1. Indian Facility Management
Services Market Published: Nov’ 2014
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2. Overview
• The concept of facility management services gained prominence in
India after the liberalization, privatization and globalization policies.
• There are mainly two types of Facility Management Services:
• Most of the FM services offered in India are in the IT/ITES, BPO/
KPO, and Banking & Finance sectors and to some extent in other
sectors also.
• The industry has a large number of small unorganized players
offering the services.
• As per our research, more than 60% services are performed in-
house. This trend is, however, changing.
• India’s service sector is the fastest growing part of its economy- it
held 33.3% of GDP (at current prices) in 1950-51 increasing to
64.8% in 2012-131
.
• The swiftly growing service sector is creating huge potential for
FM services, which is anticipated to grow at a CAGR of around
20%, five years down the line.
• As per our interaction with FM Service providers, Housekeeping
and Security will remain the major revenue generators for them.
• The share of specialized services such as energy, water manage-
ment, etc is anticipated to increase bundled with soft services.
At present, FM services are non-regulated. There is no regulatory body
to control the industry.
However, due to its manpower driven nature, the Labour Laws such as
minimum wages act, EPF etc. are applicable to these services.
The majority of small, locally spread, unorganized players do not com-
ply with labour laws properly. Their services are comparatively cheaper
than the organized ones.
The big organized players, however, comply with laws related to
labour, quality, man-power training etc.
The organized players are demanding a regulatory body to govern the
industry.
Indian Facility Management (FM) Services Industry
Market Update
Source: RNCOS
Source: RNCOS
Note: Others include catering, horticulture, water management, energy
management, transportation and others
1
UN National Accounts Statistics
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
• Soft Services: Involvement of Human skill
• Hard Services: Involvement of electrical and mechanical equip-
ments with human skill

3. Source: RNCOS
India - Segmentation of Security Services in FM Industry (2014)
85%
5%
10%
Manned Guarding Cash Services
Elec. Security
• Manned guarding is the largest segment in security services
which includes protection of industrial, commercial and
infrastructural facilities.
• Increasing crimes and less availability of government-em-
ployed security personnel has led to increase in this segment.
• Cash services and electronic security are slowly evolving
as major and fast growing service offerings within security
services of Facility Management.
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
• As per our research with Security service providers and FM
service providers, manned guarding is expected to cater
higher revenue in future with increase in shopping malls, IT
parks, and other private infrastructural facilities.
• The cash services segment is expected to showcase an incline
in its current share given higher numbers of ATM installations
along with white-label ATMs, opening up of bank branches
and increasing penetration of debit cards.
• According to most of the security agencies, wider security
coverage as compared to manned guarding; and one-time
investment will lead to rising demand for security and surveil-
lance systems such as CCTVs in India.
• The minimum qualification for a security guard in India is
matriculation. The organized players, however, prefer a 10+2
(intermediate) degree.
• Besides qualification, security service companies give due
importance to IQ level and physical fitness (including height,
weight, and eye-sight).
• The pay scale for a security guard varies from location to loca-
tion and client to client. However, most companies pay as per
the minimum wages act under labour law plus incentives.
• Big players like G4S abide by the Private Security Regulations
Act 2005 whereby state governments have placed guidelines
related to security services such as licensing norms and train-
ing requirements for guards.
• Most of the domestic players are regionally located serving
few geographical locations
• The companies are specialized in one or few services
• They lack trained staff and technical expertise
• Very few organized players have high sales turnover
• Companies have well-established presence and cater to
mainly commercial sectors such as IT/ITES, BPO, Finance and
Banking
• Companies use inorganic growth model for expansion by
acquiring domestic players having well-established networks
• Companies have well-trained staff and deliver best services
with their global expertise, systems and resources
• They provide integrated total facility management solutions
to customers
• They further utilize their global and regional expertise to capi-
talize on key sectors such as healthcare, aviation & education
amongst others

4. Companies gearing up for Total Facility Management (TFM) Solutions
Strategic Acquisitions: the way to go
Future Prospects
Total facilities management providers in India are scarce. Some companies including multinationals, such as ISS operate in the region with varying degrees
of success.
Previously, most of the companies in the facility management industry in India were having either one or few facility services in their portfolio of services.
But now-a-days, the scenario has changed as companies look to provide one stop solutions to their customers meaning a total facility management solu-
tion incorporating hard as well as soft services.
For that, the companies are making strategic acquisitions to avoid appointment of multiple subcontractors for various services. For instance, last year,
UK’s largest family-owned facilities service provider, OCS Group integrated its services to provide total facilities management services and end-to-end solu-
tions to its Indian clients. The Group now directly delivers core facilities management services such as engineering, cleaning, hygiene, security and other
FM services to Indian clients without appointing multiple subcontractors.
Over the past few years, the facility management industry in India witnessed rapid changes accompanied with consolidation. Some of the big interna-
tional players followed the inorganic growth route to mark its presence in the Indian market. For that, the companies started acquiring domestic facility
management players. For instance, OCS group acquired four service providers in India such as Absotherm Facilities Management (engineering), Radiant
Hospitality Services (housekeeping), Cannon Hygiene India (hygiene and sanitation) and Central Investigation & Security Services Limited (security services)
over the last 2 years period.
Similarly, Sodexo acquired two companies to enlarge its scope of activities beyond gift vouchers and coupons to food services and facility management.
Recently, the Ikya Group, which is a subsidiary of the tour operator Thomas Cook (India) Ltd, signed an agreement to acquire Chennai-based Hofincons
Infotech & Industrial Services from the Australian firm Transfield Services.
Besides international firms, Indian firms are also following the same route to consolidate their market operations. For instance, Rentokil Initial India
acquired the Gujarat-based pest control service providing company PestconePlus which would help inculcate an experienced local management team into
the company.
• The FM Services industry’s future seems quite bright as more number of organization are looking for outsourcing their services which are not directly
related to their core business to cut cost and perform efficient operations.
• The upcoming infrastructural projects and significant economic growth will create more demand for FM services in the country.
• FDI in sectors such as retail, IT and security services will create more opportunities for FM service providers in India.
• Expansion of business activities in tier 2 and 3 cities by end-user segments will increase regional growth of FM services.
• New opportunity areas for facility management companies in Indian railways are evident as Ministry of Railway in its budget announced a separate
housekeeping wing at 50 major stations.
Industry Trends

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