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10 Tips to choose manpower outsourcing partner

Two people shaking hands in office showing business partnership.

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 manpower outsourcing partner.

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 penalized.

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 of the Manpower Outsourcing Partner

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.

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