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Building-cleaning Services in India: ISIC 7493
- Building cleaning, as a self-standing form of business, is still at its infancy in India and yet to fulfil its huge potential in one of the fastest-growing major economies in the world.
- It is, however, a growing industry, increasing its turnover at 7% annually between 2000 and 2010 and with collective revenues of INR35 billion in 2010. If compared with 2000, industry turnover nearly doubled. Businesses generated close to 85% of demand for building cleaning services, while households and public institutions accounted for the rest. Outsourced housekeeping or facility management is gaining momentum in India. Given the increased competition and globalisation, corporate, hospitals, hotels, retail companies, educational institutions and a host of other industries perceive day-to-day cleaning as an important and integral part of their endeavours. About 70% of companies outsource janitorial and building maintenance functions to private firms to contain operating costs.
- Apart from IT, BPO and banking which are fuelling demand for these services, the real estate and retail sectors are also contributing to industry growth. Buoyed by a flourishing Indian economy and its low cost labour, global biggies like Knight Frank, Jones Lang LaSalle, Sodexho and ISS have set up offices here. They tend to outsource building cleaning services to local companies. Many large retailers and property developers are using the services of big industry players who charge anywhere between INR7 and INR15 per square foot as maintenance charges. Since most jobs are outsourced to smaller unorganised vendors, the business is lucrative with high margins.
- Sinar Jernih India, a 100% subsidiary of Sinar Jernih Sdn Bhd, Malaysia, is an integrated facilities management company, one of the key players in Indian building cleaning industry. The company is rapidly increasing its customer base locally and investing in Indian operations in terms of training facility, infrastructure and manpower. Sinar Jernih currently offers a complete comprehensive solution on all spheres of cleaning and maintenance services, including housekeeping, laundry, pest control, lawn and garden maintenance, high-rise cleaning, restoration programmes and food premises hygiene services. In India, Sinar Jernih has concentrated strategically on the hospitality and hospital segment where benchmarked environment standards are of high importance. With operations in Chennai, Bangalore, Delhi, Goa, Hyderabad, Kolkata, Mumbai and Udaipur, Sinar Jernih is poised to take a major share of Indian building cleaning.
- The industry is highly fragmented thus making entry easy and a large number of small service providers operate in the country. There is a good potential for growth and hardly any professional players in the building cleaning business, making share relatively easy to grasp for corporate players. Low operating costs and abundance of suitable manpower make building cleaning attractive.
- Indeed, labour costs grew at under 4% annually on average over the past decade and accounted for less than a third of total industry spending. Business costs grew at nearly 6% annually and accounted for close to two thirds of total operational costs of Indian building cleaning industry. Turnover growth of 7% meant profit margins improved and EBITDA margin gradually rose from 19% of total turnover in 2000 to nearly 34% at the end of the decade.
- Given the fast-growing Indian economy and increasing scope of outsourcing activities in the country, building cleaning business has a good future. Industry revenue is projected to grow by 12% per year over the forecast period of 2011-2016, to reach INR71 billion at the end of the forecast period. A number of professional players are likely to enter building cleaning over the forecast period, increasing industry competition and raising domestic building cleaning standards. However, potential for growth is still huge and lack of corporate players in the industry combined with the size of the country mean there will be enough room for new entrants in the foreseeable future.
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