New market trends
The outsourcing of numerous fragmented services didn’t exist 15 or 20 years ago. It’s a major industry in Canada that started with disparate services like food services and maintenance that are now rolled up into one and there’s no turning back. It drives value for the organizations that outsource and is a $35 billion industry in Canada alone. It began with companies like Crow, who managed contracts for food services, custodial services and landscaping. Little was self performed. Johnson acknowledges that was a great model for the late 90s.
What Johnson saw was the next level. “The old model tends to plateau. I realized that the next model was for the outsourcing company to self-perform everything. What if we were also the landscapers, the electricians, the custodians as well as the food service people? It’s financially beneficial for our clients since they aren’t paying a margin on all the subcontractor work. This is not an industry standard yet; we are still distinctive in our approach.
This is a unique time in the industry and Sodexo is different from its competitors. “We come from a food service background and our competitors, like Aramark Canada aren’t offering the other services that we are. Then there are the real estate and engineering industries. Our model is what we call the self-perform model, whereas their model is the agency/contract model, where they outsource from different providers. That industry isn’t expanding yet either.”