Although outsourcing as a business model is still not widely accepted in Nigeria, experts say its benefits are immense. Afam Udeagwu, chief executive officer of XL Outsourcing Limited, a member of Association of Outsourcing Professionals of Nigeria (AOPN) who was recently nominated into the fellowship of the association, speaks on the numerous benefits of outsourcing business in this interview with Hope Moses-Ashike. Excerpts.
Could you give insight into outsourcing business? What, really, is it about?
Outsourcing is a business model most people in the corporate world like in Nigeria know about but beyond corporate world, it’s not much known. People that are using the business model know about outsourcing.
Outsourcing happens when there is transfer of work, responsibility, decision making right to an external subject matter expert entity. Many companies use our outsourcing services. Some of them don’t know that it is actually the outsourcing layout they are using. It is known in the corporate world. But we are doing a lot of things to ensure that people embrace the concept because many companies are also not using the concept.
What are the benefits of outsourcing as a business model?
Benefit of using outsourcing is very numerous. In a competitive environment, outsourcing helps you to remain competitive. Outsourcing helps you gain access to world-class technology at cheaper rate. Outsourcing also helps you to have access to professionals, subject matter experts. You don’t have to have these people in your employment. You have them when their services are needed and you pay for the services.
How many companies in Nigeria are using your concept?
Currently we have over 15 companies that we are outsourcing for. Basically, to us outsourcing is a partnership. It is not a vendor-supplier relationship and we see ourselves as a critical link to the development of skilled manpower and also as people that provide gainful employment to young Nigerians. The basket of our outsourcing service helps companies, banks, telecom companies, manufacturing firms, oil and gas companies to focus on their key activities and generally improve competitiveness and bottom line.
Is the business regulated?
Yes, we operate in a highly regulated environment. We are regulated by the Federal Ministry of Labour and Employment; before you practice you should have been licensed by the ministry. Secondly, associations are playing critical role in monitoring, like the Human Capital Providers Association of Nigeria (HuCaPan) and CIPM. You can’t do HR outsourcing if you are not a qualified HR practitioner. Also we have Outsourcing Professionals of Nigeria. You can’t do outsourcing if you are not a professional. So there is regulation.
What is the standard for outsourcing practice?
The principle of outsourcing is to create employment to reduce the number of unemployed and to create decent work. Let me take India, for instance. In India alone, within few years the country produced more than 20 million jobs but in Nigeria we are talking about few thousands, maybe about a hundred thousand or thereabouts jobs that have been created by outsourcing. We are encouraging companies to embrace the model; use outsourcing model because it helps to increase profitability, helps you gain access to professionals that can do this for you. When I talked about creation of employment, it was in 1997 that International Labour Organisation (ILO) in Convention 101 embraced the concept of flexibility of labour. The ILO defined decent work, and for a job to be considered as decent, there are five measuring yardsticks: (1) the job must provide a fair income, (2) the job must be productive and safe, (3) the job must guarantee the right of employees, (4) the job must provide social protection, and (5) the job must guarantee freedom of dialogue and unionism. So once you have all these in place, the job can be said to be decent. ILO embraces the concept of Private Employment Agencies (PEAs) and they define the role of PEAs in that Convention 181.
Economic downturn is forcing some companies to cut cost. How is this affecting outsourcing business?
Cost-cutting is actually one of the values that we sell. If the company is trying to cut cost, it is good for us because we are helping companies to cut cost. When a company outsources some its operations to us, it helps the company save the cost of owning those operations. So rather than owning those processes, investing in those processes, investing in those technologies, you give us the opportunity to provide these to you on a fee. Outsourcing is actually a cost-saving model. Beyond human resource outsourcing, we also do call centre outsourcing. So rather than investing so much in having your own call centre, all I need is just to give you a few seats or the number of seats you need and provide staff who are fully trained, I provide the technology for you, I provide the power, I provide the cooling system for a fee and you have all the time you need to concentrate on your key activities, face competition and grow your business and, of course, you make profit by so doing.
What are the challenges facing the industry?
There are a quite a number of challenges facing outsourcing today. Number one is that we have a lot of quacks and that is due to insufficient regulation. The Federal Ministry of Labour and Employment is trying its best but it needs to do more in the area of regulation to ensure that if you are not licensed, you don’t practice. For the ministry to do that, it also needs funding; to do the monitoring requires money to go round. Apart from insufficient regulation, there is also poor professional conduct by some service providers. We have had cases where some service providers go about cutting corners; they don’t live up to expectation. The other challenge is inadequate funding by service users. Some service users do not actually understand that outsourcing is helping their business. You see some of them treating service providers as suppliers, labour suppliers. You need to see an outsource partner as your strategic partner. Some banks have started calling them HR business partners because they know that it’s business model that these outsourcing partners are providing. Lack of funding is the other part of it.
The other challenge we have is stakeholder alignment. Because people do not understand the concept of outsourcing, they go about calling it all sorts of names – some call it casualisation, and that is why you see labour and unions making all sorts of comments on outsourcing. So, there is need for stakeholders to align themselves to the business model. Outsourcing does not make people lose their jobs; it actually helps to reduce unemployment, create more employment.
There is also abuse of outsourcing by service users. You are working in a big organisation and because you have a brother or sister who is not a professional, you ask him/her to open a company and you give him/her a responsibility to manage. It is part of the problem that we have; people abuse that process and abuse their position in these organisations.
What is the standard for HR outsourcing business?
The standard is you must have qualified HR professionals with certification; CITN provides one of it. AOPN helps you to know the people that are professionals. Human Capital Providers Association is an umbrella body to coordinate and supervise the activities of companies that provide labour. Of course before you are licensed, you would have been able to meet some of these criteria and you would also have been able to provide bond depending on the sector you are playing.
How many outsourcing companies are licensed in the country?
As at last count, there are over 200 Federal Government-licensed but in Human Capital Providers Association, we have maybe 150-160 members.
What can you say about downsizing in banks and other companies?
Companies right-size for various reasons. That is why we are asking companies to embrace outsourcing because if you embrace the concept of outsourcing, anytime you want to reduce the number of your workforce, all you need to do is to call the service provider to reduce the number. Because outsourcing partners also render service to other clients in other environments, they are able to withdraw these people and place them elsewhere. So any company that embraces outsourcing doesn’t have to bother about the number of people working for it. If you have restructured and you want to reduce the number of employees, all you need to do is notify the outsourcing company to reduce the number; the outsourcing company withdraws and places them elsewhere because those people are core staff of the outsourcing company, though working in a different environment.
But some outsourcing companies do not pay their staff working in companies well. Why is that?
That is a wrong understanding. Remember initially I talked about decent work as supported by ILO and HuCaPan. There are standards and yardsticks to measure what constitutes a decent work. I did say provision of fair income, guarantee of employees’ right, guarantee of social protection, freedoms of dialogue and unionism. Any employer who is able to meet this standard is providing a decent work. When you talk about money, it is never enough; even myself, I cannot tell you that I am earning enough today. Everybody wants to look up to earning higher but the key thing is at the point of engagement, because employee/employer relationship is contractually guided by law. If I have a job of N30,000 and I advertise such job and you apply, I give you terms and conditions and you accept at the point of entry, why complain eventually, because nobody is surcharging you?
Do you have statistics of the number of jobs created so far from outsourcing business?
It is still less than 100,000 but above 90,000. I am talking about people in HuCaPan. There are about 150-170 members of HuCaPan, and about 90,000-100,000 jobs have been created by them. It is low, that is why we are encouraging companies to embrace the model. In India alone, they have created more than 20 million jobs.
Is advent of technology not a threat to the industry as many jobs seem to be affected?
Technology is actually providing a different form of employment. The concept of outsourcing was born out of what is happening in the world today. One is globalization, two is restructuring within companies in order to remain competitive, and the other one is the need to gain access to world-class technology. I am sure your question is talking about HR alone but people also outsource technology. When I talked about call centre, it is a technology-based solution. So human resource is different, technology is different, people outsource all these. Technology is actually helping to create more jobs. It is encouraging people to develop multiple skills.
Can you take us through your product offerings? What is your unique selling point?
We are one-stop outsourcing company for several outsourcing services. You can hardly find that in Nigeria. You can either see people doing one form or the other but in XL we have basket of outsourcing services. Number one is support staff and human resource outsourcing where these people are our full employees working in different environment – those staff these companies consider not core, talking about tellers or cashiers, note counters, marketing officers, cleaners, office assistants, security officers, despatch riders, factory workers, even expatriates because we have presence in key states in Nigeria as well as Ghana, Sierra Leone, Liberia and USA.
We also provide expatriates. This one is outright recruitment – we help companies save that stress of profiling, looking for skills, interviewing, documenting, and doing background checks. We take off the stress from these companies. The difference between executive search or outright recruitment and HR outsourcing is that when we recruit, we send to companies and these people become their permanent employees and the companies just pay us a fee for searching and recruiting.
The other of our service offering is called call centre outsourcing. Currently we have a technology called Avaya call centre. It is a very intelligent software. We already have the technology, call centre agent, we have the space needed for people to come and rent, so rather than having your own call centre in your location, all you need is just to outsource the service to us and we will give you a line.
When people call, it is as if they are calling your office. The simple scenario in UK today, you are calling Barclays Bank and they are picking the call in India.
The other service is training and capacity enhancement. Rather than having your own faculty in your company, rather than having all the training materials, training room, equipping them, you outsource your training to us. We have a training centre and we are licensed to do what we do. We have professionals cutting across all sectors, all fields, to handle all the training needs of any company – in financial services sector, manufacturing, telecoms, oil and gas, etc. We handle trainings that cut across.
The other service in our outsource service offering is fraud and integrity management solution. XL Outsourcing Limited is the only company in West Africa that is licensed to do what we call voice stress analysis. Voice stress analysis is a software that determines people’s capability to commit fraud in the future. It is non-invasive like polygraph that has to attach something and when you are talking, it is checking. We have five people that we trained in the US, I am one of them. We call them voice stress analysts. We are certified to do that and licensed to sell this software in the whole of West Africa. We have the sole franchise. People that are staff in key and sensitive areas, like people that handle money, need this software because if you employ somebody today, six months down the line I can tell you that person is not the same but with this use of technology, if you employ the person today six months down the line you assess the person and check if that person is under financial stress. This technology tells you that. When you are speaking, the technology is picking certain signals that your ear ordinarily will not hear. After picking these signals, it plots it in a graph and, of course, qualified analysts will read the graph and interpret and tell you what it is.
We also do certificate verification and reference check. As I did say, this exercise is very cumbersome; any company that has done it will know that it is time consuming. For instance, you have 500 employees, you need to verify all their certificates – primary school, secondary, university, among others. But if you engage our services, all you need is give us the details and we will do that for you. We have presence in all 36 states of the federation, including Abuja. We run these states through our zonal structures located in the six geo-political zones. We have North Central zone, North East, North West, South West, South-South, South East, and Lagos because of its peculiar nature. Beyond Nigeria we are in the US, Ghana, Liberia and Sierra Leone. We also have foreign partners outside Nigeria that we use to do certificate verification and background check. Beyond certification, we also do personality check because you find out that people are not usually who they say they are and people change personalities when they change job. If you engage our services, we are able to track the person to his village.
The other of our outsource service offering is payroll. Payroll is a very cumbersome exercise for companies. We have software that can handle the payroll of any company in Nigeria, rendering world-class service and with qualified professionals to do that. It is all these that gave rise to the current award they gave us as the most trusted company in Africa in outsourcing service. This award was given to us by World Quality Alliance in collaboration with Africa Quality Institute. They gave us the award in recognition of our effort in putting together one-stop shop, in putting together competence in all these areas, in putting together the right professionals. Most companies are scared of outsourcing because they do not want to outsource and still have complaints. They recognised that we have built a reputable company over the years that you can use our service anywhere in the world and be sure of getting world-class service.
What, in your view, is the future for outsourcing business?
The future is large. We are talking about 180 million Nigerians. Every year, our universities are releasing fresh graduates with different skills, Nigerian economy is just recovering from recession. So the future is for companies and government to embrace outsourcing, work with private entities who are experts in this field. When the current administration is promising Nigerians that it would create ABC jobs, it is time to embrace outsourcing because outsourcing helps you to create this number of jobs you are looking at. Government is to create an enabling environment and let these companies thrive. So, the future is promising. We see more companies embracing outsourcing because that is where the trend is going, that is where the world is going and you cannot get that business model wrong because of the several benefits it offers.
What is your outlook for XL Outsourcing Limited five years from now?
We are currently in only three African countries. We are expanding. We want to cover the whole of West Africa and Africa really because our vision is to be the leader in outsourcing as far as Africa is concerned. So five years down the line, I see us achieving the dream of being the number one one-stop outsourcing shop in the whole Africa.
