Integrated Facilities Management Global Industry Outlook

The global FM market was valued at $612 billion in 2016

  • The market is forecasted to grow at a CAGR of 7 percent, to $700 billion by 2018
  • Regions such as Western Europe, North America, and some parts of APAC such as Australia, Japan, Hong Kong, and Singapore have high market maturity
  • APAC and parts of LATAM are expected to be the potential growth markets for FM services by 2020

Integrated Facilities Management Global Market Maturity 

IFM penetration is still very low outside Europe and North America

  • IFM contracts form about 20–25 percent of all FM outsourcing contracts in developed markets
  • APAC and LATAM are witnessing increasing IFM adoption because of the efforts of large global buyers consolidating the supply basel

 Integrated Facilities Management Industry Trends

Increasing levels of FM outsourcing and the adoption of an IFM strategy signal increasing buyer maturity and willingness to partner with suppliers 

  • Suppliers are also improving their supply capability while adopting performance-based metrics for evaluation and performance monitoring
  • Increasing expansion of global multinationals in APAC and parts of the MEA has triggered the need to outsource FM services
  • Since 2010, global suppliers such as Sodexo and ISS have also increased their footprint in these regions through mergers and acquisitions (M&A) 

category-intelligence-on-integrated-facilities-management 

In challenging locations where service delivery is very important and buyer has prior internal expertise in delivering and managing the services When the services are critical enablers to the strategic goal of the organization and there are specialized service providers delivering the service in that particular location at a competitive price.When supply base consolidation is the goal, however, the buyer is skeptical of trying the IFM modelWhen the client has similar service requirements across countries with similar industry trends, the volume of services to be outsourced is very high and the buyer has the expertise to manage and evaluate FM outputs through suitable IT infrastructure and suitable KPIs.

When there is a presence of competent suppliers to whom various bundles of services can be outsourced, based on the needs of the client and the location outsourced.When the buyer organization is mature, in terms of managing large outsourced contracts, and is focused on having an extremely consolidated supply base Until a clear directive on amendments in Transfer of Undertakings (Protection of Employment) regulations is released, it will be unclear how Transfer of Undertakings (Protection of Employment) in new contracts will play out.
facilities-management-trends

When there is a presence of competent suppliers to whom various bundles of services can be outsourced, based on the needs of the client and the location outsourced.When the buyer organization is mature, in terms of managing large outsourced contracts, and is focused on having an extremely consolidated supply base Until a clear directive on amendments in Transfer of Undertakings (Protection of Employment) regulations is released, it will be unclear how Transfer of Undertakings (Protection of Employment) in new contracts will play out.

About 15 percent of workers in the food industry are from the EU •Major occupations of foreign workers in the UK include cleaning, catering, hospitality and other building services •Shortage of labor (due to ineligibility for visas based on current laws) will lead to an increase in labor rates unless business-friendly policies are put in place.

Regulations related to  sustainability are largely  based on the  UK’s  decision regarding  whether or not to be part  of the European Economic Area • Health and Safety policies  and policies on farming  could indirectly impact  the costs of UK FM  services as a whole and catering services • The way services are  delivered and targets are  set are subject to change.  Priorities with respect to  sustainability targets will also be re-evaluated Source: Beroe Analysis High Impactintegrated-facilities-management-market-trendsSubcontracting, a common practice in the FM industry, indirectly affects the buyer since subcontractors charge a margin to the service provider, which is eventually passed onto the buyer. This margin-on-margin increases the spend of the buyer, which is essentially a trade-off for exploiting local synergies at a tactical level Awareness of FM Outsourcing:•There is also a low level of awareness among buyers in developing markets about the opportunities presented by outsourcing FM services with respect to the cost savings and operational efficiencies
Owing to the emergence of a global integrated business model, service providers are likely to enjoy significant leverage. However, supplier power will be constrained with the advent of open-book pricing

Owing to the emergence of a global integrated business model, service providers are likely to enjoy significant leverage. However, supplier power will be constrained with the advent of open-book pricing

integrated-facilities-management-market-growth

Experience across Industries: Tier 2 companies are building capabilities to provide a wide range of services to various sectors such as oil and gas, retail, housing corporation, hotels, and manufacturing •Self-Performing Capability: Tier 2 suppliers prevalently self-perform services, which will eventually reduce the troubleshooting escalation matrix for the buyer •Innovative Service Offering: Suppliers are coming up with new contract models and service options for buyers. Many service providers especially in the developed regions are delving from REFM providers to pure play IFM/TFM service providers through M&A’s and rebranding•Sustainability Solutions:Programmed FM companies have introduced a new service called sustainable solutions that takes care of energy, water, and emission savings. This shows that suppliers are interested in providing critical services