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Established in 1989, the Bangalore based Avon Facility Management Services Pvt Ltd has a pan India presence with over 10,000 employees. “We have a set of loyal clients whom we have been servicing for over 15 years,” says Ram Balan, Managing Director. His biggest challenge today is ensuring that quality does not suffer at the cost of growth.


How has the journey been so far?

When we started, we were treated like contractors who were trusted by neither our principal employers nor employees. The state of affairs in the industry was such that the contractors were not paying workers properly and the concept of minimum wages was unknown. I am not an HR person and the concept of “compliance” was absolutely new to me. I have always intended that a person who works should get his due and when I started out I was clear that my dealings would be transparent. Our clients would know exactly how many people we were employing for their facility and how the payment was split into the various components such as “salary, ESI, PF” and all other statutory elements.

We worked on a management fee which, at that time, hovered around 45-48%. Clients were willing to pay the premium as their primary concern was the cleanliness and hygiene of their facility. AVON’s early clients included multinational IT firms who were keen on establishing processes.

We were fortunate to be at the right place at the right time. We have seen multinational companies come in and have experienced the boom.

As our business grew, we had to deploy manpower rapidly. We ended up recruiting a lot of people and putting them on the job without actually training them sufficiently. Players across the industry made the same mistake and today we are paying the price – there just aren’t enough trained people to man this industry.

What do clients expect and what are the challenges you face?

Many of our clients ask us why their facilities are not as good as those of the five star hotels.

The first factor is that the kind of infrastructure that has been developed by a five star hotel is far superior to that of a normal office building. The second is the lack of trained manpower. While a hotel has a housekeeper who takes home around 15000, a general facility manager will just be able to pay the minimum wages. What has also happened over the years is that the entry of multinational facility management (FM) companies has brought the margins down to 8-10%. Today one may even work with margins as low as 5%.

You need to maintain a balance of direct assignments and those outsourced by the big FM companies…

We do direct as well as indirect work. Third party vendors mushroomed around 2005-2006. More than the margins, delay in payment was a bigger issue. The credit period went up to 90 days and this affected the growth prospects of smaller housekeeping and janitorial companies. These firms did not have the financial wherewithal to scale up their working capital to include salaries and meet the statutory requirements for two to three months.

Faced with the same challenges, in mid-2006 we stopped taking on new business and focused on managing our existing relationship. One of the things that bothered us the most was not being able to pay our employees on time. As a result of this decision, we did not grow much between 2006 and 2008.

Things changed in July 2008 when IKYA Human Capital Solutions Private Limited acquired a majority stake in AVON. The capital infusion helped us add around 1000 people, triggering a growth phase. Even clients we had stopped working with came back to us. Our work was appreciated and we grew from 1300 people to an army of 10,000!

Today we have offices in Delhi, Mumbai, Kolkata, Kochi, and Thiruvananthapuram and can truly claim to be a pan-national player. In fact, we also service clients in locations like Shilong and Agartala.

What are the services AVON offers?

We have started a pest control division and a food service division. We want to be able to offer a bouquet of related services to clients who now know that we have systems and processes in place to be able to deliver on our commitments. This has helped us build tremendous client loyalty; for instance, Microsoft has been a client from the day we started operations at Hyderabad.

All this would not have been possible without the people we work with – our team, our investors and our clients. We have built a solid team of professionals who we have groomed over a period of time. This, coupled with the kind of investors and the support we have got from them, could see us venture into newer areas soon. Avon already has an agreement with the NSDC (National Skill Development Council) for training workers and has also been mandated by the Ministry of Rural Development to provide vocational training to rural youth who are currently below the poverty line. To deliver on our commitments, not just to the government but also to our clients, we are setting up centers of excellence to train as many as five lakh people over the next few years.

This will address a major industry wide concern – that of a lack of skilled manpower. Though the business has increased tremendously, development of skill sets on manpower has not kept pace. Further, there is usually resistance from the trainees to accepting janitorial assignments. In the two – month period, over which our training is spread, is also used to show the trainees that there is a career path in this profession too. We have managed to build a high-quality team at the middle management level and are now focusing on quality at the lower levels.

Once this is achieved, we can move into the next higher orbit leveraging our high caliber, trained workforce that can deliver an unprecedented quality of service at never-before efficiencies! We hope to be able manage with a staff of five, what is today done by not less than 10 people. While this will mean higher wages and a higher cost per person to the client, the overall cost to the client will come down. It’s a win-win situation.

What are the challenges in relation to your equipment/chemical suppliers?

Most of the equipment is owned and managed by us at the client locations. A key challenge is the usage of the machines. Once again training comes into picture. Sometimes we would want to deploy a machine of a certain level but clients don’t always agree as it means that the overall cost could increase. This is another challenge that we face.

May be there are other challenges…

Yes of course. The industry, and here I specify – the service providers, should come together to discuss issues like skill sets and wages. We have to raise standards so that more people will come forward to be part of the cleaning business. If one puts all the service providers together, we will be one of the biggest employers in the country.

 

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