Dr. Lwanga Martin Mwanje
“Why don’t we outsource office messengers?” Mpewo asked his boss, Banji, who was often complaining of high overhead costs due to an oversized payroll. Banji often wondered if the Bank needed all that many staff. In fact, he was always pointing out how idle most of staff were during the day. “They stand aloof picking and spreading rumors,” he often lamented. Yet Banji would never think of losing any of these staff, even as the Bank struggled to meet payroll. In some ways he liked the fact that his bank was one of the largest employers in town.
Mpewo who had just enrolled in an Executive MBA program happened to have a different opinion though. In one strategic management class, a tall bespectacled professor with a slight stoop and high pitched nasal voice, had lectured that, “A twenty first century organization should be leaner and nimbler.” Mpewo had asked the professor to elaborate. “The organization gets rid of excess fat,” replied the professor. “That way it can focus on its core business.”
Enlightened with this revelation Mpewo was now on a mission to convert his boss. “Why not start with at least security and see how it works out!” he pleaded. “By outsourcing we shall then focus on our real business which is offering the best banking services in town.”
Although outsourcing has been around for some time many organizations have not warmed to the idea. Take many a typical school. Shouldn’t a modern school outsource non-core functional areas like: catering, security, landscaping, housekeeping, printing, accounts, etc. This is because when one speaks of a school all that anyone cares to judge them is teaching and exam results. Why should a school then expend all its energies and resources on stuff no one is going to count against it!
However, if you looked around most schools are run the old way. The kitchen staff belongs to the school. The school provides security. It is the school that does landscaping. The school runs the boarding facility. Some schools run clinics. And with all this comes a huge payroll, along with statutory payment, of which the schools must pay a penalty once it defaults. Other than focusing on its main business of admission, teaching and graduating students, the school ends up bogged down with all sorts of administrative headaches.
There is the procurement of materials for these services and usual leakages which increases its bill. For all those staff, the school has to provide for annual, maternity and paternity leave, increasing her administrative costs. Precious time for teaching is often spent resolving conflicts between staff and management.
In the post Covid- 19 era where finances are stretched outsourcing is one worthy cost saving strategy every organization must consider. One large hospital decided to do just that. To reduce her operational costs it did outsource the boarding, catering and even mortuary section. The results were a far less bloated organization, leaner and nimbler.
Ultimately the cost savings were passed on to the customers enabling the hospital to charge far less. This made the business not just survive but grow as well.
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