Hi there,

This week we’re carrying on with our series on outsourcing by starting to take a look at the pros and cons of the different options available to you – and we’re starting with the advantages and disadvantages of in-house facilities management.

Wait, what?!

Yes, I know – this series is about outsourcing – so why are we talking about in-house delivery?

Two reasons – firstly, if we’re considering whether or not to outsource, we need to establish a baseline.

If we want to outsource a service, we’re likely going to need to convince others that it’s a good idea. So we need to be able to compare the outsourced option with what we currently have.

Secondly, remember that outsourcing isn’t always the right option for every organisation, so we need to think carefully about in-house delivery as well as outsourced contracts before making any decisions.

It could be that the best option is to keep things in-house (or even bring them back in-house if we’re outsourcing a service already).

One other thing to consider is that this is not an exhaustive list and I’m positive that amongst the thousands of subscribers that we have to this e-mail, there will be people who can give additional examples of the benefits or drawbacks of in-house service delivery.

If you’re one of those people, don’t be shy!

Reply to this e-mail, share your ideas and we’ll include them in future newsletters. That way we can all help each other to get better at our jobs and do our part to improve the Facilities Management industry as a whole.

We’ll even give you a mention in the newsletter so you can bask in the adulation of thousands of other FMs – OK, perhaps I’m over-egging it but it’s always nice to get recognition, right?

Before we get started, our new website is nearly done and once it goes live, we’ll be publishing all of our previous newsletters online, so if you’ve only just joined us and missed the previous parts of this series don’t worry – you’ll be able to catch up soon.

So without further ado, let’s get into it.

What is in-house service delivery – a quick recap

As we explained last week, in-house service delivery is where we deliver services using in-house teams, as opposed to bringing in a third party company to deliver those services for us.

The staff that manage and deliver these services are on our company’s payroll and we are responsible for recruiting them, managing their performance and ensuring that their employment rights are met.

So what’s good about doing things in-house

If you want something done properly, you’ve got to do it yourself, right?

Well not necessarily – but sometimes, yes.

Keeping things in-house gives us a greater degree of control over a service as we always have our staff right there, on-site and ready to respond to any issues.

We are responsible for leading and motivating our people and if we do this well, we’ll have a team of loyal staff who will go about their work with the best interests of our organisation in mind.

On the subject of loyalty, one of the issues with outsourcing is that outsourced staff may have split loyalties between us (the client) and their employer (the outsourced company). So whilst they have an interest in delivering a great service for us, they also need to be mindful of doing it profitably.

This can cause a conflict of interest, meaning that service delivery may suffer in the name of profits for the third-party outsourcer. With an in-house team, there is no such conflict.

Depending on the nature of the service, it can also be more cost-effective to keep things in-house. This is especially true for services which require a full-time presence on-site.

Take cleaning as an example.

For most organisations, cleaning only needs to be carried out for a couple of hours each day and so bringing in an outsourced team to whizz around the building and make sure everything is spick and span is usually the most cost effective option, as even once we’ve factored in their profit margin, we still save money on the service overall and we’re only paying for a few of hours of work.

But what about if cleaning our premises takes all day, every day?

For instance, in a hotel, not only do the communal areas and offices need to be cleaned, we also need to deal with every single room, including making the beds, cleaning the bathroom, restocking the minibars and laundering the bedsheets.

In this instance, it can make financial sense to employ an in-house team and cut out the profit margin of the outsourcing company.

Sounds good – so why wouldn’t we want to keep things in-house?

Of course, it’s not all sunshine and rainbows – keeping things in-house has its drawbacks as well.

Firstly, with great control comes great responsibility.

As the direct employer of an in-house team, we are responsible for all of the responsibilities that come with being an employer, including salaries, holiday pay, sick pay etc.

This comes at a cost, both financially and in terms of time. In the worst case scenario, if we get this wrong we are liable to be sued for neglecting our duties as an employer.

We’re also directly responsible for training our staff and keeping them up to date with the latest techniques and technologies. If budgets are tight, this can easily fall by the wayside, meaning that our services are not being delivered in the most efficient way.

An outsourced company, on the other hand, will have a greater incentive to keep their staff trained and up-to-date in order to win more business, and will also be able to split the cost of training across multiple contracts, making it more cost-effective for them.

In addition, as a direct employer we’re also responsible for covering any absences in order to ensure that the service continues to be delivered, even when people are on holiday or off sick.

This can result in expensive solutions such as using temporary agency staff, which can wipe out the savings we’ve made on an outsourced company’s profit margin.

An outsourced company, however, will be better placed to deal with such absences. For example, they may temporarily transfer staff from another of their contracts in order to fill the gap.

Alternatively, if they need to employ agency staff, it’s not our problem – we will continue to pay the rate agreed in the contract and not have to swallow the additional agency fees associated with temporary workers.

Finally, there is the issue of redundancy. If we employ staff, we need to pay them (obviously).

But what if their job only takes a couple of hours each day?

We either pay them for a full day, meaning we’re getting very poor value for our money, or we keep them on part time or zero-hours contracts and only pay them for the time we use them.

Whilst part-time and zero hours contracts can work for some people, depending on their situation, for many it will mean that they do not earn enough by working for us to live on, meaning they need to take second or even third jobs to make ends meet.

This can cause split loyalties between us and other employers and can lead to conflicts and unreliability.

An outsourced provider is better placed to manage this. By employing staff across multiple contracts, they can ensure that there is enough work to offer full time employment and consequently do not suffer the issue of redundancy.

That’s all folks

So, there you have it. The advantages and disadvantages of keeping things in-house are numerous and I should probably point out again that this is not an exhaustive list. If you can think of anything that could be added, we’d love to hear from you so we can share with the rest of our subscribers. Simply reply to this e-mail with your ideas.

For now, have a great week!

Chris and the Xenon Team

P.S. If you haven’t already studied or started studying for an IWFM qualification, which will cover topics like this in depth and fully assess your understanding, you may want to have a look at our guide to the IWFM Qualifications which will give you a full breakdown of how they work and what’s involved in the different levels. You can download it here.

P.P.S. If you’re already considering taking a qualification but don’t know which level to go for, a good starting point is our One-Minute-Leveller tool, which will ask you a few questions and give you a recommendation based on the result. You can access it here.