Facilities Management Services Procurement Intelligence Report, 2023 - 2030 (Revenue Forecast, Supplier Ranking & Matrix, Emerging Technologies, Pricing Models, Cost Structure, Engagement & Operating Model, Competitive Landscape)

Every organization and its procurement team look forward to negotiating the best deal while procuring a set of products or subscribing to services. Rate benchmarking involves price/cost comparison of more than one set of products/services to analyze the most efficient combination that can potentially help the procurement team in getting the optimum rate.

The geographical location, scale of business, type of business, and industry served play a vital factor in analyzing the rate benchmarking of the facilities management services category.

Geographical location considerations can have a significant impact on the rates of services. In emerging markets such as Brazil, India, and Mexico, the cost of labor is significantly lower than the developed countries like Germany, Japan, Canada, the U.S., etc. For instance, the annual salary of a facility manager in Germany ranges between USD 105,000 and 120,000. In Canada, it is around USD 100,000 - 110,000 annually. Compared to these, FM Managers in India earn USD 15,000 - 20,000 annually. Salaries again can differ based on factors such as skill, years of experience, domain expertise, etc.

With a turnover of more than USD 75 - 85 billion annually, Germany is regarded as the largest facility management market in Europe. Most of the largest FM companies are based in this country. A few examples include the Köberl Group, M+W Group, etc. The salaries for facility managers in Germany are very high compared to the rest of the countries. This is because companies need to adhere to strict European FM standards, health and safety guidelines, and ESG regulations which force the companies to make high investments in this sector.

On the other hand, recent studies in 2022 have shown that there is an increased offshoring to India, particularly for FM services to take advantage of the lower labor costs and better-integrated services. Indian companies are looking into integrating facilities management with allied services like energy, real estate, and personnel services. By providing a thorough overview of all services, this integrated approach facilitates decision-making and improves management effectiveness. 

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Labor cost is one of the key components of the total incurred costs while offering a product or service. Therefore, an organization must decide on whether the focus category should be retained in-house or outsourced if the organization is providing its products or services at competitive prices. If the organization decides in favor of outsourcing, it must understand the difference in the salary structures of suppliers before selecting a supplier and formulating a negotiation strategy.

According to our research, facilities managers at JLL, Sodexo, and Cushman & Wakefield receive an 18 - 20% higher base salary compared to the salary received by facilities managers working in companies such as ISS A/S and Compass Group. However, the year-on-year increment rate in all these companies majorly depends on the Key Result Areas (KRAs).

Organizations may find it cumbersome to continuously track all the latest developments in their supplier landscape. Outsourcing the activities related to gathering intelligence allows organizations to focus on their core offerings. At this juncture, our newsletter service can help organizations stay updated with the latest developments and innovations and subsequently assist in preventing disruptions in the supply chain. We have identified the following developments within the facilities management services category over the last two years:

• In September 2023, ISS A/S announced a strategic partnership with Watershed. As part of carbon reduction endeavors, this deal will enable ISS’s clients to obtain data-driven insights by optimizing global calculations and measurement models. The Watershed platform will receive the relevant data after it has been centrally collected by ISS's proprietary IT "ecosystem" from both its local and global systems, for further processing and analysis.

• In September 2023, ISS A/S partnered with ToolSense to make its asset operations digital. The deal will utilize IoT and be integrated into ISS’s assets of movable machines. There are more than 500,000 transportable machines like kitchen tools, medical devices/equipment, and vacuum appliances across 30 countries globally operated by ISS. ToolSense’s asset operations platform in combination with IoT solutions and QR codes will be used to track, use, and maintain ISS’s global assets.

• In June 2023, A.H. Management was acquired by Sodexo to expand the latter's convenience retail service business line, InReach. The former will complement and expand Sodexo's InReach food offerings in the North American market - targeting mainly Mid-West, Northern Illinois, Chicago, Southern Wisconsin, and Milwaukee metro regions. The multichannel expansion will target micro-markets, water, vending, office coffee, catering, pantry, fresh food, and on-site food service.