Insourced or Outsourced? Why an Average Repair Cost Shouldn’t Settle the Argument on Its Own

By Luke Beard · 28 September 2026

Estimated reading time: 7 minutes

Earlier this month, Inside Housing reported that for the first time since Housemark began tracking the data, the average cost of a repair delivered by a direct labour organisation (DLO) is lower than that of an outsourced contractor. The difference is small, £180 compared with £185 per job in 2024-25, but the trend is significant. Back in 2021-22, DLOs were the more expensive option at £140 per job compared with £129. Something has clearly shifted.

The finding will not surprise many housing professionals. Through service reviews, financial business plans, transfer projects, operating model design and assurance work, we’ve seen this trend developing across the sector for some time. In many respects, the data has simply caught up with what organisations were already experiencing operationally.

Housemark’s explanation deserves careful consideration. Inflation pushed contractor costs upwards, while DLO labour costs largely followed cost-of-living awards rather than prevailing market rates. Both models faced rising material costs, but outsourced services also carried contractor margins and overheads. That helps explain why costs have converged and, in some cases, reversed.

It would be tempting to look at those figures and conclude that the debate is settled. It isn’t.

In fact, Housemark makes an equally important observation: having a DLO is not, in itself, a guarantee of value for money. Some organisations continue to struggle with productivity and performance challenges despite delivering services in-house. The critical point is that good management determines whether a DLO delivers value, not the ownership model itself.

That aligns closely with what we see in practice. Across service reviews, cost improvement programmes and operating model assessments, ownership structure rarely explains performance differences on its own. Leadership, productivity, workforce design, workflow management and organisational decision-making usually matter far more.

The importance of the circle of influence

There’s a deeper reason many organisations choose to insource repairs services, and it often has less to do with per-job repair costs than some headlines suggest. At its core, insourcing is frequently about increasing an organisation’s circle of influence.

Bringing services in-house means decisions about priorities, resources, standards and service delivery sit closer to the organisation itself. Leaders gain greater visibility of performance and are often able to respond more directly to changing circumstances.

Outsourcing can work very effectively, but it inevitably places part of service delivery outside an organisation’s direct control. Even under a well-managed contract, some decisions will be driven by a contractor’s commercial priorities, operating model and market pressures.

This matters particularly when external conditions change rapidly.

When labour markets tighten, inflation rises, material prices increase or new regulatory requirements emerge, landlords with outsourced arrangements are often required to respond through contractual mechanisms. Those with in-house teams can typically respond through their own operating model.

The recent inflationary environment provides a good example. Organisations with DLOs faced higher material costs just like everyone else. However, they retained greater control over labour costs, workforce deployment and operational priorities. By contrast, outsourced providers were often managing the same cost pressures alongside commercial margins and overhead structures.

That doesn’t mean insourcing is automatically better. It does mean there are strategic reasons why many organisations have pursued it beyond simple cost comparisons.

In our experience, sourcing decisions are rarely about today’s repair cost alone. They’re often linked to broader questions around resilience, responsiveness and control. Organisations want confidence that when significant change occurs, whether that’s inflation, new regulation or increased demand, they can influence outcomes directly rather than relying on contract variation and negotiation processes.

The Housemark figures do more than show costs converging. They provide an example of one of the strategic arguments for insourcing playing out in practice.

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The strengths and weaknesses of both models

One reason the insourcing versus outsourcing debate never goes away is because both approaches offer genuine advantages.

In-house delivery provides greater control over service standards and operating priorities. It can improve alignment between repairs delivery and wider organisational objectives, including customer experience, social value and community investment. It can reduce exposure to contractor insolvency and may enable organisations to respond more rapidly to legislative and regulatory changes.

Many organisations also value the ability to build local employment opportunities, apprenticeships and workforce development programmes through a directly employed workforce.

Outsourcing brings different strengths. Contractors can offer flexibility, specialist expertise and the ability to scale resources more quickly when demand changes. They may provide access to skills that would be difficult or expensive to maintain internally, particularly for lower-volume specialist work.

For some organisations, outsourcing also transfers elements of operational and employment risk away from the landlord, allowing leadership teams to focus attention elsewhere.

These are all legitimate considerations. The mistake is assuming that either model guarantees success.

A poorly designed DLO can be expensive and inefficient. Equally, a poorly managed contract can deliver disappointing service outcomes regardless of how competitive the tender price appeared initially.

The ownership model matters, but not as much as many people assume. The quality of the operating model matters far more.

Where organisations often get it wrong

Across service reviews and transfer projects, we see a recurring pattern.

An organisation decides to insource for sound strategic reasons. The objective may be greater control, improved customer outcomes or reduced exposure to market volatility. The rationale is often entirely reasonable.

The challenge emerges during implementation. Decisions are made about structures, depots, fleet arrangements, supervisory layers, terms and conditions, management responsibilities and support functions. Individually, most of those decisions appear sensible. Collectively, they can embed significant cost into the service before a single repair has been delivered.

Sometimes inherited arrangements are carried forward because they feel safer than redesigning them. Sometimes organisational compromises are made for understandable reasons. Sometimes assumptions are built into business cases without being tested rigorously enough.

Eighteen months later, repair costs appear high when compared with contractor benchmarks. The conclusion is that the in-house service is inefficient. In our experience, that is often the wrong diagnosis.

More commonly, the issue lies within the operating model itself. The workforce is being judged against a structure that may never have been designed around actual demand, workload patterns or cost drivers.

One of the most common mistakes we encounter is attributing the cost of a structure to the people working within it.

When organisations genuinely understand where costs sit, the picture often changes dramatically.

The question organisations should be asking

Before debating whether a service should be insourced or outsourced, organisations should first focus on how the service is designed. A well-developed target operating model should come before the sourcing decision, not after it.

That means understanding the true drivers of cost, including labour, materials, fleet, supervision, overheads and compliance-related activity. It means recognising which of those costs are fixed, which are variable and which are influenced by management decisions. It also means benchmarking intelligently.

Too often, organisations compare themselves with sector averages that bear little resemblance to their own circumstances. Stock profiles, geography, service scope, housing type, workforce arrangements and customer demand can all significantly influence costs. Benchmarking is valuable, but only when comparisons are genuinely like-for-like.

Finally, organisations need to be clear about the distinction between value for money and social value.

Direct delivery may provide benefits that extend beyond repair costs alone, including greater community investment, stronger local employment opportunities and increased organisational control. Those benefits are real, but they are not cost-free. Good decision-making requires understanding both the value created and the cost of creating it.

Conclusion

The latest Housemark figures provide an important signal, but they do not provide a definitive answer. A lower average repair cost for DLOs does not mean every organisation should insource. Equally, a higher contractor cost does not mean outsourcing has become the wrong choice.

The real question is not whether a service is delivered in-house or by a contractor. The real question is whether the operating model has been designed around the organisation’s current demand, risks, priorities and regulatory obligations.

The organisations that consistently achieve the best outcomes are not necessarily those that insource or outsource. They are the ones that understand their cost drivers, design services deliberately and manage performance relentlessly.

Ultimately, the debate is not insourced versus outsourced.

It’s well-designed versus poorly designed.

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