India’s economic growth and infrastructure development have triggered outsourcing of maintenance of facilities and selected administrative functions by organisations. Facility Management companies provide integrated services. But the term Facility Management is the most misunderstood terminology today. In a first-of -its -kind meet, facilitated by Clean India Journal and Knight Frank, Naushad Panjwani, Executive Director-Projects & Facilities Management, Knight Frank; Rajesh Pandit, Senior Executive Director-Asset Services, CB Richard Ellis South Asia Pvt. Ltd; Vinay Deshmukh, CEO, Forbes Facility Services Pvt. Ltd, all three from the FM side and Keith Monteiro, Vice President-Administration, Reliance Industries Ltd and Suresh Nair, Senior Manager, Siemens Real Estate Division, Siemens Ltd, from the corporate side, discussed the challenges & misconceptions and the need for ‘partnership’ between the service providers and their clients.
What do we understand by Integrated Facility Management?
“In the 70s, when the Indian industry began looking at outsourcing, manpower supply companies mushroomed. These companies provided extended services in housekeeping. Now, Facility Management, which also includes housekeeping, is perceived as an extension of housekeeping. FM is often confused with housekeeping and today it is all the more confusing with terms like asset management, property management and estate management, having cropped up,” said Vinay Deshmukh.
The extent of confusion was such that clients who claimed they had outsourced FM, only ended up hiring housekeeping services, added Keith Monteiro.
Putting it in the right perspective, Rajesh Pandit clarified that Facilities Management was more than just providing services like engineering or security services etc. FM means managing the whole gamut of all such support services required to run an organisation. “We have various examples wherein we run complete FM of a site with limited involvement from the client’s side. Many a time clients end up seeking proposals for housekeeping services from FM companies. For us FM is value creation – value for any size, any client, anywhere…”
“As a client,” said Suresh Nair, “we would want the FM team to replicate us at the location and do all that we would do. Be it an emergency or a normal routine matter. There are many service providers, both big and small. With experts being few, small timers are ruling the market by getting in through the housekeeping doors. And housekeeping is what any normal and not-so-mature client would first want to outsource. The company would want to keep the technical services to itself. And even if all the services are outsourced the quality of facility management is judged only on the basis of soft services offered by the FM company. Hence, there is confusion in the market and people still do not know what integrated FM service is.”
During the evolution of FM, this service at some point in time got outsourced like all other activities, explained Naushad Panjwani. “At least 80% of what you see in a property is housekeeping, though the actual value would be only 20%. As retailers say, ‘what is seen is what sells’. Similarly, what you see is a tissue lying around or the floor not being clean… housekeeping is what you see.”
“If the FM and client companies could have a communication plan frozen with regular reports and an escalation matrix, then we can assume that there is a way forward.” -Naushad Panjwani
“Another aspect that explains this phenomenon is that, 13 years ago when we started, the quality of buildings was not all that sophisticated and we had to do housekeeping. Now with rising sophisticated structures, it is no longer just housekeeping but also security access data, LEED certification, green buildings and others which will change the perception.”
“Talking of new players entering the market, they will find an entry point through housekeeping companies. But, there are more entry points like ticketing, catering or security companies for becoming FM service providers…it’s like forward integration. The field is large. It’s like an old kirana shop now getting into retail, it’s going from unorganized to organised…”
“Further we are taking away the physical work from HR & administration. The housekeeping boys, the security people and the front office are the value added services we are providing. The budgets will remain with HR and admin within an organisation, but the execution is left to specialists.”
Vinay added, “Though, 80% of the business comes from housekeeping, we need to understand that India is a highly industrialized country. Over here, the need for technical expertise is also very high and this would give an edge to FM in India. Yes, we are facility providers, we are not just housekeepers. Housekeeping may be the main requirement from the client’s side, but these other services of operations and maintenance are also very important.”
Outsourcing and Subcontracting
As service providers, the big FM companies have their policies and philosophies in place. But when it comes to actual practice, said Suresh, “What these outsourced agencies or integrated service providers do is further outsourcing. Sometimes there is a second level of outsourcing too. In this outsourcing of non-core activities, the controls get diluted. It turns into people management and supervision.”
“In a matured market outsourcing would result in clear cost effectiveness however in a growing market the model has to be looked into differently. Understanding clients business; their expectations from their partners, partner’s strength in that market is very important” said Rajesh. “The Indian market is yet to get matured.”
About ‘outsourcing of outsourcing’, Keith added, “It’s not second level outsourcing but subcontracting. There is a big difference between the two. We, at Reliance, are very clear that today, instead of having 10 people control things, we would want to take a partner, lay down our rules and have the latter handle it. If that has to happen we have to change the mindset of the people in this country.”
“What FM does, is what a client employee would do otherwise but now is expecting his partner to do it,” said Rajesh. “In a normal scenario clients would have representation from their side and a similar representation from their partner’s side. This could happen because of lack of trust on the partnership and decision making capabilities of people on ground. If we price a resource right and believe in partnership the right solution could be a right single resource providing the services effectively. More important would be to differentiate between a specialist task level services company and a facility management company.”
“Much depends on the client organization culture also,” added Naushad. “This US-based client we are now taking over has a very clear mandate. We are discussing processes and systems – risk management, business continuity and IT platform – and not brooms and mops.”
“Talking from the client’s point of view, if its FM head moves into another company which does not have a sophisticated culture, he will create a kind of revolution. He’ll introduce the sophistication and help bring about a certain system other than administration. The necessity of an FM becomes clear when there is a system breakdown or a disaster. FM works on the disaster recovery plan which a housekeeping company may find difficult to do.” it is not possible for the client to invest in different services to create an FM environment with risk management and business continuity plans. FM makes the investment. Again, bringing in the sophistication involves cost. FM services provider helps the company by providing data management and research.” Every company is growing. With that, without FM companies having to do any hard selling, they are into servicing the client company”, said Naushad.
Training and marketing the FM function
“Where do the people who handle FM come from? What is the formal FM education or training they have?” Rajesh steered the discussion to the training needs. “This industry is a heterogeneous mixture of people with varied backgrounds. Most of them learn FM while working on ground. Today’s FM is expected to be an expert on housekeeping, safety, transport, food and so on. The pool of FM comes out of armed forces, hotels, engineering companies etc.
Training is a big requirement but continues to be a challenge today. We need to invest in it, and the money comes from clients. But one cannot expect trained manpower from the existing pool of resources without paying a premium!”
Naushad added, “I was at a conference recently in Manchester. It was a European Facility Management meet of around 300 people, almost all of them trained professionals. One of the functions was to felicitate the top students of the current batch of this year and they were also having a campus interview going on there. In case of a person who has been trained, he still needs specific training to update his training. So whose onus is that? And at the end of the day, the trined person becomes the client; it becomes difficult to retain him. So who bears the cost? Here comes the need to market the FM concept.”
“Housekeeping may be the main requirement from the client’s side, but these other services of operations and maintenance are also very important” -Vinay Deshmukh
Any service agency or company is as good as its people and the systems which it is following. “But if the system is not understood by the people running the show and with today’s attrition, the pull & push of the market and the lack of proper formal training, there may not be much left to be desired”, said Keith. “It is often the case that a person who is very good at your site, suddenly quits one fine day. This person from the service provider’s side could have been the sole representative at the site. It is now up to the matured service provider to have corrective or backup plans in place. Unfortunately during such crisis situation, we are unable to stand up to it. Today, we have very good service providers, very good clients, but we also need to do good marketing. What is FM, and what are the expectations?”
Will coordinating with the hotel management and catering institutes help? For awareness, the beginning has to be from here. “But my experiences have been not very positive”, said Vinay. I discussed training with a catering college principal. When it came to deciding the curriculum, duration and classes, it ultimately boiled down to how much the college would earn from this course and the fee structure.
“Client and FM companies need to work on this because there is a dearth of educated mindsets in this sector. If you want to implement safety requirements or even improve efficiencies we need an educated mind. There is a level up to which someone can learn something practically. A matriculate can learn and grow up to the level of Unit head, but if you want to make him in charge of five different sites or customers, he needs formal traning. He needs communication skills, he needs a birds eye view, he needs the ability to mobilize resources, he stops being a resource himself.”
“For us FM is value creation – value for any size, any client, anywhere…”- Rajesh Pandit
Aren’t many training institutes concentrating only on housekeeping? Yes, said Suresh. “We should create general market awareness. It could start off at a small level, like at school – talking about hygiene; at housing society or corporate levels… It’s like marketing toothpaste, oil or butter! People and training institutes need to know what the product FM is. Then, may be, institutes would open up to FM experts coming and deliberating.”
FM companies and clients: Need for matured perception
“If we do a 360° appraisal and ask the housekeeping guys for their feedback, they would probably say that their boss treats them like commodities. If that’s the case then what are they going to give in return? Further, if they are being treated like commodities, why would they want to even train themselves? Asked Keith. “Secondly, from the clients’ side, they may not be sure about their on-site FM manager’s capability; the complaints often go the FM company head directly. I think that is where the maturity should come in. What is it we want and how do we want it?”
Naushad added, “One has to address the perception of outsourcing. “We were to meet a prospective client. There was this another company which was called an hour earlier at 10am. We went in with a sophisticated presentation ready only to be asked ‘what will you do for us if we give you the contract?’ We explained our model, our internal policy that people with certain education or skills were only employed with us, otherwise others were on our manpower payroll. The housekeeping boys are outsourced but everything else – the supervision, control, planning, training, appraisals, moves and changes… are done by us. So they wanted to know whom would we outsource our jobs to. I told them the same people who met them earlier at 10am. To which the client replied, ‘that is what they also said. If you take Knight Frank, they will eventually give us the job. So give it to us and we will save that 10% or so’. We told the client to give the job to our vendor.”
There is a reason for outsourcing. An FM company would like to focus on a lot of activities that it thinks the client should be receiving, like doing a consulting role in guiding the client on various issues. “It is not the number of people in the pay role that counts; what is important is the quality of manpower. There are engineers, MBAs and architects. Our focus is on how we can reduce manpower and give the maximum benefit to our clients. But some companies believe that if they outsource, they lose control or the cost will go up.”
“There is something very strange happening,” came in Keith. “When contract gets switched to another FM company, I have seen the electrician, the gardener and housekeeping guys remaining the same. They change companies. Anyone who wants to switch over is allowed to do so. Which means, the maturity is on neither side. Is it only cost driving both ends? Because I know the cost has come down. Every three years we need to have a cost reduction and we float an RFP (Request for Proposal) and the RFP will now tell us who will be the next… We need some maturity from the client.”
“Attrition is something which is common,” emphasised Naushad. “Aspiration to work in a better organisation leads to attrition. But, at the end of the day how much money comes to hand also plays an important role. What we would be most interested in, is continuity. For business continuity, we are investing in training, ensuring payment of minimum wages, adhering to statuary compliance, PF, maintenance of hygiene levels, etc. This is an effort we are making and is not by the vendor. But, yes the client should be concerned with SLAs (Service Level Agreement). You give a clear SLA, leave it on us how we deliver it, whether we outsource or take our own people.”
Rajesh felt that for want of professional specialist task level service providers, a lot was expected from the FM team as they formed the single point of contact for the clients. “We are highlighting attrition as a big issue which obviously is not only in this industry. We all know India is on a fast track and every industry is facing the challenge. Every employee has aspirations and how quickly he wants to aspire is the key. Like in other matured economies, more and more people would like to work with FM companies. Working for a client or working for a service provider becomes a big differentiation in today’s market as this works more on price differential. In a matured market more and more FM professionals would like to work with FM companies, with this being the core business and the kind of exposure they would get.”
“We should create general market awareness… It’s like marketing toothpaste, oil or butter! People and training institutes need to know what the product FM is.”-Suresh Nair
“I will give you another situation,” said Keith. “We were talking to a client and they asked me ‘what would you do if your driver does not come for work one day?, I asked them what would they do if the driver did not come for work one day? Who would replace him? No one! But if it is outsourced, the client expects a replacement the very next day! It becomes a labour contracting. If you are looking at only the lower level, you will continue to look at the lower level always. Say for example, if you were on leave for a day, would your company provide a reliever for the organization? Somebody will back it up. So you have to give your partner the same leverage. But the client in turn cuts the driver’s salary.”
“That is what I meant by maturity levels on both sides; client side as well as service provider side,” added Suresh.
“Similarly take the security section,” continued Keith. “A security personnel works for 12 hours, but if his reliever does not come and the client wants that place to be manned, you cannot expect the first person to work for 36 hours! This is not possible. A client company can ensure that if the reliever does not come, someone else is deputed.”
“Everybody talks about ‘what’s your cost going to be? Nobody is interested in your services. They want to know, ‘what’s your cost per sq foot?. Keith felt this was not correct.“It should be something like this. The FM company can give a base cost and work on a cost plus basis. The client draws up a clear SLA and says what he wants. If the service provider performs, the payment is made; if over performs, a bonus is given.”
Naushad had something to add, “SLA is a clear thing we are struggling to get from the client. The client is not willing to discuss SLAs, they only want to talk about how many boys, how many shifts, what are the wages? I think what you are talking about is the sophistication, the maturity we would all love to move to.”
Partnership has also to be well understood by both sides. The Service Level agreements have to be clearly defined and methodologies to be understood by both sides” said Rajesh.
“An FM manager would like to do predictive maintenance, rather than preventive maintenance,” explained Keith. “The former would cost more, but the client still wants it at the price of the latter. So the FM company would go back. The client tells the management that he can get an ex-FM guy willing to do for lesser amount. I did this on a trial basis to look at PLG systems, and to do remote monitoring for my systems. But, I would rather have a service provider alerting of system break down rather than my electrician calling me in the middle of the night saying that the breaker is not working.”
It is also very critical that the service provider understands what the strategy of the client is. Not just in the service but also his business strategy. A client might say that he wants to open up 100 retail stores, but at the end of the year. might have opened up only 10 stores. This strategy has to be understood from the beginning. “ But then, some of it may not be in the client’s hand,” said Naushad “A client comes to us and says he is going to open up 400 stores across India and wants to know our costs and pricing model. The pricing model is given, then he says his company is going open up only 10 this year and so can we give a pricing for 10 now. So. that is a planned negotiation with the vendor. This is what a procurement manager typically does. But some are genuine disasters on the client’s side. Since I hold both the portfolios of project as well as facilities, I see that happening in projects. The client has every intention of opening 400 stores, but the management within has done only two stores in two years!
So, it is more of partnership…
“Facility Management, partners, outsourced… these are all taking a new shape,” stated Rajesh. “There are lessons for both the clients and the FM companies. We have five year contract with clients in which neither of us can leave before the end of the term. From a service providers’ point of view, when you are a partner, there is no fear of term of contract; you do your best to make the success out of partnership. I have seen a great change, five years back we were in a different world. When you say partnership, it’s like the client saying, ‘listen, this is what I planned but I am not able to do it’. This works in partnership. But if it is a service provider, vendor or contractor…. he would say he lost money.”
“If the system goes down, if the back end of the company goes down, you are taken care of by the FM company.”- Keith Monteiro
“This is what we ask for when we go for a pitch,” said Naushad. “Gone are the days when the client would ask for a quote first and then check for our capabilities and skills. The quote comes at a very later stage now. It is not just giving RFPs and RFIs, it is also understanding the client’s philosophy, requirements and expectations. One of things we ask is that if they have some kind of a vendor management programme. Some don’t have, but some have which makes you happy. Then you check what it actually means. So many clients do have some kind of training/orientation programme.”
“I had my on site team flown to Goa by a client,” added Rajesh. “The immediate thought that would hit anybody’s mind is costs. Do you think these employees will leave CBRE or the client! This is the effect of partnership, wherein the client would treat them equally. I can see this positive change within Indian companies as well; FM is being given due importance and the partnership is valued.
“Giving more instances, Naushad said, “I was once on a task force. We had a review on people management and task by task force. I did a short presentation. There was this Japanese team and an Indian team that went rowing together. The Japanese team won by a mile. Both teams had the same number of people and yet the Japanese team won by a mile. They realized that in the Japanese team, there were eight rowers and one leader while in the Indian team, there were seven leaders and one rower, so they hired an agency to figure out what went wrong. The agency said, you need four leaders and four rowers. The Indian team lost by two miles because each one was rowing in a different direction. So what they figured was that the tool, the boat, was wrong. So they decided to change the boat, replace the rowers and yet they lost again. Well, that is what is happening in the industry.
“When we talk of partnership it is important that you get the best services from the vendor and you pay for that. One of our clients, called us to make the presentation to be part of his annual vendor management programme. One of the persons who came in after me was a fleet operator. He has 400 cars and the passion with which he spoke impressed me. The client invested in his business, trusted him and if not on cost basis then at least on service basis. They will not find a better person to partner with. It is all about trust and what is missing in the industry is trust.”
The downloading factor also matters here, said Vinay. “Before taking up a contract, our team – a business development person, an HR person, operations person and an accounts person – goes there. And we demand that the client gives a representation of the same strata. If payment is not being processed, accounts are probably interpreting it in their own manner. If the downloading is not done in the initial stage itself it becomes a problem. Ultimately its all about interpreting.”
Summing up, Naushad felt that the discussion so far had been very fruitful. It touched upon where FM was, where it is today and where the future would be. As Vinay said, it’s going to boil down to sophisticated management. This is not something which one can expect from the client, it has to come from the service providers.
“There are three levels of agreement which we can have. SLAs is the first level, which should be agreed upon in black and white – signed, contracted, sealed and delivered and then the processes – delivery, measurements, risks, rewards, etc. The other is expectations which are not in black and white. And the third thing, which is important and probably which the client himself does not know is that he has certain aspirations. If we are able to pull this out from his head, we will be able to deliver what he wants. This is not FM, its management. From Vinay’s point of view, communication is also important. If we could have a communication plan frozen with regular reports and an escalation matrix, then we can assume that there is a way forward.”
These reports are all very nice. But the point is how many people actually follow that.
Along with management tools, joint responsibility assignment matrix is also required because there are certain client deliverables as well. Technology will be a huge challenge and the cost for technology will also be high. Tools are going to lead to integration and scalability of size would matter most.