‘Economic challenge promotes outsourcing’
Mr. Alex Okoh is the Chairman, Resource Intermediaries Limited. In this interview with CHIJIOKE NELSON and LUCKY ORIOHA, he said that economic hardship provides the opportunity for outsourcing and argued that outsourcing is not the same as contract and casual engagements.
What’s your view about recent spate of disengagements in banks?
I know that there are sentimental views in terms of how employments are contracted. The reality is that once the issue of operational cost hit me as a bank manager, I have to make a rational decision in terms of how best to accommodate this cost without compromising the service level. And those decisions are being driven by the fact that I am accountable to body of shareholders, who will rate my performance in terms of the dividends that I pay or the profit before tax. So, I have to be very strategic and realistic about it. But personally, I will like to give a macro view on it. So, if in aggregate terms, the company is not losing the number of the employed people, I would not see a lay-off as been negative. Let me explain that. If in aggregate terms the personnel that need to run operations of Bank A is 5,000.
However, all of the 5,000 were directly on my books initially, but for various strategic reasons, I now decided that perhaps 1,000 of those staff are not core and in terms of direct engagement, I rather look for another model to manage how they render the services in my organization, and I put them on outsourcing model, but the outsourcing firm still provides the 1,000 staff to me, the economy has not lost jobs either way.
Those jobs are still within the system, but it is just that in terms of how they have been defined or redefined, you may say Bank A laid off 1,000 and Resource Intermediaries Limited employs 1,000 people. Generally, the 5,000 people are still productively engaged in the market. So, if you talk about tellers, bulk counters and other staffs that typically were on the core personnel payroll of the businesses, but are now been managed as outsourced staff, they are still in the bank rendering those services, I really don’t see any challenges on that.
Is outsourcing still viable considering the challenges in the economy?
I won’t use the word profitable because every business is set up to make a profit. But I think that it is extremely viable. In fact, it is even more viable now than ever before. Outsourcing, at least, the way we practice it, offers a win-win proposition for our clients. And if you look at the cost structure of any business, personnel cost usually is a key component of the operating cost of most businesses. Now, when you have a downturn, typically the first sufferers in a situation like that are personnel. This is because you want to cut cost by laying off workers because you see a downturn in the economy. But if you were subscribing to outsourcing model, that challenge will not be critical for the business. This is because in the first place, the personnel would have been managed by an outsourcing partner and the critical cost that hit your bottom line would have been moved to an outsourcing vendor who helps to manage all of the personnel cost that usually becomes a challenge for businesses in a downturn environment. Now, when you look at even the personnel cost that we are talking about, there is a stated cost on the book and there is also the unstated cost that the personnel incur for the business. But if you adopt an outsourcing model, all of that is left for your vendor to manage as they relate to the personnel that is under their management. So it is a more cost effective way of managing your personal input into your business.
Which policy recommendations do you have for government to enhance the industry?
I think that we need to bring some order, structure and government regulation into how outsourcing is practiced. At least to take out the charlatans and those who are taking advantage of the market. So I think that by stronger regulation by government would be helpful to this industry. So, we want to be able to set the standard for those who can practice outsourcing and perhaps push that process to lead to some licensing framework. Not everybody who knows how to keep money can be a banker, not everybody who knows how to cover risk can be an insurance company. There are processing that you will follow that will lead to some official certification and endorsement and then licensing. I think that if you have that, that is the kind of policy that we will like to see to be brought in the outsourcing industry, so that they can monitor how it is practiced to ensure that there is serious professionalism in the industry.
How would you describe outsourcing industry in the last 10 years?
About 10 years ago, the outsourcing industry was essentially unstructured. It wasn’t professionalised in terms of the service offering. It was a developing industry at that time. So, we saw a huge opportunity in that space given its unstructured nature, like bringing the requisite level of professionalism and structure into that business. And over the years that is essentially what we have tried to do. We have tried to bring structure, order, professionalism and also in terms of the service offerings to be able to tailor it to the needs of the clients in the market. So 10 years past, we have been able to move that industry forward and set the standard, basically to redefine what it takes to offer professional outsourcing in that space. We have become more like the icon in the industry for rendering outsourcing services. We have also tried to push the regulation agenda for how outsourcing services are rendered. Prior to now, and to some extent, you still find a bit of that playing out in the market and you just have people who really do not understand what outsourcing is. They see some opportunity to make money, they come into business and they are not able to offer the kind of services that would be to the benefit of the client and also the personnel under management that are deployed to the services.
Would you really describe outsourced workers as contract staffers?
Outsourcing is not contract staffing and it is not casualisation, if it is practiced the way we do and in a professional sense of it. This is because these workers that are deployed to the third party clients are actually the staffers of the outsourcing partners. So, at Resource Intermediaries, the personal under management are actual staff of Resource Intermediaries, enjoying all of the benefits that regular staffers would be enjoying. What is just the difference is that their places of redeployment are not within the office of Resource Intermediaries.
So, these staffers are ours, they are employed by Resource Intermediaries, they have the term of engagement defined by us and then deployed to our clients to render those services for the client. So, they are not causal and contract workers and as far as we are concerned, they are staffers of our company. However, the concern you expressed is valid because that was what pervaded in the industry before our entrance and that created a negative image for outsourcing firms. So we are not contract staffs provider, we are an outsourcing company providing services and personal to clients relative to their needs.
Contract staffing means that you don’t have fixed terms of engagement, you can be laid off tomorrow. Contract staffers typically don’t have a pension scheme; they don’t have a health scheme, so there are various benefits that a regular staff would enjoy in a regular engagement. However, if RIL were to engage that service on an outsource basis, the workers that will be coming to serve you will be permanent staff of RIL enjoying the full benefits of pension, medical or whatever it is from us.
But what have you done to create awareness on some of these issues?
Over the years, through various programmes such as our yearly outsourcing expo, we have basically helped the public to know what the core services and benefits of outsourcing are. In terms of how we also engage clients, there have been all kinds of public advocacy programmes and initiatives that wehave engaged in to bring the core knowledge of outsourcing to the market space. And also, when we engage our clients, we try to distinguish for them, so that they can understand the advantages and competency that we would bring to the table for them. We try to distinguish between outsourcing, contract staffing and casualisation, so they also do not have a problem with their unions or various groups that they have in their respective organisations.