Outsourcing manpower for the short term a viable option

Dubai: Nothing weighs down a small or mid-sized business in an underperforming economy than having to meet its payroll obligations. And once a business starts failing to do so, that may well create a vicious and self-perpetuating cycle that can break its back.

So are there many options available for beleaguered businesses to maintain a tight lid on their costs? A solution presents itself in the form of sub-contracting.

Here's how it works: a business could conceivably outsource professionals to handle its basic tech and accounting requirements similar to what they would be doing to manage their facilities management or security needs.

According to the country's Labour Laws, effective this year, businesses can look to outsource personnel for short-term job requirements using temporary work permits.

"This gives an advantage to mid-sized companies as they do not cost much," said S. Bala Kumar, director at Dulsco HR Solutions. "For example, event management companies wish to have additional hands on board when they are managing major projects.

Deployment flexibility

"At the same time, they would not require them during the quieter months since it would only add to their costs. Once the outsourced employees complete the project, they can be deployed in other activities."

And they need not be limited to blue-collar tasks. Apart from IT programmers and data entry operators, short-term hires could take on the responsibilities of sales co-ordinators or office administrators. They could even be employed in retail specific activities.

Once companies go with the short-term hire option for a specific job profile, they do show a marked tendency to extend this into other areas of operations as well.

"Rather than any sector, deployment of these workers depends on client requirements, with determining factors such as scale of the operation and the duration of the project," said Kumar. "The time of deployment is based on the client's specific needs.

"While companies do request experienced accounting and IT professionals initially for a short-term basis, they also have the opportunity to use our team members for longer terms based on their project requirements and duration," said Kumar. "This flexibility is what has resulted in third-party outsourcing becoming more popular."

It needs to be if some of the payroll commitment issues at local SMEs are to be resolved in favour of both parties — the business owner on the one side and the personnel on the other.

Here is what has happened at one mechanical works firm based in Fujairah. The business owner brought in more personnel after winning a project in Abu Dhabi earlier in the year. However, the project was subsequently put on hold, leaving the owner with no cash proceeds to fall back upon to meet his payroll commitments.

He then approached a bank and using machinery and other assets as collateral got a loan of Dh200,000.

"This amount is now being used exclusively to pay the employees and unless project activity picks up in the New Year this arrangement cannot continue for long," said the business owner. "I am pinning all hopes on a couple of short-term projects that are due to be awarded in January."

Layoffs

The other option is layoffs. A Dubai-based printing firm has reached this stage after it failed to meet staff payments for three months. The retained staff is even being hired out short-term to other firms.

"None of these are ideal situations for an SME to find itself in; also the lean organisation concept has never been popular with mid-sized companies here," said a financial consultant.

Skill sets

There are a number of companies offering short-term hires in a variety of job specifications. Before making the placement, the personnel are trained in the skill sets a particular job would require.

"The major advantage is that they can take on their new positions from the first day of deployment itself," said S. Bala Kumar of Dulsco.