By Tunde Bodunrin
The manufacturing sector of the economy has over the years experienced serious setbacks and consequently failed to live up to its expectation of creating employments and contributing to the growth of the economy. In view of the significance of this sector to the economy, outsourcing has been identified as a very necessary system that must be fully embraced in order to revamp the sector and save it from total collapse.
The Chief Operating Officer of Resource Intermediaries Limited (RIL), Mr. Ademolasoye Awonaike, who gave this revelation recently in Lagos in a chat with journalist disclosed that though outsourcing firms are currently working with a quite number of manufacturing firms, there are still many more out there that need to embrace this culture. He emphasized that outsourcing will help in reducing cost which can then be ploughed back into the manufacturing companies to generate more revenues.
Resource Intermediaries Limited is a foremost Lagos based outsourcing firm in Nigeria and it boasts of a very good name with clients in diverse industries nationwide and staff spread all over the country in about 34 states of the federation including FCT.
Mr Awonaike who lamented how the manufacturing sector of the economy has had its own share of the economic downturn and infrastructural deficiency, lamented that with the nation’s abundant human capital and natural resources, the industry ought to be contributing more to the GDP than it is doing currently. He however expressed hope that the industry will take its place as a catalyst for economy development with the new government in place and its promise to invest heavily in infrastructural development.
The RIL COO reiterated that there are numerous opportunities for outsourcing in the manufacturing sector which ranges from personnel, process and distribution adding that major parts of the manufacturing workforce are unskilled and semi-skilled personnel who can be better managed on an outsourced basis for better efficiency rather than on the casual and contractual basis which is the major practice. “Manufacturing companies will derive more value from personnel outsourced because the outsourced personnel will be better managed and motivated for increased job commitments”.
He noted that a total production line process could also be outsourced as it is already common practice in Europe and America while also disclosing that manufacturing plants are already outsourcing distribution in Nigeria but better efficiency would be recorded with government’s plans to invest in better infrastructure like rail.
Speaking about the existing relationships between outsourcing firms and the manufacturing sector in Nigeria, Mr Awonaike stated that outsourcing firms have been able to get a few manufacturing companies to start using outsourcing services in the areas of personnel management and the experience has been encouraging with more processes being outsourced based on the experiences garnered from previously outsourced process.
His words “A few manufacturing companies in Nigeria are currently using outsourcing services in the area of personnel management which has helped them with the flexibility of upscaling and downscaling personnel requirement for production at will. This has helped the manufacturing concerns to manage cost of personnel when production is low or when they need to close a line of production”. He however decried the habit of quite a number of manufacturing companies that still make use of unskilled personnel that are not properly documented which is against the Nigerian Labor Law on casualisation.
Mr Awonaike charged manufacturing firms not to look at personnel outsourcing from the angle of cost saving alone but rather see more of the benefits from the increased efficiency and personnel dedication.
While identifying Pharmaceutical manufacturing companies, steel, cable and metal manufacturing, plastic manufacturing, chemical manufacturing, etc as other aspect of manufacturing where outsourcing could make positive impacts, he highlighted the benefits of outsourcing to include but not limited to support increased demand, which he described as a wonderful step “for addressing an uptick in demand for different types of products. He said companies may experience a sudden surge in orders for a particular product and may require additional resources to keep up with demand and, “ability to Upscale and Downscale staff when necessary.’’
He also explained that outsourcing guarantees lower cost of production and enable organization to focus its resources, both human and financial, on the areas that increase revenue and profit. “Where we have a lot of investors and outsourcing partners are contracted, the cost of manufacturing and production will drop on the long run and this will make products more available at a cheaper rate in the market. This will encourage the unemployed to go into entrepreneurship as goods will be readily available and affordable”.
While mentioning that the world is now a global village with global competitiveness at its peak, Awonaike argued that if national businesses were so survive, they need to start paying serious attention to smart, 21st century business strategies like outsourcing.
Speaking on the strength of the British outsourcing companies over the past decades, Awonaike called on the Nigerian Government to support and encourage the outsourcing course adding that there must be an accrediting body/umbrella that must endorse any new outsourcing firm.
“Outsourcing firms in Nigeria should come together with a voice that speaks the same language which is Corporate Governance i.e do Outsourcing the right way. How it should be done according to international best practice. It has being observed that a lot of Outsourcing firms are at the mercy of the client therefore taking anything the client throws at them in terms of contract”.
“Advisors are also lacking in the outsourcing sphere. Advisors are professionals who come between the outsourcing firms and clients to ensure both parties are satisfied with the contract signed between both parties”.