Human resource experts have recommended the adoption of outsourcing as a powerful strategy to address the country’s unemployment challenges.

The immediate past President of the Association for Outsourcing Professionals of Nigeria, Dr Obiora Madu, in an exclusive interview with The PUNCH, said outsourcing would be beneficial to the economy in the long term.

“In Nigeria, we are not seeing outsourcing the way it should be, because we are concentrating more on human capital, and human resource outsourcing, that is what a lot of people are doing,” he stated.

He mentioned that the way companies in the country were handling local outsourcing could lead to job loss.

According to Madu, there are so many outsourcing activities within logistics, software, and IT services, adding that there is an outsourcing company in Nigeria that is currently employing 1,500 who work for foreign companies.

Madu said, “What is important is that if Nigeria becomes an outsourcing destination, there will be a wider playground. However, if foreign outsourcing companies are set up in Nigeria, there will be a lot of outsourcing jobs being sent out to countries of the world, and this would boost employment generation. People are contradicting outsourcing for subcontracting. They are not the same thing.”

He noted the companies that engage in Human Resource outsourcing ensure that their workers are on pensions and enjoy other statutory benefits.

“For instance, if a principal withdraws his job, outsourcing companies won’t put the people on the street. They immediately start looking for another job for them in order to keep them in employment.

“In the context of genuine outsourcing, it is a collaborative agreement, where you and the principal determine the workers’ compensation upfront. Your earnings come as a percentage of the overall worker payments, serving as a management fee,” he explained.

According to him, subcontracting tends to result in underpaid workers, leading to detrimental effects on both the company’s customer service and overall performance.

In the same vein, the Head of Human Resources at the Chartered Institute of Bankers of Nigeria, Tolu Adedayo, said the potential long-term implication of outsourcing in Nigeria’s employment landscape were mixed.

According to him, it means there are both potentials and benefits and risks associated with outsourcing.

He stated that the impact of outsourcing varied, depending on the specific circumstances of businesses.

He said, “However, businesses need to consider the potential implications of outsourcing before deciding in that regard.

 “Outsourcing increases productivity and efficiency and helps businesses focus on their core competencies and outsource non-core activities to third-party providers. It would help businesses to leverage the expertise and resources of those providers.”

According to him, outsourcing can help to reduce costs by eliminating the need to hire and train employees for non-core activities; which can be of significant benefit for businesses in Nigeria, where labour costs are relatively high.

Adedayo notes that outsourcing provides improved access to talent, it aids the access of a wider pool of professionals within Nigeria and internationally.

“This is beneficial to businesses that need to hire specialised skills that are not relatively available in Nigeria,” he continued.

He explained that the outsourcing companies must conduct a proper background check on the workers, while liabilities associated with workers were borne by the outsourcing companies.

According to him, outsourcing could also lead to job losses because as businesses move non-core activities to third-party providers, jobs are lost, adding that that could be a concern for Nigeria, especially when the rate of unemployment is already high.

Adedayo added, “Some companies have developed policies that have provided an opportunity for experienced, qualified, and competent outsourced staff to be absorbed or converted to full staff. This will go a long way to address demotivation.”

More so, a Labour Relations & Human Resources expert and lecturer at Crawford University, Dr Justice Ngwama, said outsourcing played a significant role in the modern economy.

He said the major aim of outsourcing was for organisations to concentrate on their core competencies.

“However, its impacts on the workforce, especially in the Third World, appear to be more on the negative side,” he explained.

 According to him, outsourcing often culminates in a reduction of the workforce.

“Many times, jobs that could have created employment opportunities are outsourced to individuals close to the company owners. This outsourcing is frequently motivated not by a goal to enhance work efficiency, but rather to provide remuneration to their friends.

“This makes organisations abnegate responsibility of taking care of the workers. This also impacts employment relations. The outsourced workforce loses their rights, cannot belong to unions, and cannot negotiate the terms and conditions of their work. Their freedom and dignity are taken away by those firms. They are just semi-slaves,” Ngwama argued.

He noted that outsourcing encouraged exploitation because outsourcing firms usually pay anything they like in the form of wages and incentives to the workers.

“They exploit the current unemployment situation in the country for this mischievous treatment,” he claimed. 

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