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Putting a price on inferior service – the true costs to consider when choosing a TES staffing provider

By 19 Jul 2022Uncategorised

By Tania Govender, Sales Director at Worldwide Staffing

In an increasingly tight economy, businesses across the globe are on a cost-cutting mission to secure their survival. Slashing expenditure is the order of the day, but the problem with cutting costs and looking for the cheapest service provider is that it usually ends up costing the company more in the long run. Here, the adage, “you get what you pay for” isn’t just a truism, it’s a warning. Price alone shouldn’t be the deciding factor. So how should organisations handle the ‘good service’ vs ‘good price’ choice conundrum? Fortunately, these two factors are not mutually exclusive, and businesses can have both. As such, the question remains: what should companies consider when searching for the right Temporary Employment Services (TES) provider to meet their staffing requirements?

Risky business conditions

South Africa’s economic conditions are only getting tougher. We are still dealing with the fall-out from the Covid-19 pandemic, load shedding is a daily reality that results in lost economic output of about R700 million per stage, per day, and it’s estimated to have contributed to more than one million lost job opportunities. Strikes, demonstrations, and other types of civil unrest have far-reaching and often unpredictable consequences for businesses. Unreliable water infrastructure results in intermittent water outages regardless of dam water levels – all of which heightens the risk for most businesses across the country.

The hidden costs of making the wrong choice

The negative cost implications of choosing the wrong TES partner can only exacerbate the organisation’s risk. Lack of experience in handling Human Resources (HR) or Industrial Relations (IR) matters pertaining to staff can have catastrophic financial implications on the business, resulting in downtime and lost productivity. Lack of involvement in or understanding of their client’s operations can result in staff of a poor calibre being supplied as the TES provider does not understand the business need. When the client must take back most of the responsibilities handed to the TES, this defeats the purpose of using a TES provider and means no return on investment.

Short-sighted cost saving

Given that the wage bill is usually the biggest cost for businesses, it’s tempting to choose staffing providers based on price. This might seem like an immediate cost reduction, but this saving does not necessarily pay off in the long term. The price might appear to be right, but organisations must assess whether the supplier can meet all their needs. The right TES provider will fully understand their client’s business by immersing themselves in the daily operations to proactively mitigate risk areas. It’s important for companies to understand clearly what is included in service delivery from the TES provider under consideration, as well as what is not included. A TES that is not transparent about what its costing covers can end up presenting their client with a bill for additional charges for services not factored into their initial solution. This negatively affects a company’s budget and financial standing.

The right choice is a partnership

Along with providing a full range of labour-related services that ultimately benefit the client, the chosen TES provider will work with the client to further reduce costs and implement cost saving measures without affecting service delivery. A TES provider will enable agility and flexibility in staff overhead costs, along with the ability to rapidly scale up or down the staff complement required to meet operational demands in a compliant, efficient manner. By taking vested interest in the business, the TES provider can supply labour that is aligned with the client’s company values. This is based on a genuine appreciation for the fact that any business willing to outlay capital in outsourcing the labour component should be shown a return on their investment. The client is assured a quick supply of labour that is screened and vetted, along with the peace of mind that comes from knowing they will get the right calibre of workers with the relevant experience and knowledge. This also comes with the cost benefit of paying at least 30 days from invoice whilst staff continue to enjoy weekly pay cycles. This affords the client some much-needed financial relief while they wait on payment from their own customers. The client will be able to focus solely on their core business knowing all staffing requirements are taken care of legally and with full compliance to all labour laws.

Prioritising transparency over profit

The cost of choosing the wrong TES provider or accepting inferior service can be crippling, especially when compounded with the challenges that businesses face. When it comes to choosing a TES provider to partner with, it should be a priority to find a company that is reputable and that leads with integrity and honesty. Such a provider should have their clients’ and workers’ interests at heart, while focusing on service delivery and not just their own profitability. When the right TES provider is chosen, the value gained from the partnership will far outweigh the cost of their service.

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