Based on the Yearly Sectoral Analysis 2012 – Environment & Building Technologies Facilities Management in India by Frost & Sullivan, the FM market in India has strong and direct correlation with the construction sector’s growth. The current effective market of outsourced FM services in India was estimated to be approximately US $825 million or INR 3,795 crore in 2011. Compared to rest of the world and some developed countries, the Indian FM market is still at a nascent stage.
FM or outsourcing of services constitutes only 35% of the overall demand for real estate services in India, while remaining 65% or US $1.5 billion is managed in-house by construction companies. Unlocking this remaining 65 percent is hindered by many factors including lack of availability of technical and non-technical manpower, increased lead times in mobilizing resources/staff after a project has been successfully contracted due to manpower shortage, increase in inflation and labor cost, and ineffective provision of services at low rates by unorganized industry participants.
FM service providers, who have historically focused on providing soft services, are increasingly looking to add specialized technical services within their service portfolio. In matured markets, the focus of FM remains on integrating facility, maintenance, and building control systems (hardware and software) through building operations and maintenance services. In India, FM service offerings are quite mundane in nature with basic electro-mechanical maintenance of lifts, diesel generator sets, plumbing, security, housekeeping, and landscaping. Technology is yet to make an impact on the Indian FM market, unlike developed markets.
Best practices in FM should be aimed at reducing overall cost of maintenance, increasing life of the asset or building, and enhancing the client’s experience if he opts for outsourced FM services. All these factors hinge further on the ability of FM service providers to offer personalized solutions and adhere to timelines and quality consistency during service delivery. There should be an integration of facility management and maintenance management departments through customer relationship management (CRM) software platforms offered by IT and telecommunication companies.
CRM allows FM service providers to automate maintenance procedures and employ wireless handheld inspection terminals and web-based portals, which make it easy to track equipment performance, plan maintenance, control inventory, inform repair technicians, and report results to management in real time. This has led to increased reliance on handheld devices to minimize paperwork and improve accuracy of data collection. In addition, communications and data systems offer service providers more informative tools, which they can utilize to assist clients in the decision making process.
With respect to the segment-wise breakdown, commercial and industrial segments have contributed to 70 percent of the current effective FM market in India. The commercial segment including malls, hotels, hospitals, corporate offices, and multi-tenant office buildings has remained the traditional stronghold of most FM companies here. Lately, greenfield industrial activities have led to improvement in scope of growth for FM. Limited competition in the industrial segment, followed by continued offshoring of manufacturing units by multinational corporations (MNCs) has propped up this segment.
The Information and Communication technology (ICT) sector has effectively converged with the FM market in most developed nations. Remote monitoring of one or more geographically-dispersed buildings from a single remote location has become quite prominent in matured markets. Proactive monitoring and predictive maintenance through continuous real-time monitoring of various systems in a building, such as heating, ventilation, and air conditioning (HVAC), and lighting, electrical, security, and alarm systems, is a very specialized solution. Remote monitoring aids in finding and fixing any issues, optimizes energy consumption, and reduces operational costs.
Integration of ICT and emphasis on energy management could transform the Indian FM market from contract-based to performance based, forcing service providers to maintain high levels of quality to meet client requirements. Companies hitherto focusing on providing soft services are now partnering with companies with core competencies in technical services to attain capabilities in these areas.
Economic Impact and Competitive Analysis
Competition in the FM services market is intense with presence of both domestic and international service providers. The market is expected to witness more competition from new entrants through mergers and acquisitions. Since the market is riddled with low-cost unorganized service providers, pricing and margins come under pressure. These unorganized players provide services at low rates, essentially scuttling the competition from large organized players. As investments increase in IT/ITES/BPO, finance/banking, telecom, retail/malls, and industrial sectors, the FM market will continue to witness strong growth in the next 2-3 years.