Corporate janitors

Facilities management companies are raking in the cash

When Updater Services (UDS) opened shop back in 1985 it had modest ambitions. The company had contracts to keep three organisations "" the American Consulate, MRF and CMC "" spotlessly clean.

Today, UDS is a cleaning-up giant with 4,000 people on its rolls and a Rs 35 crore turnover. Its clients include Infosys, American Express Bank, Alcatel, Godrej, Reliance, Bloomberg and Saint Gobain.

UDS isn't the only company that is cleaning up in a big way. There's Integrated Property Management & Services (IPMS), a company jointly promoted by Mahindra Group and IL&FS. After 11 years in the facilities management business IPMS has over 80 clients covering a wide spectrum of businesses. What's more, the company is growing rapidly. Turnover is likely to touch Rs 30 crore in 2003-04 up from Rs 26 crore in 2002-03.

What exactly are these companies doing? They are facility managers, which basically means that they are responsible for the maintenance and cleanliness of offices. But as times change the facilities management companies are coming into their own.

In the old days most Indian companies employed their own cleaners to ensure that offices were kept reasonably tidy. But it was the coming of the new software companies that the picture began to change. Suddenly, these new companies entered the Indian workspace with new ideas about cleanliness levels.

Says T Raghu Nandana, managing director, UDS: "The entry of multinational companies in the facilities management business has definitely made a big difference."

Step inside Chennai's Tidel Park where the city's leading software firms have made their base. Every inch of the giant software offices is kept spotlessly clean. How is it done? Keep an eye out for the army of mop-and-pail men and women in their spick-and-span overalls.

Another change occurred in the '90s which has resulted in the facilities management business growing beyond all recognition. That was the arrival of international companies like C B Richard Ellis, Haden, Knight Frank and Sodexo. Internationally, these companies provide a variety of services to clients. A key part of their revenues come from managing properties and keeping them sparklingly clean.

Take Jones Lang Lasalle, one of the world's largest property management companies with 725 million sq ft under its care globally. In India, it manages facilities for companies such as Microsoft, Accenture, Convergys and Procter & Gamble. Jones Lang LaSalle's property and its portfolio management services cater to corporations and institutions that outsource the management of their occupied real estate.

At one level, the coming of the software companies and more multinationals has led to companies demanding higher standards of housekeeping. At another level, the facilities management companies have been taking over more complicated work.

Says Nandana: "When it started it was on a piecemeal basis. We were given bits of electrical work or mechanical work within the office. Today the scope of our work is all encompassing. There are clients for whom we also check the TDS (total dissolved solids) in the water."

IPMS is also expanding in a similar fashion.But it has adopted a different business model. Says Mahua Ghose, managing director, IPMS: "We have a work force of 1,400 that is outsourced from multiple vendors. Apart from this we have 350 supervisory and managerial staff who are on the rolls of IPMS."

Ghose also provides the rationale for this business model where the foot soliders are kept off the company's payroll. "We have multiple vendors who provide the workmen. But we insist that they are trained by us and cannot work for another FM company. So we ensure that what we spend on training them, bears fruits only for us," she says.

Historically, Ghose points out that the finance and IT sectors have provided the impetus for growth in the FM space. Ghose, however, says that growth driver for the future of this industry is in the manufacturing sector.

The new industrial units that are coming up in the country are also using facility managers to maintain their facilities. "The older factories are yet to adopt this method. We are already in talks with some of these older units to hand over the FM work to us. If this segement buys our proposition in a big way, then we are in for a boom in this market," Ghose says.

Nandana's UDS has already bagged one such prestigious client in the manufacturing sector "" Hyundai Motor India. "At the fag end of 1998, we got the Hyundai order. Today we cover over 2.5 million sq ft for this one client and nearly one-fourth of our work force is engaged there."

UDS also undertakes production related work for Hyundai and bills this Korean carmaker close to Rs 70 lakh a month.

As the FM market in India expands, homegrown players like UDS are suddenly finding that new suitors are coming their way. Nandana says he is talking to two leading foreign FM companies for co-branding or representing their brand in India. Nandana is looking at several options including starting a separate joint venture.

Having a foreign brand name can help to bag contracts. The Tidel Park contract, for instance, went to Richard Ellis because the building managers felt that a multinational name would help to attract foreign companies like Cognizant and Computer Associates. But UDS carries out actually cleaning work for Richard Ellis. When the Tidel contract comes for renewal this year, Nandana plans to bid on his own and is confident of bagging it too. UDS is also looking at the Middle East to expand its presence geographically.

The facilities management companies are an indicator of how times have changed in India. As Ghose puts its, with more fancy buildings and shopping malls popping up across the country, the sky is the limit for the facilities managers.