Outsourcing has become a reality for many companies as they look to bolster their competitive advantage and consolidate costs.
In South Africa, where many industries are affected by a workforce mostly driven by organised labour, outsourcing can become one of the best survival strategies in their business toolkits.
But the question is always where to start? Which jobs should be outsourced and which positions should stay in-house? For example, imagine you’re the owner of an engineering business. Would you outsource your IT or employ internal technicians? Now imagine yourself as the owner of a healthcare business. Would you outsource your cleaning services or would it make sense to you to rather employ and manage a team of cleaners? If you owned an airline, would you employ chefs or outsource your catering requirements? What if you managed a mine? A hotel? A transportation company?
Though it makes sense to focus on your core business while an outsourcing company focuses on your work force requirements, companies are still hesitant.
While there are many myths regarding outsourcing, the truth is the benefits far outweigh the drawbacks. In a business environment characterised by a fluctuating market, downgraded economic conditions, high unemployment rates, skills shortages and labour unrest, more and more companies are seeing the wisdom of choosing to outsource staff.
Myth one: outsourcing is too expensive
• Staffing a business is a time-consuming and costly exercise, as recruitment expenditures can run between 15% and 25% of the candidate's total first year annual earnings.
• Added to that, mandatory staff training and Human Resources related costs, bank- and payroll charges, and payroll export fees further impact overheads.
• Further, as South Africa has a highly regulated employment environment, companies’ bottom lines are often negatively affected due to industrial action and operational disruptions.
Truth: outsourcing reduces costs
By outsourcing the staffing element of your operations to an organisation who understands Human Resources and the law intricately, and who appreciates that its clients’ focus should be on their core business and growing their organisations, you can save on all of the above concerns:
• For instance, the company would add an agreed management fee to the client’s existing labour bill to manage all their staffing requirements and HR related costs.
• Clients further save substantially as all training, skills development and competency licensing requirements in certain industries are for Innovative Staffing Solutions’ account. As the company is dedicated to providing a skilled and competent labour force to its clients, it ensures that all employees are proficient and skilled according to their respective professions.
Myth two: loss of control over business processes
• Some might argue that outsourcing results in the loss of control over certain business processes such as driving, guarding, cleaning, administration and accounting.
Truth: focus on core business processes rather than supporting ones
• Back office operations don’t generate money for your business but they do take up a lot of your time and create unnecessary stress. By outsourcing non-essential functions, our clients can better focus on their core business functions. Also, outsourcing allows management to play a more strategic role by concentrating on other crucial aspects, such as operations and the financial growth of the business rather than having to deal with routine issues and activities.
Myth three: lack of employee commitment• While there is a concern that outsourced employees may lack the necessary commitment to fulfil their roles adequately, the same could be said for any unmotivated employee.
Truth: staff are easier to let go or replace
• While businesses need to build strong relationships with their people, they also need to focus on profitability. This sometimes includes being able to let go of people who are not performing well, who do not fit in with the corporate culture or who do not demonstrate the necessary commitment. Outsourcing allows this process to take place more easily as the contract usually allows for an employee to be replaced or moved onto another contract without all the associated human resource issues. Instead of just dismissing, the outsourced employee will be shifted to another site where the culture fit may be better. Alternatively, the outsourced company’s disciplinary code will be followed eliminating all risk involved for the client such as CCMA hearings.
Myth four: only unskilled and semi-skilled staff are outsourced
• Start-up organisations and small to medium enterprises often think that outsourcing is only aimed at larger organisations who outsource their unskilled such as farm labourers, grocery clerks, hotel maids, or general cleaners for instance) or semi-skilled workers such as truck drivers, security guards and retail salespeople.
Truth: fill the expert labour gap
• Outsourcing can be as effective for organisations looking for unskilled or semi-skilled personnel as it is for those looking for people with more specialised skills such as engineers, marketers and accountants, specifically where there is a shortage of expert skills in a particular field.
• Good outsourcing companies make sure they recruit the best talent in their respective fields to ensure their clients are happy because satisfied clients mean repeat or increased business. We also have stringent processes in place to check the credentials of all our staff and provide mentorship and training programmes to ensure staff are business-ready and updated on the latest industry trends.
Myth five: outsourcing is a long, tedious and legal process
Companies are often under the impression that outsourcing is a lengthy process and that it involves months or years’ of union negotiations to outsource its labour force.
Truth: Outsourcing can be done within days
• The process of outsourcing staff is a relatively simple one.
Arnoux Maré is the MD of Innovative Staffing Solutions and CEO of Innovative Solutions Group.