The continued growth of the FM public sector outsourcing market

Public sector outsourcing accounts for billions of pounds of the FM market

Public sector outsourcing has become one of the most important drivers of growth in the UK facilities management (FM) market.

With the FM market currently worth around £128 billion and forecast to rise to £146.5 billion by 2029, government contracts represent a major share of this expansion.

Healthcare and education alone represent £38.6bn of market share, whist central and local government also accounts for billions of pounds in outsourced FM spend. With no sign of the market slowing down over the course of the decade, the sector is a vital one for FM providers.

Why the Public Sector is Increasingly Turning to Outsourcing 

As many public sector organisations face continuing pressure on budgets, the central reason lies in efficiency and accountability. By outsourcing non-core functions such as cleaning, catering, maintenance, and security, public bodies can focus resources on frontline services.

At the same time, outsourcing brings access to specialist expertise, advanced technologies, and economies of scale that many in-house teams cannot replicate.

Key Growth Areas

Healthcare and education are the standout sectors. In 2025, they represent around 30% of the FM market combined, reflecting strong demand for specialist cleaning, catering, and compliance-driven services.

Local government contracts are also expanding, boosted by “levelling up” policies and the decentralisation of public services.

The rise of Bundled and Integrated Facilities Management (IFM) models is particularly evident in the public sector. Large government departments and councils increasingly prefer providers who can manage multiple services under one contract, reducing administrative complexity and cost. This trend is set to accelerate as budget constraints tighten.

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Challenges and Considerations

Despite strong growth, public sector outsourcing is not without challenges. Insourcing debates – particularly in health and justice – remain a threat, with some policymakers questioning whether bringing services back in-house could offer better control and value.

The NHS particularly is an area of vulnerability with a built-in suspicion amongst some about perceived attempts by government to privatise the health system.

Currently, the Labour government’s first year in charge has yielded little shift from existing tolerance to outsource but increasing pressure on the Prime Minister from the left of his party could be the catalyst for a change of approach, although there is nothing to suggest that this is imminent. Many organisations consider in-sourcing but can often be unprepared for the increased cost can make the desire unaffordable.

Demonstrating Social Value, such as local hiring and community investment, in order to win contracts is now a ‘Must Have’. Providers need to be able to evidence how the will positively impact local communities as well as deliver FM services.

Looking Ahead

The public sector outsourcing market shows no signs of slowing down in the near term. Competent providers who are experts in their field continue to be able to perform non-discretionary services, achieve regulatory compliance, and reach sustainability targets more effectively than public bodies could do if brought in house.

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