“About 54.9% of the overall market in India is for soft services and 45.1% for hard services. The market for soft services comprises a large cluster of companies that provide single services and specialize in services such as catering and pantry, cleaning and housekeeping, security and others. The market for hard services has high prominence in the IT sector as it outsources the work to professionalized and well-equipped service providers. Cleaning and Housekeeping services contribute a higher percentage of the outsourced services followed by maintenance and engineering services and finally security services and others.”
– Frost & Sullivan
From building operational services to cleaning and maintenance, outsourcing the management of entire facilities to an organization that executes this service professionally is fast evolving in India, but it is yet to go a long way to include all aspects of facility maintenance. Having said that, Frost & Sullivan reports, FM market revenues in India are higher than other nations such as Singapore and with the expected influx of major global multinational companies, IT/ITeS/BPO, finance/banking, telecom, retail/malls, and industrial sectors, FS will continue to witness massive investments for the next five years providing a huge potential for cleaning market to grow and evolve rapidly.
Hence a welcome time for investors to invest in FS sector in India!
Facility Services
Challenges
Lack of availability of skilled manpower, technically qualified staff, fluctuating labour cost and integrated services have been deterrent for the sector. This often results into contracts’ cancellation. The established commercial sector shares the major chunk of FS market in India. Telecom, retail and global MNCs such as Accenture, Nokia, Cisco, Microsoft and IBM have driven the facility services from the front, but then these companies do expect the highly integrated services and technical knowledge. Unorganised local players not looking for long term gains, agree to work at small profit margins forbids to flourish a healthy FS completion in the market.
Growth Opportunities
JVs are being seen as strengthening both, quality and much needed investment. According to Frost & Sullivan, the FM industry is all set to enter the next phase of the market life cycle, the development stage. Industry participants are looking for unconventional areas to expand their growth prospects. The market is poised to grow at a stupendous rate and offers huge area of growth for FM companies. Demand for both hard and single services is expected to remain strong as end users value the experience and professional service that these providers can offer.
Tapping Cleaning potential in FS
BSCs purchase 56% of their products and equipment through sanitary supply distributors. Chemical spending accounts for 35% of all contractor purchases. Paper/plastic products, 33%; power equipment, 18% and so on.
While the majority of contractors suggest they maintain at least two supply relationships in order to guarantee price and availability, a common practice is to split purchasing between core supplies by product category with the bulk of equipment or paper goods coming from one supplier and the remaining chemicals and/or tools delivered by another. Some BSCs opt to purchase a majority of cleaning equipment and supplies from one distributor and use a second as a backup or specialty supplier.
In addition to products, most BSCs tap into a distributor for value-added services that include:
• Product training
• Access to material safety data sheets (MSDS)
• “On-time” delivery strategies
• Warehouse storage strategies
• Product availability after-hours or in case of emergencies
One recent industry study revealed that, beyond the traditional contractor/distributor arrangement, 17% of products are purchased directly from manufacturers – while 11% of purchases are made through wholesale clubs, and 11% from retail outlets or “big box” stores. Educational facilities – specifically K-12 schools – are also seeing a rise in outsourcing as more state-funded school districts are reducing expenditures.
As more facilities outsource their services, contractors are also finding that large owner-occupied facilities and property management firms are paring down their lists of vendors to a select few service companies. As a result, many BSCs are diversifying their services beyond cleaning. Popular diversified services include:
• Carpet cleaning
• Floor care
• Window washing
• Security
• Pest control
• Matting services
• Graffiti removal
• Fire and water restoration
BSCs often will subcontract certain “specialty” work to subcontractors – primarily because facility management operations tend to purposely limit the number of service vendors they work with. Similarly, national firms may subcontract geographically, using local firms around the country.
