Download - Indian facility management services market
Indian Facility Management Services Market
Published: Nov’ 2014
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Overview
• TheconceptoffacilitymanagementservicesgainedprominenceinIndiaaftertheliberalization,privatizationandglobalizationpolicies.
• TherearemainlytwotypesofFacilityManagementServices:
• MostoftheFMservicesofferedinIndiaareintheIT/ITES,BPO/KPO,andBanking&Financesectorsandtosomeextentinothersectorsalso.
• Theindustryhasalargenumberofsmallunorganizedplayersofferingtheservices.
• Asperourresearch,morethan60%servicesareperformedin-house.Thistrendis,however,changing.
• India’sservicesectoristhefastestgrowingpartofitseconomy-itheld33.3%ofGDP(atcurrentprices)in1950-51increasingto64.8%in2012-131.
• TheswiftlygrowingservicesectoriscreatinghugepotentialforFMservices,whichisanticipatedtogrowataCAGRofaround20%,fiveyearsdowntheline.
• AsperourinteractionwithFMServiceproviders,HousekeepingandSecuritywillremainthemajorrevenuegeneratorsforthem.
• Theshareofspecializedservicessuchasenergy,watermanage-ment,etcisanticipatedtoincreasebundledwithsoftservices.
Atpresent,FMservicesarenon-regulated.Thereisnoregulatorybodytocontroltheindustry.
However,duetoitsmanpowerdrivennature,theLabourLawssuchasminimumwagesact,EPFetc.areapplicabletotheseservices.
Themajorityofsmall,locallyspread,unorganizedplayersdonotcom-plywithlabourlawsproperly.Theirservicesarecomparativelycheaperthantheorganizedones.
Thebigorganizedplayers,however,complywithlawsrelatedtolabour,quality,man-powertrainingetc.
Theorganizedplayersaredemandingaregulatorybodytogoverntheindustry.
Indian Facility Management (FM) Services Industry
Market Update
Source:RNCOS
Source:RNCOSNote:Othersincludecatering,horticulture,watermanagement,energymanagement,transportationandothers
1UNNationalAccountsStatistics
Source:RNCOS
India - FM Services Market (Billion US$), 2014 & 2019
7.5
16.5
2014e 2019f
India - Share of Soft vs Hard Services (2014)
35%
65%
Soft Hard
India - Segmentation of FM Services by Type (2014)
35%
25%
15%
25%
Housekeeping Security
Electro-mechanical Others
• SoftServices:InvolvementofHumanskill• HardServices:Involvementofelectricalandmechanicalequip-
mentswithhumanskill
Source:RNCOS
India - Segmentation of Security Services in FM Industry (2014)
85%
5%
10%
Manned Guarding Cash Services
Elec. Security
• Mannedguardingisthelargestsegmentinsecurityserviceswhichincludesprotectionofindustrial,commercialandinfrastructuralfacilities.
• Increasingcrimesandlessavailabilityofgovernment-em-ployedsecuritypersonnelhasledtoincreaseinthissegment.
• CashservicesandelectronicsecurityareslowlyevolvingasmajorandfastgrowingserviceofferingswithinsecurityservicesofFacilityManagement.
Future Outlook of Security Services in FM Industry in India:
Key Points of Security Services in FM Industry in India:
Key Highlights: Facility Management Companies
Indian
International
• AsperourresearchwithSecurityserviceprovidersandFMserviceproviders,mannedguardingisexpectedtocaterhigherrevenueinfuturewithincreaseinshoppingmalls,ITparks,andotherprivateinfrastructuralfacilities.
• ThecashservicessegmentisexpectedtoshowcaseaninclineinitscurrentsharegivenhighernumbersofATMinstallationsalongwithwhite-labelATMs,openingupofbankbranchesandincreasingpenetrationofdebitcards.
• Accordingtomostofthesecurityagencies,widersecuritycoverageascomparedtomannedguarding;andone-timeinvestmentwillleadtorisingdemandforsecurityandsurveil-lancesystemssuchasCCTVsinIndia.
• TheminimumqualificationforasecurityguardinIndiaismatriculation.Theorganizedplayers,however,prefera10+2(intermediate)degree.
• Besidesqualification,securityservicecompaniesgivedueimportancetoIQlevelandphysicalfitness(includingheight,weight,andeye-sight).
• Thepayscaleforasecurityguardvariesfromlocationtoloca-tionandclienttoclient.However,mostcompaniespayaspertheminimumwagesactunderlabourlawplusincentives.
• BigplayerslikeG4SabidebythePrivateSecurityRegulationsAct2005wherebystategovernmentshaveplacedguidelinesrelatedtosecurityservicessuchaslicensingnormsandtrain-ingrequirementsforguards.
• Mostofthedomesticplayersareregionallylocatedservingfewgeographicallocations
• Thecompaniesarespecializedinoneorfewservices• Theylacktrainedstaffandtechnicalexpertise• Veryfeworganizedplayershavehighsalesturnover
• Companieshavewell-establishedpresenceandcatertomainlycommercialsectorssuchasIT/ITES,BPO,FinanceandBanking
• Companiesuseinorganicgrowthmodelforexpansionbyacquiringdomesticplayershavingwell-establishednetworks
• Companieshavewell-trainedstaffanddeliverbestserviceswiththeirglobalexpertise,systemsandresources
• Theyprovideintegratedtotalfacilitymanagementsolutionstocustomers
• Theyfurtherutilizetheirglobalandregionalexpertisetocapi-talizeonkeysectorssuchashealthcare,aviation&educationamongstothers
Companies gearing up for Total Facility Management (TFM) Solutions
Strategic Acquisitions: the way to go
Future Prospects
TotalfacilitiesmanagementprovidersinIndiaarescarce.Somecompaniesincludingmultinationals,suchasISSoperateintheregionwithvaryingdegreesofsuccess.
Previously,mostofthecompaniesinthefacilitymanagementindustryinIndiawerehavingeitheroneorfewfacilityservicesintheirportfolioofservices.Butnow-a-days,thescenariohaschangedascompanieslooktoprovideonestopsolutionstotheircustomersmeaningatotalfacilitymanagementsolu-tionincorporatinghardaswellassoftservices.
Forthat,thecompaniesaremakingstrategicacquisitionstoavoidappointmentofmultiplesubcontractorsforvariousservices.Forinstance,lastyear,UK’slargestfamily-ownedfacilitiesserviceprovider,OCSGroupintegrateditsservicestoprovidetotalfacilitiesmanagementservicesandend-to-endsolu-tionstoitsIndianclients.TheGroupnowdirectlydeliverscorefacilitiesmanagementservicessuchasengineering,cleaning,hygiene,securityandotherFMservicestoIndianclientswithoutappointingmultiplesubcontractors.
Overthepastfewyears,thefacilitymanagementindustryinIndiawitnessedrapidchangesaccompaniedwithconsolidation.Someofthebiginterna-tionalplayersfollowedtheinorganicgrowthroutetomarkitspresenceintheIndianmarket.Forthat,thecompaniesstartedacquiringdomesticfacilitymanagementplayers.Forinstance,OCSgroupacquiredfourserviceprovidersinIndiasuchasAbsothermFacilitiesManagement(engineering),RadiantHospitalityServices(housekeeping),CannonHygieneIndia(hygieneandsanitation)andCentralInvestigation&SecurityServicesLimited(securityservices)overthelast2yearsperiod.
Similarly,Sodexoacquiredtwocompaniestoenlargeitsscopeofactivitiesbeyondgiftvouchersandcouponstofoodservicesandfacilitymanagement.
Recently,theIkyaGroup,whichisasubsidiaryofthetouroperatorThomasCook(India)Ltd,signedanagreementtoacquireChennai-basedHofinconsInfotech&IndustrialServicesfromtheAustralianfirmTransfieldServices.
Besidesinternationalfirms,Indianfirmsarealsofollowingthesameroutetoconsolidatetheirmarketoperations.Forinstance,RentokilInitialIndiaacquiredtheGujarat-basedpestcontrolserviceprovidingcompanyPestconePluswhichwouldhelpinculcateanexperiencedlocalmanagementteamintothecompany.
• TheFMServicesindustry’sfutureseemsquitebrightasmorenumberoforganizationarelookingforoutsourcingtheirserviceswhicharenotdirectlyrelatedtotheircorebusinesstocutcostandperformefficientoperations.
• TheupcominginfrastructuralprojectsandsignificanteconomicgrowthwillcreatemoredemandforFMservicesinthecountry.
• FDIinsectorssuchasretail,ITandsecurityserviceswillcreatemoreopportunitiesforFMserviceprovidersinIndia.
• Expansionofbusinessactivitiesintier2and3citiesbyend-usersegmentswillincreaseregionalgrowthofFMservices.
• NewopportunityareasforfacilitymanagementcompaniesinIndianrailwaysareevidentasMinistryofRailwayinitsbudgetannouncedaseparatehousekeepingwingat50majorstations.
Industry Trends
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