Realising the full potential of midcap accounts

In the farthest corners of mofussil India – or in the heart of its largest cities – and away from the media glare on giants of the FM industry, there are service providers operating in different zones, who have been providing every conceivable service to clients. With smaller operating budgets and fewer resources, they have had to reinvent themselves in order to survive and thrive. Working with clients who also have smaller budgets, they have seen the client-service provider relationship evolve up close.

BS Shetty , MD, Durga Facility Management Services Pvt Ltd, Vijayalaskhmi Subramani, MD, Ganpathy Manpower Pvt Ltd and Swwapnil Gadekar, Director, Quinteze Facility Management India Pvt Ltd, whose companies service around 30, 35 and 150 sites respectively, spoke about how their scale dictates their choices and who will be the best customers in the days to come.

Negotiating troubled waters

The impact of lockdowns and Covid restrictions on the strength of the FM workforce need not be repeated here. However, many service providers attempted to curtail downsizing by retaining as many people as possible on the rolls, and rotating them through various duties and sites. By doing so, they were able to manage at least some days of employment – and consequently, wages – for everyone.

As one of them put it, “At some sites, we were working at cost or even at a slight loss. In the last two years, everyone tried just to sustain their business, not make profits. Our main task was to be able to feed our workers and pay for overheads like office expenses.”

Another summarised this period thus: “We may not have made huge profits, but at least we didn’t go into loss”.

In some instances, demand for manpower has actually grown. Gadekar said: “The hunger of huge gated communities and townships for professional services, and the added necessity of regular disinfection, required us to dedicate additional manpower.”

Some service providers used the pandemic as an opportunity to consolidate their business. “We have consciously moved away from sites which were not giving us the right kind of returns”, said Subramani. “We decided to scale back and figure out how best we could offer quality services in line with our vision.”

While one might expect each service provider to indiscriminately broaden its customer base in an effort to stay afloat during difficult times, carefully picking one’s target segments and customers, based on potential returns and margins, may be the smarter choice.

Have customer expectations changed?

Not all is hunky-dory here. Shetty said: “Customers are not as interested in quality services supported by quality equipment and consumables, as they were earlier. To reduce their expenses, they are ready to compromise by 10-15%. For example, if a customer insisted on the use of a top-quality chemical brand in the past, that customer is now willing to settle for a less reputable brand if it is easier on his budget.”

While this may be the case with private customers, FM tenders for government facilities do not permit any such compromise. However, although these have cut down on their manpower requirements, the now-smaller team at the site is not complemented or augmented by automated machines or anything else.

Is digitisation practical?

With fewer people now deployed across more sites, everyone agreed that digitising FM has helped monitor and coordinate operations across geographies. Shetty has successfully implemented a digital attendance system for housekeeping supervisors, integrated with time and location. However, the inventory, working time and other details of his cleaning machines – which form the basis of his business – are still recorded manually.

“Tracking machines digitally would definitely be more cost-effective, but some of our sites are in the interiors, without consistent network coverage”, he said. “Clients from sensitive industries like airports and oil refineries do not let us use their networks, or set up our own at the site, due to security concerns.”

Gadekar, who is in the process of introducing digital solutions, is gung-ho about their benefits. “App-based software gives you real-time data about what is happening where. Working out of Mumbai or Pune, we need to oversee sites in Bengaluru; digitising makes this easier to manage. It is not only about monitoring and keeping track of operations, but also relying on documentation to give the client a clear and fair picture.”

According to Subramani, this streamlines conversations with a client. As an example, she shared: “If an HR manager is not working from the office but needs to monitor it from home, he can access all FM-related reports in his email. He has all the data at hand at all times.”

Have cleaning robots really become popular?

Every client wants robotic machines; few are willing to pay for their use. As Shetty explained, when he explained to his clients that battery-operated machines are more sustainable, require less maintenance and are cheaper in the long term, his clients were reluctant even to upgrade from electricity-powered machines. For many clients, the spend on robots is something they don’t even wish to consider at this time.

On a lighter note, another service provider said: “Some clients always want to complain about something or other not being done, even when everything has been done. They need a scapegoat. A robotic cleaning machine logs all operational data faithfully; who can the client blame then?”

Choosing the right client

Having tided over the worst of times, service providers are now deciding the right mix of clients which will help them grow, as well as weather any future storms. For example, Gadekar said: ”We are majorly into the IT/ITEs sector, but these companies have not had people return to office, and are uncertain about when they will. On the other hand, the manufacturing sector is booming and everyone is entering it; there are many opportunities to be created there.”

Subramani has a similar story of pivoting to a new segment: “We were essentially into the banking sector, but have moved on as it wasn’t giving us much returns. So now, we are concentrating on small business units/manufacturing industries and larger corporates, which already have systems in place.”

The recent push for Capex in the Union Budget is going to make the infrastructure segment very desirable to service providers of all sizes. Watch this space for more.

Diversify, diversify, diversify

A common theme that has emerged is this: service providers must avoid putting all their eggs into a single client segment’s basket. If one segment does not do well, another will prosper and make up for the loss of revenue.

“Even small companies have learned the lesson that cleaning is necessary, and only the best products must be used. Some clients also include regular sanitisation in the scope of work in scope of work”, shared Shetty . Perhaps the pandemic has persuaded even smaller clients to move away from the unorganised cleaning sector and turn to professional service providers, which bodes well for the latter.

Diversification is not limited to segments, but also geographies. “We are expanding our reach to Andhra Pradesh, Karnataka, Goa and more”, revealed Gadekar. “The more the volumes, the better we will do”. By diversifying even within the same segment and offering more services to the same client, service providers both broaden and deepen their market base.

A word of warning: a sector like pharma, that appears booming to one service provider, also appears booming to everyone in the industry. If everyone hankers to service the same segment, that latter’s demands will get saturated very soon. And however much production increases, the number of people required for FM does not rise concomitantly.

The bottom line is this: Hedge your bets by banking on more than one segment, then hustle to realise each segment’s full potential.