The In-Source vs. Outsource Dilemma | A Case Study on the Hidden Costs of In-House Janitorial Teams
Updated: Jun 20, 2022
You’ve been approached by an outsourced cleaning service. You currently manage an in-house team. Obviously in-sourcing is cheaper, right? Let’s take a look…
We know what you’re thinking, obviously a $15/hour in-house custodian MUST be cheaper than a $30/hour outsourced solution. It’s simple arithmetic!
Unfortunately, wages are just the tip of the iceberg…
Consider the following hidden costs:
● Payroll taxes – 10% of base pay, $1.50/hour
● Benefits – The BLS estimates this to be $6.84/hour for a $15/hour wage earner
● Vacation Time – 3.8% average downtime, $0.58/hour
● Sick Time – 1% average downtime, $0.15/hour
● Turnover Costs - $7,000 - $10,000, $3.36/hour
● Equipment Acquisition & Repair Costs - $400/annually, $0.19/hour
● Chemical Costs - $4,000/year average, $1.92/hour
● Insurance (WC/Liability) – 6% of base pay, $0.90/hour
● Management & Oversight – 10% of payroll, $1.50/hour
Taken together…you can conservatively add $16.94/hour to the baseline $15/hour figure to arrive at the true cost of a $15/hour in-house custodian.
Total Cost to In-Source: $31.94/hour
Still not convinced?
Outsourcing your cleaning provides these added benefits:
● 100% Service Uptime
● Management team steeped in facilities maintenance knowledge who spends all of their time thinking about commercial janitorial solutions
● Professional employee supervision & training modules aimed at improving outcomes and overall efficiency
● Enhanced flexibility to ramp service up/down based on internal facility usage patterns
● After-hours option – can provide service outside of currently managed windows
● Ancillary services expertise – carpet/tile/windows etc.
Next, let’s take a look at a real-life example…
In 2018 BCS Facilities Group was approached by a large uniforms distributor based in West Philadelphia, PA. This uniforms company had been running a team of two in-house custodians for over a decade. The team was working fine, but the second shift person was about to retire and the first shift person decided they didn’t want to shoulder the burden of the extra work and quit.
The company was in a pinch and so for the first time in a decade decided to pursue an outsourced solution to their cleaning needs. The customer estimated their total cost of labor for these two positions as follows:
● Base Hourly Wage: $13.75/hour
● Hourly Benefits Cost: $4.28/hour
● Hourly Vacation/Sick Time Cost: $1.00/hour
● Hourly Management Cost: $3.25/hour
● Total Estimated Cost: $22.28/hour
BCS consulted with the customer to help identify the following additional costs specific to their business:
● Employee Turnover Costs: $3.00/hour
● Equipment Costs: $0.25/hour
● Chemical Costs: $2.10/hour
● Excess Insurance Costs: $1.10/hour
Resulting in an all-in estimated cost per hour of $28.73
BCS Quoted $28.00/hour, won the bid and has been working with this customer ever since. Their facility is consistently looking great, and the Plant Supervisor’s time has been freed up to pursue more meaningful work in the plant.