Skip To The Main Content
15 March 2019

Interserve collapse illustrates dangers of outsourcing giants

Responding to the announcement that Interserve is at risk of administration, Federation of Small Businesses (FSB) National Chairman Mike Cherry said:

“The collapse of Interserve highlights once again the dangers of relying on a handful of outsourcing giants. At a time when political uncertainty is weighing heavily on small business confidence, this development will spark further fears across its supply chain.  

“A year on from Carillion’s demise, lessons still need to be learnt. We have to move to an environment where Project Bank Accounts are the norm for large public procurement projects, and big contracts broken up to provide opportunities for smaller firms. Doing so will diversify and de-risk supply chains, meaning higher performance.    

“Thankfully – following FSB’s tireless campaigning in this space – Interserve is one of a few big outsourcers with a living will in place. That means work should be handed straight on to new suppliers, helping to avoid a Carillion-style meltdown.

“We will be checking that this takes places seamlessly and easily, and look to the Government to make sure it does. We continue to have promising conversations with other big firms that win large swathes of public contracts.    

“In future, providing those responsible for public procurement with the skills they need to divvy up contracts is a must. Without the expertise required to make that happen, it’s all too easy to hand big chunks of work to the same old faces.

“So-called ‘aggregation’, which reduces competition and leads to these mega risks, has run its course.”