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ANALYSIS
UK sets sights on overseas opportunities GRAEME DAVIES newsdesk@fm-world.co.uk
The latest round of corporate news from the FM sector’s biggest players has highlighted the growing dichotomy between those who are seeking to consolidate their position of strength in the UK market by extending contracts and making acquisitions, and those who continue to seek further expansion in growing overseas markets where opportunities appear to be somewhat easier to come by. With its heavy focus on the UK, Capita Group is already one of the biggest providers of outsourced services to the UK public sector and a widened collaborative partnership with the London Borough of Lambeth announced last week, illustrates the opportunity available to bigger players to more deeply embed themselves within the businesses they serve. Capita has supplied Lambeth with revenue collection services for council tax since 1997, but under the expanded agreement it is now adding call centre management and IT support functions taking the contract’s value to £60m over the next ten years. Built into the agreement is the potential for even further expansion, which could take the contract value to £300m over the same period. The gain for Lambeth is a projected £16.5m cost saving over the life of the project. 10 | 14 JULY 2011 | FM WORLD
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Capita has also bulked up its customer services operations through the acquisition of customer contact specialist Ventura for £65m. This deal works both ways, with Capita gaining Ventura’s expertise which it can sell across its existing customer base, and also the ability to sell existing Capita services into Ventura’s customers. These two moves illustrate Capita’s existing strong position in the UK and its ability to grow even without a significant increase in overall outsourcing markets. Utilising the breadth of its offering, Capita is able to provide clients with a one-stop shop of services that many rivals
cannot match – especially when Capita continues to expand those services through acquisitions. But other large outsourcing specialists appear to be less willing to stake so much on domestic markets. And with the flood of outsourcing that was expected to emerge following the Coalition government’s victory last May not yet having materialised, and increasing incidences of radical public sector service reform being reconsidered in a series of high profile u-turns, this may yet prove to be a wise strategy. Public sector changes It is clear that public sector service provision in this country is changing, and in some cases rapidly, but the pace and depth of change has been erratic in some areas and downright unpredictable in others. Over the long term, vast swathes of UK public services will be delivered by the private sector, but the increasingly imageconscious Coalition government is not yet being as radical as some expected. Serco alluded to this
when it said that the UK market remains “challenging, with short term headwinds resulting from government austerity measures, together with some uncertainties regarding public service reform”. Serco also announced a two year deal with the Australian Defence Force to support its bases in the Middle East and said that trading in the first half of the year had been resilient, but mainly due to opportunities in overseas markets. This may explain why some of Capita’s peers continue to forge further growth opportunities overseas, after all diversification, should theoretically improve overall resilience. Interserve illustrated this twin-pronged approach in its recent trading statement, which reported £1bn of contract wins since the opening six months of the year, including deals with the Department of Transport and the RAF, and contracts in the United Arab Emirates, including with Dubai International Airport. Graeme Davies writes for Investors Chronicle
Contract wins
NEW BUSINESS Travel concession catering operator SSP has extended its relationship with holiday village company Center Parcs with a £110m contract.
provide round-the-clock security at The Sage Gateshead, a prominent live music venue and education centre in the town.
Independent caterer Charlton House is taking up a £2m catering deal at Gatwick Airport, pushing aside longtime incumbent Sodexo. Charlton House replaces Sodexo after 25 years to provide 24-hour catering for 23,000 airport staff in the north and south terminals.
WhiteOaks, a division of Compass Group UK & Ireland, has won a £1.6m contract with Abbeyfield Wey Valley Society to provide residents’ catering for five years.
Axis Security has won a contract to
Liverpool Cathedral has appointed specialist concession caterers Couture to manage its restaurant, café and hospitality suites.
The Co-operative Group is awarding a three-year contract to Managed Support Services (MSS) for the management of buildings in North Staffordshire. The deal is an expansion of an ongoing contract with MSS that the Co-operative Group awarded last December, for which MSS is delivering a multi-service, critical engineering solution for five data centres. Global construction services specialist Hochtief has agreed a major contract with Halton Borough Council worth an estimated €181m (around £162m) over 27 years. GBM Support Services has been awarded a five-year contract with Transport for London (TfL). GBM will provide TfL with a range of facilities management services, including cleaning, waste management, pest control and horticulture. www.fm-world.co.uk
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