Facilities Management Services Market in India to Reach $6B by 2012

Facilities Management Services market ‐
Facilities Management Services market India
September 2009

Executive Summary

 Facilities management services market in India is valued at USD 3.3 bn for 2009
Market  The market is expected to grow at 22% annual rate and reach USD 6 bn by 2012
 Organized market is 150 mn square feet while unorganized about 1 bn

 Drivers:  Challenges:
Drivers & – Growing real estate and property – Availability of manpower
management market – Large unorganized segment
Challenges – Growth in BPO, IT and ITeS sectors
– Boom in retail sector

 Evolving project management and General Contracting Services: a growing sub‐segment
 Huge variation in pricing and mark up from region to region and firm to firm
Huge variation in pricing and mark up from region to region and firm to firm
Trends  Growth in facilities management market increasing the demand for training and certification
courses specific to this sector

 With entry of international property consultants one can expect acquisitions and joint ventures
Foreign Players Domestic players
Competition • Jones Lang LaSalle • Knight Frank India • IL&FS Property Management
• Total Solutions
Meghraj • Cushman & Wakefield and Services Limited (IPM&SL)
• BVG India
• CB Richard Ellis India • Tenon Property
p y • Vipul Facility Management
•PProperty Solutions
S l i
• MacLellan India Services • Updater Services

FACILITIES MANAGEMENT SERVICES MARKET – INDIA.PPT 2

•Introduction
•Market Overview
Market Overview
•Drivers & Challenges
•Trends
•Competition


Facilities management covers a wide spectrum of essential
support services

“Facilities management is the integration of processes within an organisation to maintain and develop
the agreed services which support and improve the effectiveness of its primary activities”

Facilities Management Services
Facilities Management Services

Hard services Soft services
Services
S i include
i l d managing
i critical
ii l Services i l d management and provision
S i include d ii
environment of an organization like of cleaning, security, reception, catering
ensuring uninterrupted power supply, services, help desk services, vendor
maintenance of air conditioning etc. management etc.


Various sectors outsource facilities management activities to
focus on their core business

IT and ITES International
Retail and
Shopping
Shopping Schools
Malls

Target Audience Banking and
Real Estate
for Facility
for Facility Finance
Fi
Companies
Management
Services

Corporate
Manufacturing
g
Houses
H
Firms

• Facility Management firms provide its clients with a dedicated team to solve the day to day problems associated with
p p y
property/facility management and provide a single point of reference and contact
y g p g p
• 0utsourcing facility management requirement provide the following benefits:
– Healthy, comfortable, safe and secure work environment
– On going transactional cost efficiencies
– Consistent and standardized management systems
– Overall quality improvements
Overall quality improvements
– Extended asset life and reduced maintenance costs


•Introduction
•Market Overview
Market Overview
•Trends
•Competition


Facilities management services market in India has immense
potential and creates an opportunity of USD 6 bn by 2012
Market overview Market size & growth
• The facilities management services market in India
was valued at USD 2.3 bn in 2007 USD bn
6.0
• The market is expected to reach USD 6 bn by 2012 6 +22%
5.0
growing at a 22% annual rate 4.1
4 3.3
• The organized market is about 150 mn square feet 2.7
and the unorganized is estimated at 1 bn square feet 2.3
2
• With th
With the growing IT/ITES and retail sectors in India,
i IT/ITES d t il t i I di
the market for facilities management services looks 0
positive 2007 2008 2009 2010e 2011e 2012e

Sector wise market share (2007) Organized vs. unorganized split (2009)
255 mn square feet 1.15 bn square feet
Retail
16% 13%

Corporate
48% IT/ITES
office 17%
Organized
19% 87% Unorganized
Others


Market is concentrated in and around metros with very low
penetration in Tier II cities
Geographic Overview Region wise market split
• Facilities management has picked up well in
Bangalore, the IT hub of India
• Hyderabad and Chennai are the growing markets
with growth in construction and hospitality sectors in
these regions
• Others include Chandigarh, Bhubaneswar, Indore, 20%

Jaipur, Vizag, Trivandrum, Calcutta etc.
• Facilities and property management services have
significant scope in the Indian Corporate real estate
market
• It is the unorganized market that is covering the Tier I 20% New Delhi, NCR
and Tier II cities requirements for facilities
management Mumbai, Pune
5%
• However, slowly the organized segment is moving
However, slowly the organized segment is moving 35% g
Bangalore
towards these geographies
Chennai
• Security and guarding services is the sub‐segment
10% Andhra Pradesh
which employs maximum workforce in this sector
Others (10%)
Others (10%)


•Introduction
•Market Overview
Market Overview
•Trends
•Competition


Drivers & Challenges

Challenges
Drivers
Availability of manpower
Growing real estate and property
Growing real estate and property
management market Large unorganized segment

Growth in BPO, IT and ITeS sectors

Boom in retail sector


Facilities management business is rapidly growing on the
account of record infrastructure and real estate investments
Growing real estate and property management Impact
• The Indian real estate sector contributes heavily towards the country’s GDP is the second
largest sector in terms of employment generation
• The growth in this sector gave immense potential to the property management companies who
in turn provide integrated facilities management services
• Many residential and commercial complexes are being constructed including hotels, offices,
shopping malls, hospitals etc.
• All th b
All the above mentioned entities require facilities management services like housekeeping,
ti d titi i f iliti t i lik h k i
security, cleaning, hospitality, property management, electrical, mechanical and civil
engineering services etc.

Commercial space required by 2010
Commercial space required by 2010
mn square feet

IT & ITES 150

Organized Retail 220


The market growth is accelerated by the demand from growing
BPO/IT/ITES sectors
Growth in BPO, IT and ITeS sectors Impact
• The growth in BPO, IT & ITES sectors has spurred the demand for facilities management services
in India
• IT sector is growing at an annual rate of 18.6% and BPO‐ITeS at 35% as per 2009 figures
• Majority of these offices need services like security, cleaning, catering services etc. and all of
these are outsourced to facilities management companies
• The future for facilities management is bright with the growth figures of the above mentioned
sectors
t
• Overall there is a increased share of service sector in India which would induce growth in
facilities management services in India

Service sector growth in India
Service sector growth in India

1996‐97 2007‐08
100 100
Services
44% 53%
Industry
28% Agriculture
29%
28% 18%


Increasing retail outlets like super markets, malls etc. has
created wider scope for facilities management services
Boom in retail market Impact
• The boom in retail market has led the demand for facilities management services in a major way
• Increasing malls and retail stores has increased the demand for many services offered by the
facilities management companies
• Mall management is a critical factor for the success of malls and also the retail industry
• The major scope of services for facilities management in malls lies in infrastructure
management

Infrastructure management in malls

• Uninterrupted power supply with 100%
Power
P
p
power backupp
• HVAC with adequate redundancy
Retail Market growth
Retail Market growth
• Emergency lighting in all areas
USD bn
400
• Fire‐fighting and detection system +14% 312
Safety • Dedicated security system 300 262
230
186 205
200
• Toilets maintenance
• Water softening and purification
Miscellaneous 100
• Building and floor directories detection
• system
• Signage directing customers towards
Signage directing customers towards 0
elevators, toilets and fire exits 2001‐ 2002‐ 2003‐ 2004‐ 2005‐
02 03 04 05 06


Shortage in manpower is the major challenge faced by this
sector in India
Availability of manpower Impact
• Facilities management requires three‐fold manpower comprising professionals, skilled and
unskilled people
• There are very few professionals who can handle large infrastructure projects the demand for
There are very few professionals who can handle large infrastructure projects, the demand for
them is huge in India
• The unskilled manpower easily switches jobs for better payments and hence controlling the
employee turnover at that level is a big challenge
Three‐fold
Three‐fold
manpower

Professional Skilled Unskilled
require technical requires expertise and These are the one’s who
qualification relevant qualifications deliver the results

Salaries range for the manpower (INR)

Professional 25,000 35,000

Skilled 10,000 18,000
Minimum
Unskilled 3 000
3,000 5,000
5 000
Maximum


Industry is fragmented with highly unorganized market

Large unorganized segment Impact
• Facilities management sector is highly unorganized in nature and only a small part is organized
• Due to wide range of services falling in to this sector many small players enter with focus on one
or two services like security, pest control etc.
• There are more than 1000 players present in the facilities management sector in India
• The industry is not defined properly and it is fragmented with many local players
• It was only in 1998 that an International company MacLellan first entered this market to
It was only in 1998 that an International company, MacLellan, first entered this market to
provide services to Ford India (then Mahindra Ford) in Chennai
• The service model for this industry is yet to be developed keeping in mind the cost effectiveness
and price sensitivity of this sector
 Local and unorganized players do not comply with statutory compliances and insurances giving them the
Local and unorganized players do not comply with statutory compliances and insurances, giving them the
advantage of providing services at lower cost compared to organized players


•Introduction
•Market Overview
Market Overview
•Trends
•Competition


Trends ‐ Summary

Evolving project
management and general
contracting services
i i

Trends

Training and certification
Variations in pricing and
courses specific to facilities
p
mark up
k
management sector


Evolving project management and General Contracting Services:
a growing sub‐segment

• Project Management was introduced in India by international real estate companies like Jones Lang LaSalle, CB Richard
Ellis etc. in establishing outsourcing facilities in India for their global clients
• Since then it has matured significantly with growth in lot of industries especially IT and ITES
• Today, there is wide acceptance and predominant usage of Project Management and General Contracting  Services
across various construction projects in India

• Managing construction activities and maintaining the
progress
• Monitoring  scope, quality, time and cost constraints
• Managing resources like people and raw materials Major customers
Project required for the project include clients who:
Management
g
• Reducing the risk of failure by interacting with various
d i h i k f f il b i i ih i • Create their facilities
Create their facilities
parties within existing
• Regular monitoring of  architects, design consultants buildings
and contractors • Set up independent
buildings
• Undertake campus
• Integrating the processes and providing services developments
General involved in the delivery of project either directly or by
Contracting subcontracting
Services • Acts as a single point of contact managing all the
Acts as a single point of contact managing all the
subcontractors


Pricing and Mark‐up for facilities management services in India
varies from north to south and differs with firm

North India South India
Pricing range
1.20 to 1.30 INR per
INR 0.80 per square feet
square feet

Jones Lang LaSalle Meghraj Mark‐up range Tenon Property Services
(Example)
35 – 45% mark‐up on cost 10% mark‐up on cost

• Majority of the real estate consultants in North India are in to Property Management, (which is serving the
j y p y g g
owners/developers of infrastructure) hence less prices ex:‐ CB Richards Ellis India
• Through effective marketing Jones La LaSalle Meghraj has captured the facilities management market (serving
the tenants/MNCs who leased offices) in the south and got best price for their services


With increasing demand for Facilities management education,
training and certification courses are offered in this sector

Increasing infrastructure investments in India demands expert professionals who understand the complexities of
technologies used in various operations. There is a need for formal education system in facilities management sector

• Started a division, Sinar Academy for Service Excellence to offer training and
certification courses of international recognition
• Courses offered in cleaning and maintenance, food and beverage services and
Sinar Jernih India communication skills
i ti kill
• Benefits to a wide range of people with only primary school education to graduates
• Joint certification is provided by CII (Confederation of Indian Industries) & City and
Guilds of the UK for selected courses

• Signed a MoU with the National Academy of Construction, Hyderabad, to provide
certification courses in facility management
• It provides a six month course for fresh graduates and a part time course for working
facility managers
IFMA India
• Courses offered covers areas like real estate, finance, communication, operations and
maintenance, planning and project management, quality assessment and innovation,
leadership and management, human and environmental factors among other trades
of facility management
of facility management


•Introduction
•Market Overview
Market Overview
•Trends
•Competition


The entry of international property consultants has trigged
competition and one can expect acquisitions and joint ventures
Competition Employee strength of major players
• The market is yet to grow to its fullest capacity with
efficient service models to expect stiff competition
Tenon Property Services 20,000
• Market is highly unorganized with over 1000
companies in this space Updater Services 15,000
• Majority of the organized segment is dominated by
the international property consultants Total Solutions 5,000

•I t
In terms of area covered, Jones Lang La Salle Meghraj
f d J L L S ll M h j George Maintenance Services 3,500
(JLLSM) is the major player covering about 15 mn
square feet area Vipul Facility Management 3,000
• Majority of players do not hire employees on their
Jones Lang LaSalle Meghraj 2,800
payrolls and prefer outsourcing the work to sub
payrolls and prefer outsourcing the work to sub
contractors as they get a contract Sinar Jernih India 2,000
• Large MNCs are looking for acquisitions in metros as
they see a big opportunity for new business and CB Richards Ellis India 1,500
cross‐sales from target company’s clients
IPM&SL 1,200
1 200
• The areas which require enhanced security
requirements include: MacLellan India 1,000
 Mall management
 In‐house office space management Cushman & Wakefield India 700
P i h lt
Peripheral tower block security
bl k it
Perks Links & Services 300
 Retail and 24 hour convenience stores


Foreign players in India (1/3)

Company Business Description

Jones Lang LaSalle • Indian subsidiary of Jones Lang LaSalle, a global real estate services firm
Meghraj • Provides services like managing office industrial technical manufacturing critical
Provides services like managing office, industrial, technical, manufacturing, critical
environments etc.
• Had presence in 11 cities in India and covers around 15 mn square feet area
• The total strength is over 2800 employees
• The first independent real estate consultancy to enter India in 1994
h f d d l l d
CB Richard Ellis • Provides services in Strategic Consulting, Valuations/Appraisals, Agency Services, Asset
Services and Project Management and Facilities Management
• Headquartered in Delhi an d offices in Mumbai, Bangalore, Chennai, Hyderabad, Kolkata and
Pune, presence in 50 cities across India
Pune presence in 50 cities across India
• They employ around 1500 professionals in India
• CBRE has portfolio of about 50 mn square feet of space under facilities management
Cushman & • Privately held real estate services global firm
Wakefield India Pvt • Started operations in India in 1997
Ltd • Provides various real estate services including facilities and property management services
like maintenance, construction, procurement, regulatory compliance etc.
• Total employees strength is over 700 with offices in New Delhi, Mumbai, Bangalore, Chennai,
Hyderabad, Kolkata and Pune

Note: This list is not exhaustive



MacLellan Integrated • A subsidiary of US‐based MacLellan group company
Services India Pvt. Ltd.
Services India Pvt. Ltd. • Provides turnkey solutions in automotive paint finishing, environmental engineering etc.
y p g, g g
• They have about 1000 direct and indirect employees in India
• The head office is located in Chennai and they have a regional office in Bangalore
Knight Frank India Pvt • It is a part of the Knight Frank Global Network
Ltd • It
It provides a comprehensive range of real estate related services covering residential,
id h i f l t t l t d i i id ti l
commercial, land, investments, hotels & leisure, valuation, advisory services and facilities
management
• It has offices in Mumbai, Gurgaon, Bangalore, Pune, Hyderabad, Chennai & Chandigarh

Tenon Property • A subsidiary of Singapore‐based Mortice Group, started operations in India in Jan 2008
Services Pvt Ltd • Provides integrated facility management and project services
• Headquartered in Bangalore has a wide network of over 50 offices and resources across
19 states in India to deliver services beyond Tier I and Tier II metro cities
• It has a subsidiary Rotopower, which operates under brand name FMSG, specialized in
engineering services especially in Telecom tower sector and it covers 2 mn square feet
space
• The total strength of the group is in excess of 20,000
• It covers over 5 mn square feet of space is targeting for 15 mn square feet this year




• International property company having operations in Asia, Australia and New Zealand
L.J. Hooker India
L J Hooker India y , p y p p y
• Globally it has 800 offices, 10000 employees and handles over USD 50 bn in property
• Launched Indian operations in 2007 with head office in Bangalore
• It has 5 franchises in India (Delhi, Ahmedabad, Mumbai, Hyderabad and Bangalore)
• Provides services in key areas of property management like financial analysis and
g g, g , p g, y g y
budgeting, structural and building maintenance, housekeeping, security and general facility
management
Sinar Jernih (India) • It is a subsidiary of Sinar Jernih Group Malaysia
Pte Ltd • It provides hotel housekeeping and hospital cleaning service in India
• Sinar Jernih India has major presence in Chennai
Sinar Jernih India has major presence in Chennai
• It employs over 2,000 workers, and its clients include the Taj Group of Hotels, Sheraton
Oberoi, and the Wockhardt Park Hospital



Domestic players (1/3)


IL&FS Property • A property management services division of Infrastructure Leasing & Financial Services
Management and
Management and Limited (IL&FS)
Limited (IL&FS)
Services Limited • Provides services in facility and property management, Office support and administrative
(IPM&SL) services, research and advisory services for new business etc.
• It has a strength of 1200 employees in 30 locations in India and one overseas office in
Srilanka
Vipul Facility • VFM is part of Vipul Group headquartered at Gurgaon established in 2000
Management • Provides services in the areas of business support, helpdesk, engineering, cleaning, security
services, civil, structural, mechanical, electrical engineering and soft services
• VFM manages 15 mn square feet with above 3000 professionals from 12 offices in India
VFM manages 15 mn square feet with above 3000 professionals from 12 offices in India
Total Solutions • Headquartered in Mumbai
Facility Management • Provides services like cleaning and housekeeping, repairs and maintenance, guesthouse
Pvt. Ltd. management, office support services etc.
• Th d l
They do cleaning and servicing of over 10 mn sq ft on a daily basis
i d i i f 10 ft d il b i
• They have over 5000 employees and operations in 19 cities across India
• The client list includes 160 plus B2B customers and have vast experience in IT/ITES sector,
Office & Industry, Townships, Commercial building, Retail outlets, Hotel, Restaurant &
Entertainment houses
Entertainment houses




Updater Services • Funded by ICICI Ventures, it has above 15000 people and 11 offices in 10 cities in India
(P) Ltd
(P) Ltd g y g , , g, p y,
• Provides integrated facility management services for IT, ITES, Manufacturing, Hospitality,
Financial sector and others with main focus in Chennai, but plans to expand soon
• It manages more than 40 mn square feet for 300 plus Indian and MNC clients
• A Bharat Vikas Group company headquartered in Pune, Mumbai, Bangalore, Chennai and Delhi
• Provides complete range of facilities management services including cleaning security
Provides complete range of facilities management services including cleaning, security,
landscaping, electrical, logistics & transport, manpower outsourcing and civil engineering
BVG India Ltd
• BVG provides multiple services to more than 50 clients in private, public and government
sectors
• Few of its customers include Parliament of India, Indian Railways, ONGC, Tata Motors, ITC,
Few of its customers include Parliament of India, Indian Railways, ONGC, Tata Motors, ITC,
Accenture etc.
Financials:
Revenues 2007: INR 725.73 mn; Net Profit 2007: INR 135.66 mn
Property
Property • PSIPL is a business division of the Kalpataru Group of Companies
PSIPL is a business division of the Kalpataru Group of Companies
Solutions India • Founded in 1999, PSIPL has consistently shown 100% growth since inception
Pvt. Ltd. • Provides services in Project management, Mall management and Facility management
• It manages property of over 18 mn square feet
• It i l t d i M b i P
It is located in Mumbai, Pune, Baroda, Hyderabad, Bangalore, Chennai & Delhi
B d H d b d B l Ch i & D lhi




George Maintenance • It is located in Mumbai and has been in the Facility Management Services for past 30 years
Services Pvt. Ltd.
Services Pvt. Ltd. p g, p g, p ,p y,
• Provides services like housekeeping, manpower outsourcing, pest control, pantry,
gardening, electrical, plumbing & carpentry etc.
• It has offices in Pune, Nasik, Nagpur, Ahmedabad and Goa
• It has about 3500 employees
Perks Links &
Perks Links & • Located in Mumbai
Located in Mumbai
Services Pvt. Ltd. • Provides services in housekeeping, pantry & catering, garden maintenance, pest control,
security, electrical, event management etc.
• The total number of employees are 300



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Facilities Management Services Market in India to Reach $6B by 2012

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