UK FM Cleaning Services Market Overview and COVID-19 Impact Report

Copyright © 2020 by Baachu
UK FM Cleaning
Services Market
Overview and COVID-19
Impact
Market Report

Overview of cleaning services market
FM Service Provider Landscape
Outsourced FM Market in UK: By Service and Sector
Top FM deals by sector
Contract Overview for soft FM in Public and Private Sector
Digitisation in Cleaning
Evolution of client expectations
COVID-19 Opportunities
Impact of COVID-19 and market segmentation
Table of Content
Advice for cleaning suppliers navigating Covid-19
UK Market Snapshot
Cleaning Services FM Market in UK: By Sector and Key
Players

3
UK Market Snapshot
 UK Public sector – 58.4 Billion GBP
 UK Private sector – circa 58.6 Billion GBP
 Third generation outsourcing with 2% YoY growth next 3 years
 Average contract length – 3.5 years
 Key players in the market – 80
 Top 5 Players account for 33% of the market
*Public Sector: Healthcare, local government, education, and ‘other public sector’ (including defence,
transport, libraries, heritage and culture).
*Private Sector: Commercial offices, financial services, manufacturing, and ‘other private sector’ (including
retail, hospitality & leisure, and logistics).

4
Cleaning Services Market
 The British Cleaning Council (BCC) is calling for all cleaners to be to be included in
the expanded first wave of testing for Coronavirus for ‘essential workers’ announced
last week.
 1.63 Mn workers in the industry, making up around five percent of the UK
workforce, makes it one of the top ten largest UK industries for employment.
 Cleaning contributed circa £60 billion to the economy in 2019
 300,000 companies in Europe
 Living Wage, Apprenticeship Levy and Mandatory Pension

5
The Focus and the Covid-19 context
 Health, Social and macro economic effect –
 Community spirit – mental health, work from home, social wellness
 Nightinghale, PPE, Testing and NHS
 Furloughed employees
 Cashflow and Supply chain difficulties
 Reallocation of resources
 Sick leave
 Sales decline and Contracts cancelled
 Lack of information on the Government's exit strategy
 Employees ability to work
 Business rate grants and CBILS
 Procurement and Bid Teams

6
The market segmentation
 Self employed cleaner
 Very small companies/smes
 Mid tier companies
 Large groups

7
FM Service Provider Landscape
Source:
1. Frost and Sullivan
Facilities
Management
Property
Management
Technical FM &
Energy
Management
Cleaning &
Security
Work place
Optimisation
Performanceof
facilities/assets
Soft services
Productivity of
real estate
Company Background
Hard and
Technical
services
Examples
Key Role
Productivity of
staff and
workplace

8
Coronavirus - what's the impact on your cleaning
business?
 Our sector is in a double bind. On the one hand, closed-down buildings put
cleaners at the risk of redundancy and cleaning companies in very difficult
economic situations, which is neither of their will nor of their responsibility.
 On the other hand, those buildings and sites which remain open require higher
hygiene standards and specialised sanitisation services that demand quick
adaptation and training by staff and companies.
 The commercial cleaning sector is directly affected by the temporary closure of
offices, leisure, retail and education facilities, which together represent more than
54% of the sector’s market segments.
 On the other hand, activities spike in hospitals and industrial sites – which
represented at least 16% of the overall operations.

9
Growth effect
 Public sector published the fewest opportunities since Contracts Finder fully came
into force
 Local Government were responsible for nearly half of these cancellations.
 Non-urgent procurements and procurements that were not shaped in Q1 2020 are
naturally taking a back seat to this immense crisis.
 With closed offices and people isolated and working from home, companies
working with the public sector will fare better than most in 2020.

10
Buyer approaches to current contracts and planned
procurements
 Oil and Gas, Retail, Commercial buildings, Manufacturing, Hospitality impacted
 Vs Telco, Utilities, Housing, Pharma, Central Government, NHS Healthcare
increase demand and
 Schools, Universities..
 Terminated contracts range from minimum 1 to max 3 per service provider

11
Outsourced FM Market in UK
Source:
1. Rain FM Database
2. Baachu Analysis
50.1%
49.9%
Total UK FM Market = £117.0 Bn
Private Public
 Outsourced FM market in the UK was c.£117.0 Bn in Total Contract Value (TCV) in 2020
 Market was dominated by Private Sector which exhibited a high level of outsourcing
activity contributing 50.1% (£58.6 Bn) to the total FM market
Source: Baachu RAIN Database dated 20 Dec
2020
Outsourced FM Market in UK – Public and Private (2020)

12
Outsourced FM Market in UK: By Service Type
Outsourced FM Market – By Service (2020)
Source:
1. Rain FM Database
2. Baachu Analysis
 In Public Sector, soft FM contributed 36.8% to the public FM market; followed by
Integrated FM (26.2%)
 Whereas in Private Sector, Integrated FM contributed 45.2% to the private sector market;
followed by soft FM (27.8%)
19.7%
32.3%
35.7%
12.3%
Hard FM Soft FM Integrated FM Other Support Services
2020

13
Outsourced FM Market in UK: By Sector
Source:
1. Rain FM Database
2. Baachu Analysis
21.4%
17.2%
11.7%
7.6%
6.6%
5.6%
5.4%
5.2%
5.1%
4.7%
3.9%
3.6%
1.0%
1.0%
Office
Central Government
Local Government
Manufacturing & Industrial
Energy and Utilities
Defence
Residential and Housing
Health Care
Leisure
Transport
Retail
Education
Others
Property Management
 In Public Sector, Central Government contributed 34.5% to the public FM market; followed
by the Local Government (23.1%)
 Whereas in Private Sector, Office sector contributed 42.3% to the private sector market;
followed by Manufacturing & Industrial (15.1%)
2020
Outsourced FM Market – By Sector (2020)

Outsourced FM Market in UK – Market Share (by TCV)
Outsourced FM Market in UK – Top FM Players
Source:
1. Rain FM Database
2. Baachu Analysis
14.5%
5.8%
3.9%
3.3%
3.2%
2.7%
1.5%
1.4%
1.2%
1.0%
1.0%
1.0%
0.9%
0.8%
0.8%
57.1%
Mitie
Interserve
ENGIE
Compass
Sodexo
ISS
Serco
CBRE
EMCOR
G4S
OCS
Vinci Facilities
Integral
Skanska
Kier
2020
Note:
1. The liquidation of Carillion in Jan 2018 impacted the UK FM Market, however,
most of the contracts were awarded to other FM Providers. Hence, its contracts
were considered to calculate the market size
2. Others also includes contracts that were awarded to multiple vendors
3. Mitie has acquired Interserve’s FM division in Dec. 2020; the impact has not
been included in current analysis
 UK FM Market is highly fragmented with top 15 players holding ~40% share of overall
FM market and remaining held by other players
 Mitie leads the FM services market with TCV of ~£17 Bn, followed by Interserve (~£6.8
Bn) and Engie (~£4.6 Bn)
− Mitie Group is the largest provider of Soft FM, Hard FM, and Integrated services in the
UK FM market, with share of ~14.2%, 6.6% and ~22.0% respectively

26.2%
36.8%
22.4%
14.6%
Total Public FM Market = £58.4 Bn
Integrated FM Soft FM Hard FM Other Support Services
Outsourced FM Market: Public Sector
Outsourced Public FM Market in UK – By Service (2020)
 In the Public Sector, the Soft FM services contributed £21.5 Bn, accounting for 36.8% of
the market share; followed by Integrated FM (26.2%) and Hard FM (22.4%)
 Soft FM and Integrated FM services together account for more than half (~63%) of the
public FM market in the UK
 Other Support Services include back office processing, finance & accounting services,
consulting, schemes & programmes, vehicle/fleet management, interpretation, and
translation services among others
Source:
1. Baachu Rain FM
2. Baachu Analysis
2020

16
Outsourced FM Market: Public Sector
Source:
1. Rain FM Database
2. Baachu Analysis
 Within the Public Sector, the Central Government is the largest procurer of FM services
accounting for almost a third (~34.5%) of the FM market in the UK, followed by Local
Government (~23.1%) and Defence (~11.2%)
 The Central and Local Governments together offer the biggest opportunity to FM
providers in the Public domain as they account for more than half the market (~57.6%) of
the Public FM Market in the country
Outsourced Public FM Market in UK – By Sector (2020)
Note:
1. Transport includes govt. transport authorities such Department for Transport
(DfT); Transport for London; Bristol Airport; Highways England etc.
2. Leisure includes govt. bodies operating public facilities such as British Library;
Imperial War Museums; Blair Castle etc.
3. Education includes Government schools
4. Even though Defence, Healthcare, Transport, Education are part of central
government they are categorized separately as they still are very independent in
procuring their own services
Others include Housing, Transport and Leisure (Museum,
Libraries) etc.
2020
34.5%
23.1%
11.2%
10.4%
6.3%
5.7%
8.9%
Total Public FM Market = £58.4 Bn
Central Government
Local Government
Defence
Health Care
Education
Others

17
Outsourced FM Market: Private Sector
Source:
1. Rain FM Database
2. Baachu Analysis
 In the Private Sector, Integrated FM contributed ~£26.6 Bn, accounting for almost half
(~45.2%) of the market share, followed by Soft FM (27.8%) and Hard FM (17.0%)
 Soft FM and Integrated FM services together account for more than 70% of the Private FM
market in the UK
 Other Support Services include middle-office services, conference & hotel services,
passenger services, programme formulation, consultancy, hotel/accommodation services
among others
Outsourced Private FM Market in UK – By Service (2020)
45.2%
27.8%
17.0%
10.0%
Integrated FM Soft FM Hard FM Other Support Services
Total Private FM Market = £58.6 Bn
2020

18
Outsourced FM Market: Private Sector
Source:
1. Rain FM Database
2. Baachu Analysis
 Within the Private Sector, Offices are the largest procurer of FM services accounting for
over a third (~42.3%) of the private FM market in the UK, followed by Manufacturing &
Industrial (~15.1%) and Energy and Utilities (~12.2%) sectors
Outsourced Private FM Market in UK – By Sector (2020)
42.3%
15.1%
12.2%
8.8%
7.9%
5.0%
8.6%
Office
Energy and Utilities
Leisure
Retail
Others
Total Private FM Market = £58.6 Bn
Note:
1. Transport includes private transport players- Train Operators, Airport
Operators, Airlines..
2. Leisure includes private facilities such Sports Venues , Zoos, Exhibition Centers
and Theatres etc.
3. Education includes private schools, colleges and universities .
Others includes Transport, Health Care, Property Management and
Education
2020

19
Cleaning Services FM Market: Sectors
Source:
1. Rain FM Database
2. Baachu Analysis
 In the Public Sector, Health Care is the largest procurer of cleaning services, with total
contracts worth ~£2.0 Bn (accounting for ~33.2% of the market), followed by the Central
Government (21.5%) and the Local Government (15.1%) sectors
 In the Private Sector, Office is the largest sector opting for cleaning services with total
contracts worth ~£9.6 Bn (accounting for ~61.9% of the market) rolled out to the service
providers, followed by Manufacturing & Industrial (12.2%) and Retail (9.1%) sectors
Cleaning Services FM Market – By Sector (2020)
44.8%
9.2%
8.8%
6.6%
6.0%
5.4%
19.1%
Office
Health Care
Retail
Central Government
Transport
Others
Cleaning Services Market = £21.3 Bn
Note:
1. Transport includes private transport players- Train Operators, Airport
Operators, Airlines..
2. Leisure includes private facilities such Sports Venues , Zoos, Exhibition Centers
and Theatres etc.
3. Education includes private schools, colleges and universities .
Others includes Defence, Education, Energy and Utilities, Local Government, Residential and Housing, Property Management and
Leisure
2020

20
Cleaning Services FM Market: Key Players
Source:
1. Rain FM Database
2. Baachu Analysis
 Mitie is the largest cleaning services provider in the UK FM Market accounting for
~32.4% of the market share, followed by Interserve (11.0%) and ISS (6.0%)
Cleaning Services FM Market – By Key Players (2020)
32.4%
11.0%
6.0%
4.6%
3.8%
3.8%
38.3%
Mitie
Interserve
ISS
Serco
EMCOR
Sodexo
Others
Cleaning Services Market = £21.3 Bn
Note:
1. The liquidation of Carillion in Jan 2018 impacted the UK FM Market, however,
most of the contracts were awarded to other FM Providers. Hence, its contracts
were considered to calculate the market size
2. Others also includes contracts that were awarded to multiple vendors
3. Mitie has acquired Interserve’s FM division in Dec. 2020; the impact has not
been included in current analysis
2020

Top Market Sectors: Deal Volume (next four years)
Source:
1. Baachu Rain FM
2. Baachu Analysis
Note:
1. Break-up by service may not add-up as the contribution of “Other Support Services” and “Uncategorised”
categories have not been mentioned
Leisure
# of Deals 194 155 138 118 111
Soft FM 54% 25% 56% 86% 47%
Hard FM 20% 30% 18% 6% 12%
Integrated FM 11% 44% 25% 8% 23%
Local Govt. Office Central Govt.
Education

Top Market Sectors
Note:
1. Break-up by service may not add-up as the contribution of “Other Support Services” and “Uncategorised”
categories have not been mentioned
Housing
Market SizeA >£18 Bn >£6 Bn ~£6 Bn ~£6 Bn ~£5 Bn
Soft FM 17% 51% 30% 6% 20%
Hard FM 13% 11% 19% 63% 27%
Integrated FM 71% 3% 26% 11% 53%
Office Local Govt. Energy & Utilities
Local Govt.

The moving parts

Central Government
 CCS Next Generation FM Marketplace
 Expected 70% supplier to be SMEs. Out of 70 shortlisted suppliers around 10 suppliers
were SMEs
 All Central Government bodies (HMRC, MOD, DWP) will have no choice (except libraries
and museums) to use the framework
 After defence, CCS is continuing to review whether the generic package will work, or they
will need design customised package for fire brigade, schools, NHS, academies, local GOV
and more…
 Outsourcing playbook 2.0
 NEW - Building Cleaning Services - A Dynamic Purchasing System (DPS) - full range of
internal and external building cleaning services
 Beware of the direct awards

UK Public Sector FM Landscape is changing..
 Over 400 Facilities Management framework agreements have been created since 2015
 More than 250 buyers involved (Buyers in London, Tyne & Wear, West Midlands and
Manchester are particular active)
 2,626 FM suppliers named on these FM frameworks
 70 public sector facilities management frameworks expiring before the end of 2020

Local Government
Buyer approach – Insourcing, Local approach, Devolution and Social Value

NHS
 Buyer approach – Hybrid
 NHS procurement will gradually move to CCS marketplace
 The NHS has an Apprenticeship Levy worth £200m - Level 2 Healthcare Cleaning
Operative apprenticeship standard.

Education – Colleges, Universities and Schools

Office and Commercial Buildings

Manufacturing and Industrial
*Industrial Goods &
Services
Pharma & Bio Tech
Construction Materials
Automobile & Parts
Chemicals
Food and Beverage
Personalised & Consumer
Goods

Leisure
Buyer approach – Insourcing
*Sports Venues - Football
Clubs, Race Courses,
Tennis, Cricket
Museums
Zoo
Exhibition Centres
Theatre

Security Services
 Mobile Security
 Security Systems
 Remote monitoring
 Intelligent reporting
 In theory – many companies have “reopening premises toolkits and processes”

The Positive
 Did you ever think your business could move to a 100% work-from-home environment
with less than three weeks’ notice?
 This crisis is forcing businesses to flex – vastly accelerating the digital-first environment,
dramatically cutting redundancies and improving processes at scale.
 There is a massive amount of change happening, and out of change comes real
transformation.
 Strong will be get stronger
 Bottom line - everyone managed to adapt but prepare for recession
 How can we assist our friends to come out of this and recover quicker?

Digital trends in cleaning
 TRACEABILITY AND
TRANSPARENCY
 USER SATISFACTION AND
COMPANY PROACTIVITY
 THE NEED FOR REACTIVITY
 OPTIMISATION OF PLANNING
 USER SATISFACTION AND
COMPANY PROACTIVITY
It can take a long time to set up
digital solutions. It is only of
interest to clients when
considerable turnover is
involved….

The vicious cycle of digital transformation within cleaning
companies..

THE EVOLUTION OF CLIENT EXPECTATIONS
 We have ever greater expectations concerning traceability and access to information on
the effectiveness of services provided
 The crunch point is when consumables need to be replaced in toilets ; cleaning companies
must be able to respond within an hour
 We now pay more attention to the organisation than to the number of people and the
surface areas we are dealing with
 Ideally, we would like the company to intervene before the problem becomes apparent. It
is no longer the frequency of cleaning that is the issue, but the quality of the service and
the satisfaction of those who use it
This has become indispensable those who are not able to do it will be excluded from the
market

Identifying Your Company’s Growth Zone

The Opportunities
 Outsourced Opportunities
‒ Around 11000 FM opportunities outsourced (£85* Billion) in UK
‒ 1250 opportunities expiring (next 12- 18 months) across both Public and Private
sectors
‒ 50% of these are between £500k to £5m annual revenue
‒ Insourcing and Integrator
 Covid opportunities – Taskforce (safer environment)
‒ W curve (close offices, employee affected covid19)
‒ Disinfection and security - high growth
‒ Regular deep cleaning , swab testing, thermal cameras
‒ Workplace planning and Virtual teams
‒ Mandatory floor markings and restriction in lifts (2 metres apart)
‒ Staggered breaks and open and close times
 Reactional opportunities – people, property and company
Growth is harder to find and needs to be driven by new value propositions, advanced
technical solutions, and productivity gains for customers.

The Opportunities
 How quickly can companies restart and recreate ?
‒ 2000+ Cleaning contracts across public and private sectors
‒ Major players will halt innovation and put back to core business and pull back from
marginal business worth millions. Based on Covid – 19 personal experience, some
companies will dig deep and align to values and purpose
‒ New opportunities in the market will be even more reliant on the resilience of the
companies and relationships
‒ Entrepreneur and SMEs space – have 18 month head start

General Procurement Considerations
 A large number of contracts have been extended to the end of the year. This will create a
bottleneck in companies’ abilities to bid for work.
 Updated GOV procurement timelines could be published!
 Lack of face-to-face discussion means that future needs are not being discussed and this is
likely to delay future procurements.

Intelligence is Critical
 Its not just about competition - Who are your competitor’s top public and private sector
customers?
 How exposed are your competitors to individual contracts?
 Who is winning (and losing) from this erosion in market share?
 How does your go-to-market strategy compare to your competitors?
 Which suppliers would be most exposed to a post-election policy change?

Our advice for cleaning suppliers navigating Covid-19
 Expect disruption in current/future bids
 Look out for extensions to current contracts
 Use your time for strategic planning
 Direct awards more likely

The Positives
 Unsung heroes – Thank you (Social Media)
 C-19 Business pledge
 The covid19 outbreak is bringing out the best in the
facman sector
 Contribution of the industry – an opportunity (or
missed) to improve the trust deficit?
‒ We've gone from a sector which had little
recognition to now being on the first line with
public or is it?
‒ Reconfigure the hospital every week, at scale and
speed. What if this is insourced?

Key workers or not?
 Too often national authorities do not take into consideration that cleaning agents are often
working under hazardous and difficult circumstances, that can put their own health at
risk.
 No communications yet from - cleaning industry’s and cleaners’ crucial role in preventing
the spread of the virus by providing cleaning, disinfection and sanitisation operations, that
ensure the maintenance of hygienic conditions and cleanliness in hospitals, nursing
homes, and all other essential buildings and infrastructures.
 Are we doing enough ?

The Board Room..

Pipeline Test and Booster

COVID-19 Will Hit Certain FM Contracts Harder Than Others
 If there’s one thing that is certain right now, it’s that a recession is coming soon. By almost
all accounts, it looks like it will be the biggest hit since the 1930s when the stock market
collapsed in New York. However, identifying who will perish, or adapt and flourish, post
COVID-19 is still very much an impossible task
 Digital projects that save money and lower operating costs would continue to attract
investment, but those that require capital may not be as popular
 Reactional Opportunities Spotting, Gap filling and consolidation –
‒ Behaviour bites and breaks
‒ People planet profit
 What kind world will emerge ?
 There will be scars economy will have to live with

The path ahead..
 The UK FM market has rapidly fragmented and shifted, resulting in a growing polarisation
of ‘winners’ and ‘losers’ depending on providers’ market positions and their ability to
identify changing market dynamics and quickly adapt accordingly.
 For those able to identify on-trend influences, clearly plan and implement exit strategy of
the isolation/furlough, exploiting market growth of 10% or above the next four years is a
realistic target. For those FM providers less able to recreate quickly, identify trends and
adapt, the number of pitfalls in the market continues to grow….

The Clarity
 Baachu brings clarity to UK Facilities Services procurement – a huge but under-reported
market
 We help you to win more business by planning strategically and generating new leads
proactively
 Save time, gain insight, improve sales effectiveness

50
At Baachu, we design and implement simple, sustainable and data driven outsourcing
solutions every day.
 We have organized our team into:
 Growth and Strategy
 Learning and Development
Our culture is based on five values – capability, creativity, credibility, connections and
confidence. These values are the essence of how we behave, what we believe, what we expect,
who we are, what we deliver, and what we exist for.
Baskar Sundaram
Trusted Advisor to Facilities Service Providers
Website: www.baachurain.com and www.baachuscribble.com
Phone: 0203 574 8855
Mobile : 0771 819 3599
Email: baskar@baachu.com

At Baachu, we design and implement simple, sustainable and data driven outsourcing solutions every
day.
Our vision is to be the world’s premier research driven, technology enabled outsourcing capability
partner achieving sustainable results for our customers, building fulfilling careers for our people and
earning a fair return on the value we deliver.
Our culture is based on five values – capability, creativity, credibility, connections and confidence. We
call our values “multipliers” - the combination of 5Cs that enables us to grow and serve as a powerful
integrated business. These values are the essence of how we behave, what we believe, what we expect,
who we are, what we deliver, and what we exist for.
Why Baachu?
Baachu’s solutions aim to integrate growth consulting, bespoke research, data analytics, subscription
products, bid and capture support to enable our clients achieve their goals.
Contact:
Baskar S Sundaram
Director, Baachu
11th Floor, Sussex Innovation, No.1
Croydon, 12-16 Addiscombe Rd,
Croydon CR0 0XT
0771 819 3599
020 818 13602
baskar@baachu.com

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