For The People

Insourcing explained

When the future key holders of South Africa were protesting for free education, they remembered that many of those tending to these institutions were barely surviving through outsourcing and were also struggling to put their offspring through the same institutions they tender to every single day.

In conformance to a nationwide protest in the tertiary education environment throughout South Africa, 12 out of 24 universities succumbed to the demands of the students to “insource” certain services offered to the universities. Since then the infamous insourcing trend has spread to governmental departments with unions demanding that certain departments insource employees who worked for the liquidated bosses.

Premier Dr. Zamani Saul and David Makhura of the Gauteng province reiterated the importance of insourcing all cleaners, gardeners, security guards and catering services in their state of the province addresses. Makhura also stated that the Gauteng province has already started with insourcing.

Cleaners and gardeners of the Department of Social Development in the Northern Cape barricaded the department’s gate due to their contract with an outsourced company ending. Their reason was that Premier Saul said in his inaugural speech that the departments will insource all the services they’ve been outsourcing. He did not explain that the insourcing will take time as there are processes to be followed, workers therefore expected an immediate change, resulting in the frustration. One of the strikers said she didn’t want to jump from one company to another every time her contract came to an end.

Types of insourcing

Indirect insourcing – also referred to as the top-up model, involves increasing the rates paid to the service provider and mandating them to increase the worker wages up to the acceptable or livable wage. The advantage of this model is that it is relatively simple to implement and manage. The main disadvantage to this model is that it purely adds cost with no potential of achieving operational savings. Furthermore, it can also blur the lines as to who the real employer is, as the outsourcing company is taking operational decisions based on its client’s demands. Workers may also have fewer benefits compared to working directly for the organisation such as access to services that are available to all direct employees (education as an example in the case of Universities).

The Hybrid model- involves the insourcing of certain tasks and the outsourcing of management and/or other functionalities. The main advantage of this model lies in the fact that it achieves social justice with a lower administrative and human resource burden compared to full insourcing. If this model is selected, the cost benefits discussed earlier can be optimised from the onset of the insourcing project. The main disadvantages hereof are that worker satisfaction with the process is low (since only partial insourcing has occurred) and the difficulty in the management of the interface between the work to be insourced and that which is to be outsourced.

The 100% insourcing model involves the insourcing of workers required and the elimination of a requirement for external service providers. The main advantage of this model lies in it generating more worker satisfaction and buy-in than the other two models. This model also creates more accountability and ownership for tasks as external service providers tend to be “at arm’s length”. The biggest disadvantages of this model are that it requires strong and proactive management of both the employees and equipment or materials, it can be administratively intensive, and some of the skills required to manage the new employees may not be readily available (specifically skills of a technical nature). The insourcing cycle consists of the three phases: planning, implementation and stabilisation. The planning phase is characterised by (and may only be a success through) a significant amount of stakeholder engagement and strategic decision making. Some of the key steps in approaching this phase are the objective establishments of the insourcing requirements and the ensuring of extensive stakeholder engagement and education.

In the implementation phase, systems, processes, procedures and support services are put in place to ensure the success of insourcing. It is upon completion of these activities that employees are moved to the new organisation.

When approaching this phase, some of the key steps include the creation of mediated forums to ensure continuous dialogue and feedback amongst the various stakeholders, the clarification of roles and responsibilities, the establishment of support infrastructure, the modification of systems and the development of processes, procedures and controls to ensure continuity of service levels into the stabilization phase.

In the stabilisation phase, with new employees on board, systems, processes and forums are tweaked or created to deal with exceptions and to bring about efficiency improvements. This step is best addressed through the creation of additional procedures, processes and forums and the adjustments to the existing systems to ensure full integration between the work requirements, performance management, consumables management and financial systems.

Media liaison officer for the department of Social Development Lesego Pule, states that the department agrees with implementing insourcing though the development will only be able to be implemented properly next year as it will need R54 million for it to be a success. He goes on to say the department had already insourced workers’ way before the Premier had mentioned it.

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