Disclaimer : Contracts data is based on public available information. Due to Covid19, many of the contracts could be extended or re-procured.
As the outsourcing picks pace in the UK and the private sector companies continue to look increasingly to focus on their core business metrics and outsource the rest, the FM providers will continue to be in the thick of heightened business opportunities in the mid and long-term.
Through this article we will have a look at the mid-term available business opportunities from the private sector corporates to the FM providers. The outsourcing to FM has been successfully used in various sectors like retail, professional services, healthcare, technology, logistics, manufacturing, education as well as by the public sector. The areas that FM services generally cover vary widely and primarily depends on type, size and the sector in which it operates. There is no one size fits all approach and some organizations will prefer a single service solution provider while others may look for bundled service offerings or total facilities management solution.
Mid-term business scenario for FM providers covering a three year period provides a glimpse of the volume of business that will be available between 2023-25 basis the coming to close of the currently running contracts. Below chart gives an idea of the contracts that will expire each quarter for the three year term.
Q1 of 2023 which will mark the beginning of this phase provides an opportunity in excess of £98 Million annual value worth of contracts to the FM Providers from the private sector businesses.
This will be followed by a steady and consistent flow of business all through this period.
Top Private Sector entities with large offerings during 2023-25
An analysis of the data available shows some high value deals in the offing for the FM industry from private sector in the near and long term period. Lets have a look at some of the large contracts that will expire in this duration.
Lloyds Banking Group from the banking sector will provide one of the largest outsourcing opportunity currently valued at £170 Million annually during Q3 of 2024. The contract which was procured for a period of 5 years is currently held by Mitie. Nationwide Building Society which is one among the largest Cooperative financial institutions and provides mortgage and personal finance services to its members provides the second largest FM opportunity in this duration with an offering of £50 Million annually.
Few more upcoming deals are highlighted below.
Top 10 FM buyers during 2023-25 as per value of deals on offer
Category wise spread for FM opportunities for 2023-25
The category spread of the total business deals as per data analysis shows Manufacturing & Industrial being the top category at 23% of overall value business for the period at review. This will be closely followed by Banking sector at 20%, with Retail contributing 13% and Leisure driven by Sports & entertainment companies clocking 12% of overall value business. The other significant offerings will come from Housing, Finance & Insurance and Healthcare as well. Below chart gives a glimpse of the overall pie.
Way ahead to seize these business opportunities
In the normal course once a contract is due for expiry, the buyer initiates a process for fresh bidding six months (some cases 1 year earlier) before the contract expires. All expired or any new contracts go through a laid out process of tendering and bidding and then the contract reward to the successful bidder. Based on this assumption below table shows the tentative timelines for the initiation of this process for the prospect business for this period.
Going by the figures the FM industry will be full of exciting business opportunities from the private sector companies in the mid-term period. The FM providers can look forward to high value and lucrative business opportunities in the coming times.
BD Metrics shows us incumbents retains 70% of their contracts.
If you are an incumbent looking to renew or challenger looking to displace the contract then drop me a line – baskar@baachu.com to discuss your sales growth opportunities, goto market and renewal bid strategies