The facilities management outsourcing market is not just expanding, but it is evolving, with growing public and private-sector demand for FM solutions that are both global and integrated. The growth in outsourcing goes hand-in-hand complemented by growth in integrated facility management (IFM). The rate of outsourcing and demand for integrated solutions follow similar trend lines in mature markets. With higher outsourcing penetration, the demand for integrated facility solutions is typically higher. Despite high growth rates, revenues generated by IFM in emerging markets like India remain comparatively small as outsourcing is considered as a costly affair. These trends are reinforced when synergies with the other services such as energy management can be demonstrated and cost savings are achieved.
FM outsourcing is increasingly delivering more complex services and will progress to the point of accepting modern FM solutions, thus paving the way for massive growth in IFM. It will also lead to greater opportunity for in-house teams to focus on core activities and deliver strategic value. Besides this, the customer expectations are broadening to include more value-added FM services. For instance, the clients expect FM providers to assume responsibility (i.e. accept risk transfer) for regulatory and essential compliances while taking an active role in advancing company’s strategic mission. Thus, the FM suppliers have evolved from just being a service provider to strategic partners. As far as IFM is concerned, the clients look for a smarter solution i.e. an equation between cost, service performance, and risk acceptance.
Many growth opportunities have been identified for IFMs in the market. Firstly, the need for real-time analytics, which will lead to better cost efficiency and resource optimization. The demand for more environment sustainable practices such as energy efficiency, renewable energy, and circular economy-based requirements is also opening some opportunities for new players to enter the market. These changing demands require a new way of thinking about the delivery of FM services as the industry has transitioned from having a single-service model to providing multiple integrated services delivered seamlessly to the client.
Service integration necessitate specific contract standards and language that differentiates it from a single-service contract. These contracts are more performance-based rather than a checklist. These performance-based contracts require focused forethought for the governance plan. Mature IFM markets are characterized by the intense competition. The challenge for many FM participants, therefore, will be to reach a balance between being competitive and achieve reasonable margins.
Overall, it is recommended to new and existing players to keep an eye on the existing market trends and look out for potential opportunities to create partnerships or specialized offerings in the various sectors.