The worldwide facility management (FM) market is expected to grow from $959.2 billion in 2012 to $1.314 trillion in 2018 - but what drives the growth? Here are the 4 biggest trends.
Economic and regulatory developments
Economic pressures from regulatory requirements and increased competition is pressuring companies to evaluate how they conduct business. As a consequence of higher scrutiny and tighter regulations, companies have started looking for partners that can deliver and manage facility services while taking on the associated risk.
The client companies are looking for partners that will:
- Help them protect the investment they already have made in facility assets
- Take full responsibility for facility services and thereby minimise interruptions to their core business
- Deliver added value from both current and new initiatives.
Increasing pressure from health and safety regulatory bodies is also putting client companies under pressure. To invest the maximum of their efforts in their core competencies, they are therefore outsourcing their regulatory compliance to FM service providers with service level agreements (SLAs) that include penalty clauses for violations. With no doubt, these regulatory responsibilities drive an increasing need for expertise among facility managers across the whole industry.
Increased demand for outsourcing and FM integration
Outsourcing of facility services has increased considerably in the 2000s, with the majority of the growth coming from the emerging Asia Pacific markets. Even though these markets still are smaller than those in North America and Western Europe, the market penetration is without a doubt increasing rapidly.
The growth in outsourcing goes hand in hand with a growing demand for Integrated Facility Management (IFM). In this context, the IFM market is predicted to expand at a compound annual growth rate of 6-8%, to reach $1.314 trillion in 2018.
The rate of outsourcing and the demand for integrated solutions follow similar trend lines: in mature markets with higher outsourcing penetration, the demand for Integrated Facility Solutions is typically higher and growing, while the reverse is true in emerging markets. However, by the late 2020s, it is predicted that China’s outsourcing culture will progress to the point of accepting modern FM solutions, opening the way for massive growth in IFM in that market.
Increase in international contracts
The number of international contracts is growing, and with estimated revenues of $800 million or more, global IFS contracts will become more popular. According to studies, drivers for internationalisation include:
- Pressure to lower costs
- Demand for simplification and standardisation of services
- Internal pains - performance and employee retention
- Attracting the biggest talents as employees
- Pressure to deliver the best place to work, with an increased focus on culture of work
The move to nationalisation and regionalisation leads to a greater share of the FM market being provisioned through IFS contracts.
Market demand for value-added services
- Social: Concern for the company environment accounting for customers, staff and their communities
- Environmental: Being a good citizen with emphasis on sustainability
- Economical: Ensure shareholder value currently and in the future
The Facility Management providers are expected to comply with both internal and external regulations as well as have the economic stability necessary to assume the responsibility and cover the risk of non-compliance.
At last, the Facility Management provider must have the ability to deliver a uniform set of facility services across worldwide markets and be able to integrate these services as well.
Learn more about the developments within the Facility Management industry by reading our blog post: The Evolution of Facility Management Markets: The past, present and future. You can also download our White Paper: Perspectives on the FM market development.
If you would like to know more about the ISS approach to Integrated Facility Services, please visit our website, by clicking here. For more news about Facility Management sign up to our weekly newsletter in the right-hand column.