Outsourcing is an enabling tool that can contribute towards job creation
MANY South Africans and some concerned world citizens supported students in the #FeesMustFall campaign in order to make higher education more accessible. Added to their demand was the #EndOutsourcing campaign.
Broadly, the students raise a valid point about the working conditions and benefits for support workers who were outsourced decades ago. However, is it true that outsourcing is an exploitative practice that should stop?
Many businesses are struggling against sub-optimal performance, largely due to poor choices in sourcing strategies, leading to cost structures that cannot be recovered by diminishing revenues. Outsourcing is not an isolated “evil” practice, but an enabling business tool that delivers operational efficiencies, while creating jobs and opportunities.
SA’s labour law provides sufficient regulation to companies that choose to outsource services. There are clear safeguards that protect employment rights. The Labour Relations Act protects employee transfers to outsourced firms that could result in changes to employment conditions or remuneration levels.
The benefits of outsourcing are not just in the reduction of employee salaries and benefits, but in obtaining specialised expertise, economies of scale and optimisation skills from outsourced business partners.
Companies remain with an obligation to ensure fair treatment of all employees. Where it is cost-effective to outsource a service that a client will require for as long as it is in business, the client must ensure that the service provider adheres to basic conditions of employment.
Applying a balanced view towards outsourcing is necessary in light of the extensive coverage that is provided by our labour law in effectively discouraging any exploitative practices.
Outsourcing contributes to job creation through foreign companies that rely on specific professional services out of SA.
We could provide more actuaries than India or the Philippines, or create job opportunities for the vast number of unemployed youths to service European markets that struggle with hiring for entry-level jobs such as call centre work or capturing of invoices. SA can take advantage of that with our favourable currency exchange rate and a young workforce.
According to researchers, SA can still attract more than 192,000 new jobs. The investment incentives offered by the Department of Trade and Industry have been extended to 2019, attracting global multinationals to outsource from local-based service providers. In Cape Town, 6,000 young people have been employed this year to service European companies through an international outsourcing service provider.
Outsourcing has broadened mainstream economic participation for many emerging small businesses by creating market access opportunities while giving progressive social redress policies like broad-based black economic empowerment true and practical meaning.
There is a great risk to our commitment to eradicating poverty and unemployment if outside companies in the midst of deciding the location of 3,000 jobs see boards that read #OutsourcingMustFall.
SA could rule itself out of the contest when it is in desperate need of solutions to address the 62% youth unemployment challenge.