India’s facility management industry is entering a defining phase as sweeping labour reforms begin to reshape how millions of frontline workers are hired, paid and protected. The transition is set to influence costs, compliance and workforce structure across the sector. Clean India Journal’s Manka Behl speaks to experts in companies and examines how they are navigating the shift and what it means for the future of facility management.
India’s facility management industry — built on millions of frontline workers who clean, maintain, secure and sustain the country’s infrastructure — is standing at a turning point.
The sweeping consolidation of 29 labour laws into four codes is not just a regulatory shift; it is quietly redefining how this workforce is hired, paid, protected and perceived. For an industry long driven by cost efficiency and contract labour, the transition signals something deeper: A move toward structure, transparency and accountability.
As the new labour framework edges closer to full implementation, the question is no longer whether the facility management sector will adapt. Instead, it is how fundamentally it will transform in the process.
Industry leaders, while broadly aligned with the intent of the reforms, are now navigating the realities of implementation – where every change in definition, documentation and responsibility has a direct bearing on margins, manpower and service delivery.
Simple, Complex
At its core, the reform aims to simplify a fragmented system.
Calling it a much-awaited move, Sudhir Mani Sahay, Chief Operating Officer at Allied Resource Management Services (I) Pvt. Ltd., points out that consolidating multiple laws into “compact and crisp” codes reduces administrative clutter, allowing companies to focus more on delivery and performance rather than paperwork. “This will boost organized players to be in the race,” he says.
“Consolidating multiple laws into “compact and crisp” codes reduces administrative clutter, allowing companies to focus more on delivery and performance rather than paperwork.”
— Sudhir Mani Sahay
Echoing this, Edward D’Souza, CEO of SMC India Integrated FMS Ltd( An SIS Group Enterprise), calls the consolidation “a genuine leap toward ease of doing business”. “The new labour codes bring clarity on wages, working hours, and social security, which will push the FM industry to move beyond pure manpower supply. I see this as an opportunity to invest in multi-skilling, ensuring our staff are valued for their expertise rather than just their presence,” he says.
Edward also believes that replacing multiple registrations with a single framework could streamline compliance. “However, real impact depends on state-level implementation and clarity in rules. For FM companies operating across multiple states, uniformity will help,” the expert says.
“In the next five years, the “unorganised” tag will disappear from facility management. We will see a highly professionalised industry.”
— Edward D’Souza
Digital Shift
What appears as simplification on paper is in practice a complete overhaul of how companies manage compliance.
Vinayak Bhise, MD, iSMART Facitech Pvt. Ltd., explains that while the legal framework reduces fragmentation, the compliance burden does not disappear — it shifts. “For FM companies — who typically deploy large numbers of contract and site-based employees across multiple establishments and states — the compliance burden will not necessarily reduce but will shift towards structured digital compliance,” says Vinayak.
Facility management firms, he says, will now have to invest in integrated payroll and HR compliance systems to align with the statutory definition of wages, centralised digital compliance platforms for maintaining electronic registers, worker data management tools particularly for contract labours and automated statutory contribution tracking (PF, ESI, gratuity, etc.) based on the revised wage structure.
“The new labour codes do not eliminate the labour-intensive nature of the FM industry. However, they do promote greater formalisation and standardisation of employment practices.”
— Vinayak Bhise
From an operational standpoint, Ankur Sachdev, CEO of Tenon FM, also stresses on the urgency of automation. “To meet the new compliance norms, automation of HR portal for maintaining the digitalization records and a statutory dashboard for timely adherence of the compliances including wage payments, appointment letters, leave encashment, Full-Time Equivalent (FTE contract) and welfare facility schemes will be needed,” he says.
“As a service provider, we have revised our payroll structures and are issuing updated appointment letters in line with the new labour framework.”
— Ankur Sachdev
According to Sanjeev Kumar NGS, CEO at Dusters Total Solution Services Private Limited, larger, organized players have already started aligning their compliance systems, digitized payroll, and documentation frameworks. “However, a significant portion of the industry — especially smaller, regional operators still rely on manual processes and fragmented compliance practices. The facility management industry is partially prepared but unevenly so,” he says.
The expert adds that the transition will accelerate formalization, with increased focus on digital compliance tracking, standardized wage structures and audit-ready documentation. “Overall, the industry is on the path to readiness, but full compliance maturity will take time,” says Sanjeev.
“Over the next five years, FM companies that invest in people, processes, and technology will emerge stronger, while unorganized players may struggle to sustain. The new labour codes are not just a compliance change—they are a structural shift towards a more transparent, fair, and sustainable FM industry.”
— Sanjeev Kumar NGS
Wage Reset
Perhaps the most immediate and impactful change for the industry lies in the new definition of wages.
Under the Code on Wages, a uniform definition of ‘wages’ is now applicable across multiple labour laws. The basic pay must constitute at least 50% of total remuneration, a move that directly increases statutory liabilities.
According to Vinayak, this restructuring can have a substantial cumulative financial impact on labour-intensive sectors like facility management. “In practice, FM service providers generally operate under fixed commercial contracts with clients, where manpower cost constitutes a substantial portion of the service cost. Many organisations would structure salaries with lower basic wages and higher allowances to optimise statutory contributions. But under the new legal framework, such structures will no longer be sustainable as this change will significantly raise payroll-linked costs, including provident fund, gratuity, bonus and leave encashment,” he explains.
The increased statutory labour cost will ultimately have to be incorporated into service pricing structures, the expert adds.
Ankur admits that the revised wage definition is already creating friction at the client level, with increased costs requiring renegotiation and approval before implementation. “As a service provider, we are facing on-ground challenges from clients in implementing the revised wage definition under the labour codes. Since all statutory benefits are linked to this, costs are increasing, and any change in overall cost requires client approval and consent. Accordingly, we have revised our payroll structures and are issuing updated appointment letters in line with the new labour framework,” he says.
However, the impact is not uniform across the industry.
Suresh Shinde, Head – HR, IR & Admin at FF Services Pvt Ltd, indicates that the impact of the 50% wage definition may not be uniform across the industry. “Any compliant facility management company is unlikely to face significant challenges, as they are already paying minimum wages to all staff according to their respective designations. Since minimum wages already constitute more than 50% of the wage calculation, such companies are unlikely to face major margin pressures,” he explains.
However, Suresh cautions that organisations that have not been following proper wage structures and have been undercutting prices to secure business may find it difficult to manage under the new framework.
Suresh further notes that this change extends beyond traditional employment structures. “Short-term contracts will also be eligible for statutory benefits such as gratuity, leave encashment and other entitlements. Apart from this, gig workers, consultants and employees on fixed-term contracts will also receive fair and equitable remuneration, which is a positive development from an employment perspective,” the expert adds.
“The most significant aspect of the new labour codes will be the standardized definition of wages and stronger compliance with statutory benefits. This will ensure that employees receive proper social security benefits such as provident fund and gratuity.”
— Suresh Shinde
Overall, Suresh is hopeful that the reforms will significantly strengthen the principle of equal and fair remuneration across the workforce.
Suresh identifies the standardised definition of wages and stronger compliance with statutory benefits as the single most important change shaping the future of the industry. “This will ensure employees receive proper social security benefits such as provident fund and gratuity, while also bringing greater transparency in wage structures. Over time, this will encourage fair competition and push companies toward more compliant and professional service delivery,” he says.
The introduction of a national floor wage is also expected to influence labour movement across regions. Says Sudhir, “The new norms will lead to uniform supply of labour all across the demography unlike the past where migrant from eastern part of the country would travel to North-West for better wages. With wage standardisation, this migration pattern may reduce, as workers find viable opportunities closer to home.”
While this could improve retention and stability, it may also impact the availability of migrant labour in certain markets — creating both opportunities and challenges for service providers.
Sanjeev is also of the view that the implementation of the new labour codes will significantly reshape pricing models and margins across the industry. “These reforms will introduce greater transparency and standardisation, particularly in areas such as wages, social security, and working conditions. As a result, companies are likely to face upward pressure on costs, especially in labour-intensive contracts, while also experiencing reduced flexibility in how they structure these costs,” he says.
In the context of long-term agreements, Sanjeev suggests that renegotiations will become almost inevitable. “While some progressive clients may be willing to absorb a portion of the increased costs, this may not always be the case. In such scenarios, service providers will need to focus on operational optimisation to remain competitive, even as margins come under pressure in the short term,” he adds.
However, the expert strongly believes that this transition could ultimately lead to a more stable and sustainable pricing environment. “Over time, pricing is expected to become more realistic, helping to curb the practice of undercutting and fostering a healthier competitive landscape,” says Sanjeev.
Formal Workforce
Beyond compliance and cost, the labour codes signal a structural shift in how the workforce is organised. The Occupational Safety, Health and Working Conditions Code focuses on improving workplace safety, welfare facilities and working conditions.
Edward believes this shift will push the industry beyond a manpower-driven model toward a skill-based, service-oriented approach, where workers are valued for expertise rather than sheer numbers. “I see this as an opportunity to invest in multi-skilling, ensuring our staff are valued for their expertise rather than just their presence,” he says.
Apart from this, the mandate for written appointment letters for every worker will be a gamechanger for dignity, adds Edward. “By bringing ‘invisible’ staff into the formal economy with guaranteed social security and a national floor wage, we are validating their essential role in urban infrastructure. This structural shift moves them from “daily wagers” to “professional service providers,” he says.
Vinayak too sees the reforms as a move toward formalisation. “The new labour codes do not eliminate the labour-intensive nature of the FM industry. However, they do promote greater formalisation and standardisation of employment practices. Collectively, these provisions indicate a policy shift toward formal, regulated employment rather than informal low-cost labour arrangements. Over time, this can encourage increased mechanisation and technology adoption in facility services, bring more emphasis on skilled and multi-tasking workforce models and improve employment documentation and statutory compliance,” he says.
Improved labour standards are also expected to have a direct impact on productivity and service quality. Sudhir emphasises that provisions such as mandatory health check-ups and stronger safety measures will lead to a healthier, more stable workforce. “A happy, productive and long-tenured team can significantly improve efficiency, consistency and output — particularly in demanding environments such as healthcare facilities, airports and commercial complexes. The emphasis on welfare is especially critical in sanitation and waste management roles, which continues to be a taboo in our country. Better wages, safety and dignity could encourage more workers to take up these roles,” he says.
Ultimately, the new norms will lead to a more stable, formal and compliant workforce ecosystem, says Sanjeev. “At the same time there will be additional challenges on local and small regional players who have been currently working with compliance standard below par and due to which getting some advantage over other competitors,” he adds.
Bigger Challenges
The transition, however, is not going to be equally easy for all.
Edward feels that smaller service providers may come under more pressure. “Increased focus on formal wages, Provident Fund (PF), Employees’ State Insurance (ESI) and documentation raises cost and compliance requirements. Large FM companies already operate within structured systems, while smaller players will need to upgrade processes, which could impact margins and scalability in the short term,” he says.
Vinayak echoes this view, stating that the readiness of the service industry is mixed and varies significantly by organisation size and compliance maturity. “Large and organised FM companies already comply with most statutory social security obligations and are therefore likely to face limited structural challenges, apart from adapting payroll systems to the revised wage definition. However, smaller service providers may encounter multiple challenges, including worker registration and documentation, digital compliance reporting, the financial impact of expanded statutory contributions, and maintaining statutory records for large, distributed workforces,” he explains.
At the operational level, FM companies will face several practical challenges. Highlights Sanjeev, “These include transitioning legacy systems to new compliance frameworks, managing cost escalations in existing contracts, and ensuring vendor and subcontractor compliance. Companies will also need to focus on training internal teams on new regulations and processes, while handling increased documentation and audit complexity. Additionally, the lack of clarity during the initial implementation phases may create short-term uncertainty.”
Vinayak further points out that The Code on Social Security, 2020 also introduces provisions enabling social security schemes for gig workers, platform workers and unorganised workers, which will require extensive administrative coordination between employers, aggregators and government authorities. “While the legal framework is comprehensive, its practical implementation will depend significantly on the readiness of digital compliance systems and the level of employer awareness — factors that could vary widely across the industry,” he says.
Compliance as a Differentiator
As compliance becomes more structured and transparent, it is increasingly influencing how service providers are evaluated and selected. Industry voices indicate that stronger adherence to labour norms is beginning to shape both performance outcomes and client expectations.
As per Sanjeev, clients will increasingly evaluate FM partners on compliance capability, not just cost. “We will see a shift towards a clear preference for organized, compliant players, along with greater scrutiny of statutory adherence and audit readiness. There is also likely to be inclusion of compliance metrics in RFP evaluations. This, in turn, will reduce the viability of low-cost, non-compliant operators and create a level playing field for quality-driven service providers,” he says.
Sudhir notes that stronger labour compliance helps service providers retain experienced teams and deliver consistent results, making them more attractive to clients. “This is not only mandated by law, but such arrangements help to have and retain experienced and long tenure teams on the ground, which helps in achieving desired results from the service provider,” he says.
Suresh adds that standardised wage definitions and statutory benefits will promote fair competition, reducing the advantage previously held by non-compliant players. “The facility management industry is highly client-driven, and we are actively engaging with clients to explain the importance of implementing the wage code and its benefits for both employees and employers while ensuring compliance at sites. A majority of clients have now changed their mindset, with many proactively approaching service providers for revised proposals, reflecting a broader positive shift across industries,” he says.
The expert adds that if service providers are already paying the prescribed minimum wages, there should be no major issue, as clients are also required to comply with the same government regulations. “The restrictions and compliance requirements have been designed to be applicable to both parties. However, for those who have been compromising on statutory compliances, it will now become very difficult to manage under the new wage code framework,” adds Suresh.
The Road Ahead
While the new labour codes lay down a comprehensive framework, industry stakeholders note that certain operational ambiguities and implementation challenges still need to be addressed. At the same time, there is broad consensus that the reforms will drive the sector toward greater structure, transparency and professionalism in the years ahead.
Ankur points to the lack of clarity around gratuity payment frequency — whether it should be monthly, quarterly or annual — which is creating disagreements with clients. “Most of the clients are not agreeing to pay it on a monthly basis. Also, retrenchment compensation is the statutory, so in cases where contracts are terminated by clients, clearer allocation of responsibility is needed,” he says. These unresolved areas, he indicates, could impact smooth implementation unless addressed through detailed guidelines.
Overall looking ahead, industry leaders anticipate a more structured, transparent and professional ecosystem. Edward believes that in the next five years, the “unorganised” tag will disappear from facility management. “We will see a highly professionalised industry where ESG (Environmental, Social, and Governance) compliance is the baseline. The codes will ensure that only ethical, tech-enabled players survive, turning Indian FM into a globally competitive, service-first sector,” he says.
Sanjeev too believes that over the next five years, FM companies that invest in people, processes, and technology will emerge stronger, while unorganized players may struggle to sustain. “The new labour codes are not just a compliance change — they are a structural shift towards a more transparent, fair, and sustainable FM industry,” he says.
Vinayak underscores that transparent wage structures and accurate statutory compliance will become non-negotiable. Sudhir foresees improved retention, stability and productivity, while Suresh expects stronger compliance to drive fair competition.
As the transition unfolds, the industry is moving toward a new normal — where structure replaces informality, and professionalism becomes the standard rather than the exception.
For companies, the shift demands investment in systems, processes and people.
For workers, it promises security, dignity and opportunity.
And for the industry as a whole, it signals a move away from informality toward a future defined by compliance, capability
and credibility.