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  • Indian Facility Management Services Market

    Published: Nov 2014

    All rights reserved. This publication is protected by copyright. No part of it may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic mechanical, photocopying, recording or otherwise without the prior written permission of the publisher.

  • Overview

    TheconceptoffacilitymanagementservicesgainedprominenceinIndiaaftertheliberalization,privatizationandglobalizationpolicies.

    TherearemainlytwotypesofFacilityManagementServices:

    MostoftheFMservicesofferedinIndiaareintheIT/ITES,BPO/KPO,andBanking&Financesectorsandtosomeextentinothersectorsalso.

    Theindustryhasalargenumberofsmallunorganizedplayersofferingtheservices.

    Asperourresearch,morethan60%servicesareperformedin-house.Thistrendis,however,changing.

    Indiasservicesectoristhefastestgrowingpartofitseconomy-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,UKslargestfamily-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.

    TheFMServicesindustrysfutureseemsquitebrightasmorenumberoforganizationarelookingforoutsourcingtheirserviceswhicharenotdirectlyrelatedtotheircorebusinesstocutcostandperformefficientoperations.

    TheupcominginfrastructuralprojectsandsignificanteconomicgrowthwillcreatemoredemandforFMservicesinthecountry.

    FDIinsectorssuchasretail,ITandsecurityserviceswillcreatemoreopportunitiesforFMserviceprovidersinIndia.

    Expansionofbusinessactivitiesintier2and3citiesbyend-usersegmentswillincreaseregionalgrowthofFMservices.

    NewopportunityareasforfacilitymanagementcompaniesinIndianrailwaysareevidentasMinistryofRailwayinitsbudgetannouncedaseparatehousekeepingwingat50majorstations.

    Industry Trends

  • AboutRNCOS

    Strategic Consulting

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    Customers,Geography/Demography) Pre-testingandpostlaunchevaluation ConceptandProductTesting

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    LeadGeneration SettingupofDealerDistributorNetwork

    Setuparepresentativeofficeinanyparticulargeography.

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    ReportWritingServices Region/CountryAnalysis Sector/IndustryBriefings TechnologyReports WhitePapers

    BusinessConsultingServicesfirmofferingabroadspectrumofManagementConsultingandBusinessfacilitationservicesincludingbutnotlimitedtoFinancial&BusinessAssessment,MarketEntry/ExpansionStrategies,MarketandIndustryResearch,Identification&SelectionofBusinessPartners,FeasibilityandFacilityLocationStudiesetc.

    Sinceourinceptionin2002,wehavebeenofferingresearchsolutionstodistinguishedclienteleacrossmultigeographiesandindustryverti-cals.Wehelpourclientsinachievingsustainableperformanceandbettergrowthprospectsbyweedingouttheirobsoletebusinessprocesswithwelllaidstrategiesbyworkingincloseco-ordinationwiththem.

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