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ISS Buys GSH - The Interview

05 February 2015 | Updated 01 January 1970

In mid-January, ISS UK Limited, a global provider of facility services, acquired the UK & European operations of engineering firm GSH Group Plc (£72m in the year ended 31 December 2014. Employing circa 800 staff) with a view to enhancing its technical services capability - and to 'drive towards a more integrated self-delivery solution'. Here we ask Richard Sykes, ISS UK and Ireland CEO, about his vision of the future.


TWinFM: Will the major enhancement of your technical services allow you to work for more private sector clients or will you be seeking more government and local authority work?

RS: We have a stable balance between our private sector (55%) and our public sector (45%) contracts which we feel is a good balance. The purchase of GSH is far more about further strengthening our technical services capability and allowing us to grow our offering around energy management which we realise is a very big fundamental issue for most facilities managers and property owners.

GSH also gives us a springboard to grow our technical services offering across Europe - it's not just a UK acquisition it's a pan-European opportunity as well. GSH has a presence in most European countries that fits well with our existing footprint so it will enable us to be in a better position to compete for pan-European opportunities and furthermore - global opportunities as they come to market.


TWinFM: What about improving margins...and indeed improving wage rates that I know you and ISS are great believers in?

RS: Having GSH within our business will give us an even greater integrated offering or IFS (Integrated Facilities Services) as we call it. This will enable us to sell more integrated and multiple service options that so many customers demand. The margins for technical services have historically been generally higher than soft services and it will be interesting to see if this trend continues.

I see more and more customers continuing to demand an IFS solution - which already accounts for 65% of our turnover. Our strategy moving forward is to continue the growth in this area with more integrated contracts and of course we will be offering fully integrated facilities services to our newly acquired GSH customers. The early appetite from these customers has been very encouraging, so the acquisition is already helping to grow our business as per our strategy. In terms of wages we are a Living Wage accredited business and we always demonstrate the benefits of the Living Wage to our customers and in our tender submissions. We also chair the Living Wage Foundation Service Providers Leadership Group with a view to driving the awareness and growth of the Living Wage in our Industry. I do hope many other service providers become accredited as our Industry is ideally placed to take a stance on this important issue.


TWinFM: What are your immediate future plans for other purchases?

RS: We are happy with this purchase. It was in an area that we wanted to strengthen and GSH provided the perfect fit with our business. We will always be looking at our core offering to ensure we are market leaders and we are extremely happy with where we are today.

Our technical services equate to approximately £150 million value of our revenue today and this purchase increases this value by approxmiately 50% in the UK. ISS already have a very strong hard/technical services capability; indeed we already look after more critical environments than any other FM organisation worldwide.

That's not to say that we weren't aware of a need to strengthen the UK and our European footprint. In addition we wanted to establish a greater mobile technician capability as the efficiency of this type of service requires volume. GSH has a fantastic mobile engineer offering that achieves that strategic intent.


TWinFM: What about energy management

RS: We already have an energy management product but GSH, who won the BIFM Award in 2013 for their EMAP (Energy Monitoring Application) energy offering, is a very strong player in this service line. More and more of our customers are asking for us to add energy management to our contracts so going forward, I have to say GSH was very attractive to us for that reason as well.


TWinFM: Is the growth of in-sourcing a concern having invested so heavily in this acquisition?

RS: I haven’t seen any concerning trends to insourcing and certainly none of our customers have signalled any intention what-so-ever to go down that route. If anything, the market is blessed with potential customers who want to outsource - our future and the future of the industry is very positive. Many customers can see the sense in transitioning from an in-house provision and moving to a value outsourced proposition - with all the benefits such as the knowledge, training and infrastructure to back-up service provision. Outsourcing also offers the employees a career path and development opportunities that may not otherwise be possible.

The external FM market is very competitive but a by-product of that is that it engenders a great deal of innovation...which in-house provision may struggle to match. So I can only see the outsourcing market continuing to grow - insourcing is not a trend as far as I'm concerned.


TWinFM: Your existing technical service providers must be concerned about your plans to move over to a self-delivery model - how will you motivate them to maintain current service levels?

RS: The majority of our work is already self-delivered so any sub-contracted work today would be relatively small. Obviously we will look the synergistic benefits of GSH and if we were to change to GSH from any current supplier, we'll make sure we work closely with them and give them plenty of notice in order to minimise the impact.


TWinFM: Despite doubling your technical services capability, ISS is still known as a soft services provider if not a big cleaning firm. What will you be doing now to change that ingrained perception?

RS: We are proud of our heritage but ISS actually started as a security company in 1901 and then grew into facilities services. As far as the perception of what we do in the market, I don't see it as a problem - we communicate with our customers our full capability and more of our business is now integrated facilities services and we expect that trend to continue.

A recent brand awareness survey showed us as third across the UK in technical services ahead of some of the traditionally known hard service providers which I think was quite interesting and highlights the movement in our brand.

I do think this acquisition will help to balance any mis-perception in the wider market but the message is clear - we are strong and have just got stronger in technical services - with an  increased mobile and engineering capability - and we will continue to grow in all the areas that we operate in. We take pride in being a market leader in both soft and hard services but should customers only want one product then our single service solutions are worldclass…....but the business case and growth in IFS demonstrates the value that integration provides.

Article written by Brian Shillibeer | Published 05 February 2015


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