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Outsource Employee Benefits – Opportunity Cost or Lost?

Our latest Expert Speak comes from Lorraine Butler, MD at CPM Ireland  on ‘Outsource Employee Benefits – Opportunity Cost or Loss?

 

Why do brands outsource their sales functions? For sure a significant reason is the flexibility, scalability, agility & expertise that outsource companies such as CPM can offer. However, for many brands, cost savings is also a significant driver and often the primary reason organisations look to outsource their sales functions. ‘Sales outsourcing is expected to be cheaper than the fully loaded cost of employing salespeople’ – Wikipedia’s opening answer as to Why Organisations outsource their Sales functions.  In many client driven commercial models, costs associated with employee benefits such as health care, pension, maternity leave are often minimised or eliminated. With economic prosperity experienced by most markets across the developed world, comes a war for talent which gets tougher each quarter. Brands partnering with outsource agencies have a decision to make – is the cost of minimising employee benefits costing brand growth in the longer term?

 

Organisations today have an understandable focus on diversity in the workplace; gender, demographic & ethnic balance. Such movements are admirable and, in many cases, very much needed to create an enriched workplace and a platform for sustainable organisational growth. However, such movements also come with a price – literally. Gender quota’s see a strive for increased levels of females in certain disciplines. Salary levels and often more importantly benefit packages determine the levels of female interest in roles. Mercer’s 2019 Global Talent Trend Survey shows that the No. 1 influencing factor in females applying for roles is the level of family related benefits included in the package.  Family benefits such as maternity leave & healthcare are seen as ‘a given’ in an employee market place, yet many organisations haven’t recognised or allowed for the costs of such benefits in outsource budgets. Unless this changes, making progress with gender balance in the workplace will not happen as quickly as the general market expects. And outsource partnerships risk becoming tactical in nature with a vicious talent cycle hindering brand growth.

 

Competition amongst outsource agencies, coupled with procurement teams expertly focusing on costs doesn’t help this cause. However, outsourcing leaders need to take steps in changing the conversation with customers. Unless it is accepted that there is joint commercial accountability to drive diversity & calibre in the workplace by both brands and outsourcers, brands will never realise the value of a diverse workplace that they could and should. And Wikipedia’s answer to why organisations outsource will never move from Cost to Growth.



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