Outsourcing services: Who benefits?

By Luke Anami

The outsourcing industry expanded in the 1990s, when organisations went on a cost cutting binge.

In response, entire industries evolved to serve companies’ outsourcing needs, but management consultants reckon these firms pay their workers poorly.

"Many of the companies that provide outsourcing services for low rates, pay lowly and don’t provide benefits to their workers," said Mr Sean Moroney, Aitec chairman.

The concept involves a company contracting another company to provide services that can be performed by in-house employees.

"Outsourcing converts fixed costs into variable costs, releases capital for investment," said Moroney

Most organisations now outsource services such as cleaning, security, information technology, call centres, e-mail service, payroll, and reception duties.

"Outsourcing lets employees focus where they are needed most," he said.

There are many other reasons that companies turn to outsourcing, but the most important factor is cutting costs.

Full control

But, there is the danger of not being able to be in full control some functions of a company, especially where team work is needed. This is because outsourcing leads to delayed communication and project implementation.

However, some human resources practitioners argue that outsourcing has created jobs that otherwise would not exist. For instance, most companies stopped employing cleaners and subordinate staff as these services are now outsourced.

Human resource experts agree outsourcing often eliminates direct communication between a company and its clients. This prevents a company from building solid relationships with customers, and often leads to dissatisfaction on one or both parties.

Sensitive information could fall in the wrong should the contract with the service provider be terminated on acrimonious terms.

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