Headcount
Every contract signed with the service company is based on the head count. “If one is to question the client’s knowledge on the cleaning aspects like the number of people required to clean a certain area, the time involved, the equipment required or the cleaning chemicals needed for the desired results, the clients wouldn’t know anything at all.” A client may insist on having 60 workers to clean the premises, “but as an experienced service provider, with 25 workers and the right equipment and cleaning chemicals, may be I could do the job better and get the desired cleaning results.” There could be a couple of reasons for such behaviour pattern – one, the client is unaware of the results of man-machine combination; two, he is obsessed with the idea of having a number of workers around to get an actual feel that the place is being cleaned; three, he feels he is being cheated by the contractor by providing less workers for the money offered. An excess headcount is a loss to the client more than to the service provider.
“Resultantly, such an attitude also leads to illegal compliances, which could put the principal employer or the client in trouble at a later date,” cautions Dr JPS Bakshi, Group MD, Global Excellence. The client is oblivious that in many instances a deduction of security benefits is made from the employees’ salary, but the same does not get deposited in the employees’ PF or ESIS account! Being the principal employer, the client company will be held responsible for such non-compliance, warns Bakshi.
That’s precisely why the whole concept of principal employer should be scrapped, argues Balram. “The workers should be given a sense of belonging. They are and should be provided that security by the service provider. We are service providers and not manpower suppliers. We are as much clients to the outsourcing company as much as they are to us. In short, we are stakeholders. Hence, it is up to the service provider to deliver what the client requires. Whether the service provider employs 50 workers or 100 workers, how much I pay the worker, how many machines I deploy is not the client’s look out.” Once brought to their notice, there are clients changing their outlook but there are many others who blame it on the company policy and base the contract on head count and demand break up of everything.
Adds Subhash: “Clients segregate the contract value into portions – Manpower, Machines, Chemicals and Consumables. What a client should be interested is that the housekeeping company has a contractual responsibility of upkeep and maintenance of the property. And this is fulfilled by collating the portions together to delivery quality results. What is debatable here is that clients tend to deduct amount if there are lesser manpower or machine breakdown. But, they don’t realise that the housekeeping company has fulfilled its responsibility of maintaining the property to its best ability by churning resources, like overtime allocation of manpower or using alternative application of machines. Clients always have the right to penalise the service provider if the set objective is not met with and should refrain from the practice of deduction portion wise.”
Delayed Payments
The delayed payment cycle has taken a vicious turn with every segment of the cleaning market facing a cash crunch.
“The cleaning industry struggles to get monetary support from finance institutions. Our only resort is receiving payments on time from our clients and PMCs,” states Subhash. “Clients and Property Management Companies (PMCs) who outsource services to housekeeping companies for service delivery, often follow a payment term of 30 to 90 days which is too tight for a healthy survival of the cleaning industry. Housekeeping companies have to pay workers by the first week of every month and in cases where there is delay, they look for a change of job. Even resources like machines and its maintenance, chemicals and consumables for the month have to be arranged for which needs funds. In such scenarios of delayed payments from clients the housekeeping companies go through a rough time. Clients and PMC’s should realise our problems and stand by us as partners. I strongly believe, if they support us on timely payments we would be in a better position to deliver more than 100% every time.”
Even the MNCs and facility management companies that engage multiple vendors for soft services, squeeze the housekeeping companies into agreeing at a low cost service. Here again, the payment to the housekeeping vendor is made after 50 or 100 days.
The service provider is unable to meet costs, the workers do not get their due payment for their services, they do not get salaries on time, the equipment suppliers get their payment after a long wait!
The outcome of this chain of delayed payments that has been growing over the years correlates to the economic factors leading to the diminishing value of the cleaning sector.
Attitude towards cleaning
Why do client companies outsource soft services? Dr Bakshi lists some of the main reasons:
One, they themselves do not know how to clean in the most effective manner and hence want to outsource.
Two, even though they can get the work done at their end and know the cleaning job, they want to focus on their core business and hence outsource cleaning.
Three, they do not want to get involved in managing such a large workforce because they feel it is a “hassle”. In order to overcome issues like where to get the manpower, how to recruit, how to monitor… and over and above employ few more seniors staff to run after them… they outsource.
Taking on the third point, Dr Bakshi says if they do not outsource they will have to pay the salary of so many employees on a particular date before the 10th of every month. Now if they outsource, there are so many housekeeping companies prepared to take these employees on their roll. Hence, the company gets the opportunity to delay payments as they are not bound by any low or time factor to make payments on the first of each month. This extended or delayed payment period stretches up to even six months in many cases.
Four, they do not want to make a capital investment in equipment and other materials and hence outsource it to a company that can buy the same for them. At the same time, they also have advantage of making the payment for the capital cost as and when they want.
Five, they can save a lot of money by imposing penalties or making deductions when making payment to the service providers.
“There are very few or rather less than one per cent of the client companies that outsource because they want to keep their premise clean or want to maintain the health of the building and the health of the occupants. These factors have greatly retarded the growth of this industry. In the garb of cleaning, the cleaning industry today is doing manpower management,” asserts Dr Bakshi. In fact, nobody is doing cleaning and neither are the client companies expecting any cleaning; they do so only when they have to deduct money.
“That is one of the basic reasons why every other sector is venturing into the cleaning business. Be it a security company or horticulture or pest control, they too can provide manpower for such cleaning. Eventually, there are no standards of cleaning followed by the service provider – all kinds of wrong chemicals, wrong equipment, wrong practices and wrong methods are used for cleaning. This leaves no scope for the service provider to improve or the cleaning industry to grow,” laments Dr Bakshi.
Squarely, says , Virendra Bhatt, CEO, All Services Under One Roof, in such a situation, the client companies cannot expect any standards. “If a client is not ready to offer the right amount due to a service provider, then the service standards will also be in accordance to the payment standards. Everything comes at a price. If a service provider is to buy new equipment for a new service contract, he has to make an investment. And, if he knows that the client company is not going to pay him the cost of the new equipment, he puts to use equipment which is over five years old. The cleaning standards too will be of a poor quality. Over and above, if the client complains about the service levels, the service provider should not be held responsible for delivering sub-standard cleaning quality. The client will receive what he pays.”
