by Tariq Chauhan, Group CEO of EFS Facilities Services Group
Undoubtedly, the Facilities Management Industry has its hands full with multiple business continuity challenges, and the continuing onslaught of trailing margins further aggravates the hardships. Modern-day FM has its battles to fight on numerous new fronts, and more so, the needed investment is not coming to fend off these challenges.
Post pandemic, inspite of growth in the sector, there is no respite from the market as clients continue their push on low margins. Besides, FM has to deal with its legacy issues of manpower and service infrastructure. Moreover, it has its other inherent problems of lack of process-oriented approach, low productivity and rising skills gaps in dealing with neo built environments where higher compliance standards are needed. To address these woes industry needs to act fast with making the requisite investments in these, including the burning issue of upskilling and training.
The industry is also slow in adapting to technology transformation that is significantly impacting the FM landscape and is in dire need to catch the new trends of AI, BI and process automation that technology is bringing. Besides, tool and machine automation is another factor evolving as an enormous opportunity for high productivity and better quality of service. The moot issue is that these changes require investment. The industry needs capital to fund these costs. For instance, to address the Upskilling and training issues, Companies needs to allocate adequate costs, a minimum of four to five per cent of employee costs.
The companies need to provide these from their own bottom line as most clients are shying away to reimburse these costs. In the last two years, in most tenders, I seldom saw clients recognizing these costs in employees CTC or, for that matter, in any other form in the tender commercial submissions. Most of such suggestions were struck down by supply chain negotiators with the least resistance from operations. FM industry is indeed at a crossroads; if these investments have to come from overheads, how to maintain the business viability? As most project margins are insufficient to fend for these costs.
Technology and investment in systems, though, can address these issues. With the drying margins, players continue to defer these investments, delving with routine business continuity with an eye on timely stability and client focus. Nevertheless, postponing long on these critical investments will not serve the purpose. This, for sure, is counterproductive. Investing in aforesaid essentials such as upskilling, technology, tools automation and machines are considered by some as developmental.
Many see this as not aligned to their current business fundamentals as a reflection of the market conditions with specific reference to pressure on margins. However, this thought process needs to change now. Holding on to these much-needed investments is a strategic need. This approach is proving counterproductive to business sustainability. This is the necessity of the hour and not something kept for a futuristic course. There is no doubt that this will significantly ease the industry’s old legacy issues and address the tide of a technology transformation that the Facilities management is witnessing. With growing pressure from clients to adapt to these requirements as a well-growing call for higher compliance, businesses have no option but to come up with these investments. Be it Upskilling, tech mobility processes automation or service infrastructure upgrade, the need is imminent. The service infrastructure in FM requires a definitive upgrade from logistics, CRM to modern-day tools, equipment and techniques. These provisions are bound to benefit the industry in terms of better services and improved profits through efficiencies.
Today’s technology platform can serve the holistic FM needs and assure a process-oriented approach and best practices specific to new maintenance regimes.
No doubt, it is tough to maintain this balancing act to retain prudence with almost five to seven per cent of the top-line cost going for these essential do’s. Nevertheless, this also helps in cost rationalization, and efficiencies therein will ensure some savings too. Above all, this shall help build scalability and growth that will further provide some relief in neutralizing the overall cost impact.
FM Business also needs to build resilience by cutting on overheads and inefficiencies. Process orientation that will come with these technologies can offset the funds required for development goals.
Whilst these costs of Learning and development, staff remuneration alignment, employees happiness, and culture of excellence require funds allocation, the industry must realize that problems to current woes lie in its introspection to transform with a focus on resilience.
Source: Construction Business News