Quiet revolution of FM in India

Today, many organizations continue to opt for in-house services and are yet to shift to a sophisticated services management company. The technical aspect, mainly, referred as hard services is mostly outsourced leaving the soft services to be undertaken by the in-house staff. The advent of favourable government policy in the construction and services sector has resulted in exponential growth not only for these sectors, but also the sectors reliant on them, with facility management being the biggest gainers amongst them. The growth story of the FM market has been often termed as a quiet or silent revolution hinting at the efficacy and the consistency with which the industry has grown. The FM industry needs to engineer social change by helping the unorganized sector regularise and corporatize the operations.

The biggest challenge faced by the industry is to transform the perception of FM services beyond traditional housekeeping services. Building maintenance is inarguably the core of FM services, but today, it also spans sophisticated requirements spanning integrated facilities management, industrial FM, specialised engineering services, and soft services. The distinction between hard and soft services in the FM business is the distinction between the level of technical expertise required to perform hard services such as air conditioning, ventilation, and heating, thus requiring higher levels of technical acumen. Sever fragmentation also burdens the FM industry, which is largely dominated by the unorganised sector, primarily local service providers. The low cost unorganised service providers often undercut the organised sector as they survive on razor thin margins due to their non-existent statutory compliance overheads. They may seem attractive from a price perspective, but there is a hidden cost and risk involved, which in worst case scenarios may outweigh the benefits derived from the lower prices.

The biggest challenge for the market to continue this growth spree is the absorption of unorganised service providers in the organised sector. One of the strategies commonly employed by large organisations is M&As of locally present service providers in order to tailor their services to specific requirements of the client by uplifting the level of services to global standards. This method, however, is not sufficient to address the huge number of players in the unorganised sector. Thus, the growth of the unorganised sector has not been on par with organised sector, and smaller enterprises struggle to break even and survive on thin margins. This style of functioning restricts the growth and development of these service providers. 

The organised sector is adversely affected by poor quality services provided by local service providers as bad experience and lack of quality services that makes the client shift to in-house services where they have more control. The infrastructure to train and educate personnel in the unorganised sector is minuscule, which adds to their woes. The organised sector often further outsource specific tasks to local service providers. This gives the organised sector an immaculate opportunity to inculcate technical skills on par with the global standards. Therefore, FM service provider can deliver quality services and engineer the unorganised sector into an organised system so that it is easier to stay within the purview of statuary compliances and standards.

The FM services sector, thus, has contemplated a growth spurt, which is laudable. In order to avoid stagnancy and ensure further market penetration, deep fragmentation in the industry needs to be addressed.  The government also has the responsibility of developing skills specific to this industry and bring the unorganized under the ambit of contemporary statutory regulations. Since there is no set policy from the government, the organized sector assumes the responsibility to educate and develop the skillset, technical steadfastness, and professionalism in the unorganised sector. The interdependency of the two fragments is the key to this mechanism. Therefore, it becomes crucial for the organized sector to spearhead the revolution and reach the summit’s peak, thus transforming the unorganised sector to reach its full potential along the way.

Colliers International | Mumbai, Indiabulls Finance Centre, 17th Floor, Unit No. 1701, Tower 3, Senapati Bapat Marg, Elphinstone (W), Mumbai 400 013, Maharashtra, India | Tel: +91 022 4924 9780