.

This trend can be used to help retain and recruit staff. A company can be more appealing for prospective workers by offering flexible working options. Flexible working will require managers to use online facility booking and management tools.

Trends that could impact the industry are wide-ranging, but the common factor here is preparedness, which could make the difference between success and failure.