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Choosing the Right Manpower Outsourcing Partner

Posted on January, 2020

The introduction of the new licensing decree in 2010 for manpower outsourcing services by the Ministry of Human Resources and Emiratization, was an important milestone in the manpower outsourcing history in the UAE which was aimed at making a clear distinction between companies that can outsource manpower and those that cannot. This was a departure from the previous practice where companies under the context of Consultancy Services, Annual Maintenance Contracts, Managed Service were providing their manpower to customers for short term and long term deployment. Today there are over a 100+ service providers to choose from in eth UAE and this leaves a HR or Contracts Managers with a dilemma on which service provider should they sign up to outsource and what are the important parameters that they must consider to make outsourcing successful. In this write up the focus shall be the white collared outsourcing and following are some of the parameters to prequalify a suitable outsourcing service provider.

1. Compliance:

The most important criteria is the correct license. The service providers license activity must clearly define the labor regulated terms, the absence of which both the firm availing the service and the service provider could be penalised.

2. Track record

while length of time is not necessarily the best yard stick it does provide a list of clientele who they can go to. A customer base of well known brands will go a long way in ensuring that the company has a good track record and credibility in white collared outsourcing.

3. Outsourcing framework

Fixed margin or percentage of the salaries or mark-up based. Fixed margin is a monthly fixed fee, with all other directly attributable costs are back charged. Under this model it offers more transparency on the costs but the customer will need to go through all the supporting documents and bills on a monthly basis. Whereas a mark-up based fee structure covers all the statutory payouts, visa costs, provisions for sick leave, insurance and risk associated are taken up by the service provider, which will be slightly expensive.

4. Payment terms:

Funding is an important element in the outsourcing industry, as in any other. Some customers agree to fund the salaries ahead of the payroll and obtain a discount, while post payment attracts a small premium. Most important element is the ability to pay salaries on time to the employees through the Wage Payment System.

5. Insurance options:

This is an important variable cost. Most outsourcing providers have a basket of insurance policies and coverage to meet the varied requirements of the customer from a basic coverage, mid-level and premium insurance to suit the employee levels.

6. HR Culture:

White collared outsourcing needs to ensure that the employees are provided with a service commensurate with their grades and social status. It is important that the service provider has a strong HR culture, team and infrastructure to ensure this.

7. Transparency and ethics:

Companies with a strong professional and ethical culture is a must to ensure that the employees are not short changed at any point in time with a commitment to meet the contractual tripartite agreements, that is in place between the company, service provider and the outsourced employees.

8. Strong contracts:

A comprehensive and well defined contract protects all parties, as it is important that the service provider or the customer has a well drafted agreement that covers all aspects of the outsourcing service to ensure that the deliverables and performance are as per the agreed terms both in letter and spirit.

9. Recruitment service:

Most service providers provide recruitment as a value added service for outsourcing for generic positions such as Admin and support staff. However if they are difficult to locate scarce resource, then a recruitment fee might be added.

10. Resourcing:

The service providers with a good media outreach can resource better talent, including access to job boards, news-papers adverts and a professional presence in Social media, which also demonstrates their transparency of business operations and outreach to customers and employees.

The above parameters are some of the basic parameters that organizations must consider while establishing partnerships with Outsourcing Companies.

Ethics in Manpower Outsourcing

Posted on February, 2020

In the battle fields of recruitment business, the rules of engagement were at times not well defined. Short term gains were thrilling, end justified the means to many in business, rules were meant to be broken and being ‘flexible’ was seen as a customer focused decision. However today this is now becoming a priority when selecting the right employer, customer, employees. This is no longer an option but a necessity, not just in recruitment but in all businesses.

Business ethics is defined as a form of applied ethics or professional ethics that examines ethical principles and moral or ethical problems that arise in a business environment. Peter Drucker observed, "There is neither a separate ethics of business nor is one needed", implying that standards of personal ethics cover all business situations enacted laws of business ethics. Several countries introduced laws to rein in unethical practices. For instance The UK bribery act 2010 is an Act of the Parliament of the United Kingdom that covers the criminal law, relating to bribery.

In practical terms business ethics is all about doing what is right. From having the right licenses, right code of conduct, avoiding any under the table payouts, shortchanging what has been contractually agreed with the customers, following the laws of the country in letter and spirit. Once these fundamentals are secured, it becomes easier to transact business.

UAE has made several strides on regulating the manpower industry. The new licenses since 2010 for On-Demand Labor Supply that covers manpower outsourcing or the agency license that covers Executive Search or Overseas Recruitment services, is provided only to UAE nationals, that are professionally qualified and capable, so that outsourced employees and potential candidates rights are well protected. The ministry of Labor in the UAE has done its best to ensure that there is transparency and ethics in this business sector, by engaging with their counter parts in the supply countries as well, especially to protect the blue collared workers. The onus of responsibility now falls on the business leaders to ensure that the framework is implemented in the UAE across all levels. One of the key value proposition that an organization can make is trust and transparency, built on a sound partnership approach. Trust can be built when the business is built on ethical grounds and it takes a long time and often takes multiple transactions to build trust and on the contrary it take only one unethical action to destroy it.

Simon Mainwaring says, “more and more companies are reaching out to their suppliers and contractors to work jointly on issues of sustainability, environmental responsibility, ethics, and compliance”.