Pros & Cons of Outsourcing
The labour market in South Africa has changed dramatically over the past decade. The proliferation of Trade Unions, Labour Regulations, Industrial Action and the dreaded CCMA has caused many companies to consider the outsourcing of its labour force. There are many advantages of outsourcing, but also some risks that you should be aware of if you are considering Outsourcing.
Outsourcing of non-core activities removes the responsibility of staff recruitment, maintenance and discipline to a third-party. This includes the management of labour issues and dispute. The pressure on internal resources is lessened and handled by an industry specialist.
Training and Skills Development
An outsourced industry specialist is able to devote appropriate time and resources on proper training and skills development of their workforce, which results in many benefits to the client.
The flexibility of an outsourced resource agreement allows the client to cut back or discontinue certain services in an adverse economic environment, without the costs and distractions related to staff retrenchments.
The operational costs involved in maintaining an internal workforce for non-core activities can be substantial. Outsourcing the staff requirements also means outsourcing the necessary HR activities and costs such as payroll, management of leave, pension, medical benefits and the like.
A business that can stay focused on its core activities is leaner and more effective. Managing a number of non-core activities such as cleaning, hygiene services and so on places a burden on internal resources, but often distracts organisations from their true purpose and mission. A core focus makes it possible to concentrate on income generating activities rather than admin.
A professional outsource partner brings best practice to the table. Because the outsource partner is a specialist in their field they constantly look for ways to improve and adopt latest technologies and solutions. This becomes particularly important when it comes to green and environmentally friendly solutions.
Loss of Control
One of the major disadvantages to outsourcing is the loss of control over a certain aspect of business operations. It is therefore important that a client doesn’t neglect the management of the outsource partner. Regular audits and controls must be put in place as must be service level agreements and reviews.
Third Party Exposure
The exposure to third party contractors could potentially cause certain security risks. Third party staff could be introduced that would pose security risks due to criminal connections, fraud and even industrial espionage. Confidentiality could also be compromised, especially if the outsourced staff service other customers as well.
There is a risk of a client becoming dependent on the outsource partner, who in many cases could have gained deep knowledge of internal procedures and practices. If the client is not managing the relationship it is possible that the supplier could become so entrenched in the organisation that it becomes virtually impossible to terminate an agreement.
A third-party’s service level and ethics could be vastly different to the client they serve. This misalignment could cause serious problems with the client’s ability to perform within their own service level commitments.
The impact on permanent internal staff of having third-party staff working alongside them, could cause friction and problems, especially if the contractors represent a vastly different company culture. This could cause serious damage to the client’s ability to deliver to its internal standards.
In summary: Ensure that you are dealing with a professional outsource partner, establish the appropriate boundaries and controls, and make sure there are regular reviews.
As discussed in this article there are many things to consider when it comes to the best implementation of cleaning, hygiene, pest management, green solutions and staffing in your business. We are experts in these areas and offer a free, no obligations, advisory service. Contact us right away so we can ensure that you make use of the best possible solution.