The Hindu Business Line : Facilities management

Facilities management is one of the younger industries in India though it has been around for quite some time in the US. It can be described as one of the business process outsourcing industries.

Let me use an example to explain what it is all about. Let us say a large factory making pharmaceutical products decides to outsource certain tasks such as maintaining their precision air-conditioning units, ensuring that they are break-down free and maintain the optimum humidity and temperature. This is a small facilities management (FMS) contract. Not quite the same as an Annual Maintenance Contract (AMC). In an AMC, the technicians are pressed into service when there is a problem. In FMS, the technicians are expected to ensure that the system keeps going.

A large FMS contract would see several such services for an entire plant being farmed out to a service provider. The services could be broadly classified into technical (hard) and soft services. Technical services would pertain to maintaining engineering equipment, and HVAC units. Soft services would pertain to activities like housekeeping. It should be noted that the core function — actual manufacturing or process — is not outsourced as part of an FMS contract.

In India, soft services see a larger market than technical services do, but that is primarily because many commercial buildings and large IT offices tend to outsource such services. International companies tend to outsource non-core activities as it reduces their HR responsibilities (recruitment, statutory issues such as EPF and ESIC) and also helps to manage headcount without impacting work adversely.

However, the industry is evolving rapidly and skill rather than cost is becoming a key differentiator. Indian industry leader MacLellan’s head of operations, Col. S. Ram, says “the last two years have seen a sea change in client expectations from asking for the lowest cost quote to being prepared to pay a premium for assurance of service”.

Some of the other leading players in the field are JJLM, CBRE and Johnson Controls. The industry sees both Indian and MNC players having a significant presence.

The organisation structure of FMS players typically consists of a strong corporate team encompassing HR, marketing, operations, and finance supporting the individual sites which are in effect mini-organisations themselves. Every site has its own ‘CEO’ — the facilities manager whose skill-sets have to include being able to command respect from the client. The site team has its own HR and finance representatives.

The industry still has low penetration, so exciting times lie ahead.

(Contributed by Ashok R. Sankethi, CEO, Kaybase, a business consulting firm. Mail: ashok@kaybase.com)

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