As a practice, Iris Services refrains from area-based cleaning contracts. Another factor that leads to cutting corners is the SLAs. The service level agreement clearly states the payment terms within which the contractor has to meet the minimum wage requirement and statutory compliances. This would mean the contractor has to reduce margins to make payments. But, for how long can a vendor do that? In order to satisfy the client, the contractor reduces costs, without realizing at whose cost he is doing it.
Any company outsourcing a vendor would expect the latter to comply with the statutory requirements so that it can concentrate on the core activity of its business. But most of the companies today cut costs by asking the contractor to meet all costs including statutory compliances within the payments agreed upon. “If there is an increase made in the number of workers, most of our clients, including ICICI Bank, accordingly increase payments.”
Even though there are clauses included in the SLA, the cleaning contractor in order to remain in good books gives in to the pressure from the client company. “In a broader perspective, SLAs are made to the benefit of the client more than the vendor.
“Another method of cutting costs that is practiced commonly by clients is in reducing the number of workers on a given site against what has been agreed upon. In such cases, the pressure falls on the workers. Where four workers were engaged, three of them would be squeezed into performing the entire task of cleaning.”
Man-Machine based contract
A service tax of 12%, ESIS & PF of 13.61% and statutory payment of 12% + 1.75%, are some of the basic expenses borne by the client when engaging a service provider. “A lot of the burden comes on the c
ontractor when the client expects the vendor to bring down all these costs. In normal circumstances, this is very difficult,” says George William, Managing Director, Spenswell Property Management Pvt Ltd.
More than 60% of the cleaning depends on manpower. Hence, if costs are reduced, there is reduction in the payments to manpower.
– George William
“Thus, to meet expenses at reduced costs, mechanised cleaning is an ideal solution, which will reduce manpower costs, enable quality service and bring down costs in the longer run. We have suggested mechanised cleaning to some of our clients, as one worker can complete cleaning of 15,000sqft with machines against 3000sqft manually.”
Even man-machine based contract is not beyond risk as the expenses incurred by the cleaning contractor on buying machines are huge. “Investing over a lakh of rupees in a machine for a cleaning contract of one year is not feasible. In fact, the client should invest in the machine as at any given point of time, either the client or the vendor can terminate the contract. The client company has a larger infrastructure to keep the machines unlike the contractor.”
The clients have to realise that three to five years down the line there will be no workers available to do the cleaning job. The economy is fast developing and janitorial workers are not prepared to work at minimum wages.
More than 60% of the cleaning depends on manpower. Hence, if costs are reduced, there is reduction in the payments to manpower. Ultimately, the worker suffers. “Alternatively, as contractors, we have to think of effective cleaning using better chemicals, etc. Here again, some of the clients agree to invest in branded chemicals for better cleaning results. But there are many who want just cleaning (as they say ‘cleaning is cleaning, just do it and go’).
“We are servicing corporate, IT offices, small factories, R&D facilities and laboratories. In most places, we recommend the client to provide the cleaning material. We are doing about 75 sites with a workforce of 700 in Bangalore. There is a huge market in Bangalore and very few good contractors are available. We are looking at increasing base in Bangalore itself,” says William.
Hence, the challenges in outsourced contracts based either on headcount or on the square feet area to be cleaned, can come down with increased mechanisation which enables faster cleaning, reduces manpower requirement and encourages better paid skilled labour.
