EFS Facilities Services to expand its footprint in Africa

EFS Facilities Services is to expand into eight new territories this year, bringing the total number of countries it will operate in to 30, according to Tariq Chauhan, the chief executive.

The Dubai-based company has picked up Dh750 million worth of new contracts over the past four months, bringing its backlog to more than Dh3.67 billion, and Mr Chauhan said it was awaiting the award of a similar amount of new work this quarter.

He said the company is “in a final tender process” with three clients that have global operations including sites in a number of African markets where EFS does not have a presence. As a result, it is planning to expand into South Africa, Tanzania, Uganda, Ghana and Sierra Leone, among others.

The company is targeting revenues of US$200 million this year. It currently employs 15,500 staff and its move into new markets should result in this expanding to 17,500.

Last year, EFS held talks to take over a cleaning firm in India with 26,000 staff but Mr Chauhan said his company walked away from the deal during the due diligence phase. "We realised there were some fundamental issues concerning disclosure, so we decided to exit," Mr Chauhan said.

He said acquisitions remained part of its strategy but that speculation about the company holding talks with Al Masah Capital about an investment into EFS were “completely baseless”.

He said that, for facilities management companies, it is important to build “critical scale” as this can bring substantial cost savings – meaning staff can be more efficiently deployed between a number of clients within the same geographic area, for example.

Mr Chauhan said despite the facilities management market being predicted to grow at 8 to 10 per cent per year, “there is sluggishness in the market”, globally and locally, and margins are under pressure.

“While gross margins traditionally used to be 20 to 22 per cent and now have come down to 12 to 13 per cent, we are still able to maintain our net operating margins.”

He said one thing putting margins under pressure was increasing staff costs – both as a result of the rising cost of labour and an ongoing drive to improve worker accommodation and facilities. Another major challenge is “a scarcity of skills”.

“The way building technologies have changed, the way the world has evolved, the colleges and engineering [schools] have not yet aligned themselves to those requirements,” he said. “We were the first ones to create a facilities management institute in 2010 and we have made a considerable investment in systems [and] training programmes.”

A study published last month jointly by the International Facility Management Association (Ifma) and the Royal Institution of Chartered Surveyors (Rics) identified the skills shortage as “the most significant challenge” faced by the industry. It said that more Rics facility management members were over 70 years old than under 30, and fewer than 15 per cent are under 40. The average age of an Ifma member was just under 60.

“In the past, facility management has been seen as a Cinderella profession, which explains the problems in attracting and retaining new talent to replace professionals when they leave,” said Paul Bagust, the UK commercial property director for Rics. “To challenge this image, we must increase our strategic focus and champion the ways in which facility management can enhance productivity in the workplace.”

Follow The National's Business section on Twitter