Awonaike: Firms Can Weather Recession by Outsourcing Non-core Functions


By Tunde Bodunrin

To mitigate the consequences of the recent downsizing and job loss in the country as a result of economic recession, government and corporate organizations need to consider outsourcing their non-core functions as well as cutting down cost by avoiding unnecessary frivolities and spending.

The Chief Operating Officer (COO) of Resource Intermediaries (Nig) Limited (RIL), Mr Ade Awonaike, who gave his thoughts recently in Lagos while suggesting ways out of the growing rate of job loss and unemployment in the country called on government to indicate better interest in outsourcing, because it’s also a revenue generating means for the government.

“Looking at it, most of the staff usually affected are low cadre staff which would not have happened if these categories were outsourced in the first place. They would have been staff of the outsourcing companies; with this, organizations would not have to deal with all the issues that come with retrenchment because the outsourcing companies will be the one to deal with issues arising from labour brokerage, compensation and benefits etc”

Other suggestions made by Awonaike include the need for government to help ailing sectors of the economy by offering bailouts to organizations that are willing to take up the bailout offer; ensuring adequate security in order to encourage foreign investors into the country which would enable more jobs creation for the citizens.

The RIL COO also suggested diversification of the economy for other areas of Internally Generated Revenue (IGR) to be looked into which will then reduce pressure on the current sectors currently thriving. While saying that government should encourage young people to become entrepreneurs and start their businesses by giving grants to promising and upcoming entrepreneurs, he advocated for the restructuring of the education system to integrate vocational training that would spur young people into creating jobs rather than seeking for jobs.

Explaining reasons for downsizing, Awonaike said downsizing has nothing to do with the employee’s personal performance. “Layoffs occur when a company undergoes restructuring or downsizing, or goes out of business. In some cases, downsizing may be temporary, and the employee is re- hired when the economy improves”.

“The economy in itself is not thriving meaning organizations have to downsize to stay afloat. With more people out of work, it can lead to increase of the inflation rate because there is less money in circulation. If more people are out of work then there will be no purchasing power. For the economy, it simply means that business just manage to survive by cutting cost from wherever is possible meaning cash flow is kept in the coffers of the organization. With the cash not flowing, it affects the economic stimulation. Most times the organization has no choice but to downsize to stay afloat”.

Awonaike disclosed that the situation is affecting outsourcing firms saying outsourcing firms like all businesses make projections and budget based on staff outsourced to them but the current economic situation has prevented outsourcing companies from meeting their annual targets and projection.

He said; “we now have more staff being returned to us and we are having the issue of seconding them to other clients so, we have our data base bursting with CVs and more people come to us daily for this. Also on the part of the welfare of staff which is paramount to us at Resource Intermediaries Limited, some clients actually want us to cut or reduce some staff benefits which can affect the morale of the staff while some clients cut the staff salaries too”.

Commenting on the consequences of this development on the already saturated labour market in the country, he said more people will be scrambling for the few jobs that are available in the system and this will create fear and lack of confidence in the young people. And also, apart from encouraging crime amongst the youth, the situation is one of the causes of brain drain where young graduates always think of travelling abroad immediately after graduation so as not to get caught in the web of eventual downsizing, sacking or not even getting the job because the jobs are not there in the first place, he noted. He added that many of them not having the financial means and wherewithal resort to getting out of the country at all costs by travelling through dangerous routes just to get to the supposed “greener pastures”

While reiterating that entrepreneurship is very helpful no matter how small the business seems, Awonaike advised youths and undergraduates to aspire to become employers of labour which can be achieved if they get vocational training alongside their academic pursuit noting that this will make them occupied and useful to them without waiting for the job that may never come.

He however believes the storm is over as the economy is gradually picking up and there are better and brighter days ahead even as he maintained that there are companies employing even in the face of this seemingly bad economy. He disclosed that investors both foreign and local were actually coming into the country and they definitely need man power to get their operations running.