Who is to blame – Client or Contractor?

Contractor A: Why should I provide service to a company that refuses to pay minimum wages?

Client: When the Government has fixed minimum wages, why should I pay even single paise more than that?

Contractor A: Then what about the equipment we use for cleaning? Who will pay for that? What about the chemicals?

Client: What equipment? What chemicals? It is simple ‘safai ka kaam’, we don’t need all that for cleaning our premises. Just provide the workers and they can use phenyl and kapada to clean the floors.

Contractor B: Well, when the client does not understand what cleaning is all about, what should the contractor do?

Contractor C: I definitely would not like to work for such a client.

Contractor D: But, to be in business, I have to compromise. If I will not take up the contract, someone else will.

These were some of the extreme reactions Clean India Journal recorded over the phone during a day-long conversation with some of the housekeeping service providers from across the country.

The housekeeping service or the building service is the most commonly outsourced service in India. Though started in a small way, the housekeeping sector today has grown to include more than 3000-4000 small, medium, big and professional contractors across the country. Mohana M discusses with a few housekeeping professionals the detrimental factors impeding the healthy working relationship between a contractor and his client

On the one end, there are contractors who do not want to take up the job if it means compromising on the wages or standards and on the other, there are a few who are prepared to work even if it means offering poor quality service.

Survival game

Ashok Bhola,

Krishna Housekeeping Services, New Delhi

It is not a question of sub-standard performance or cost cutting. It’s about whether I want to do the job or not. Once I have decided, I may do a job contract for two or even one per cent margin. This is a competitive business and if one decides to offer services at such low margins then he or she will do so in ways that fits the budget. Definitely, there will be a compromise on services provided to make some profits.

Naturally, in this game of low margins, I will have to offer sub-standard services and probably, I may not use branded chemicals or equipment. When I have stepped into the arena, I have to fight the battle. If I am going to stand before a client and talk about giving better service only if he is ready to offer a better rate, no one is going to give the job to me. At that point, I am not going to stick to the guns and talk of ethics, as I have to be in business.

This is not something that is happening only in the housekeeping business, it is common to every sector. Take the Tata’s new cheap car where most of the parts are made out of plastic. Now, we do have cheaper substitutes to cleaning products so why not use them?

Lumpsum payment

Shivkumar Tiwari,

Scorpio Facility Management Pvt Ltd, New Delhi

In this business, many clients are reluctant to pay even the minimum wages or take care of the compliances. They pay a lump sum amount and ask us to get on with whatever is possible. This definitely forces the service provider to opt for products and services that fit the budget of the contract.

This further leads to other malpractices; like when things come up for auditing at the site, the service provider engages in corrupt practices to get away with sub-standard products and performance. This is an unending problem which we have created ourselves for our own advantage. Unless we change our narrow outlook, I do not think we will be able to come out of this vicious cycle.

P.N. Viswanathan,

Oriental Facility, Thane

As far as we are concerned, we provide all the benefits like PF, ESIC to our staff, if such benefits are extended to us by our principal employers. But, many of them, including government agencies go for the lowest quote and are only interested in the lowest rating, even when the estimate shown is at the higher end.

Spokesperson,

Leading paint manufacturing company, Mumbai

We go for competitive bidding. Irrespective of what the vendor is quoting, we check on his background. If need be, we go by the track record of the vendor. We also check on their clientele, get feedback, check legal compliance and also meet some of the contract labourers. We being the principal employers, we do not want to get into trouble, hence we take care of all aspects.

It’s a compromise

Ashok Bhola,

Krishna Housekeeping Services, New Delhi

Just because a contractor is ready to work on lower margins, it does not mean he is bargaining on the workers’ wages. He compromises on other benefits, for example he cuts down the service tax from 10% to 5%. Now to make up this 5%, he compromises on the wages, the PF, the ESI or on the cleaning materials.

A lot of money goes out of the contractor’s pocket. Even for a simple labour licence he has to shell out over Rs.50,000. All these overheads are not included in the contract. So he has to compromise some way or the other.

Agreed that the government has laid down minimum wages and we too should urge the principal employer to pay more. But, when we are so engrossed in undercutting, how can we expect anything from the client?
Shivkumar Tiwari

Scorpio Facility Management Pvt Ltd, New Delhi

Gauging contractors

Pulak K Mukhopadhyay,

Bardsai Management Group, Kolkata

We do not take contracts at the expense of minimum wages. And even if someone is offering services at low margins, the client has to think and understand. They have to gauge the contractor who is prepared to work at a lower rate. He has to find out what are the areas that are being compromised.

If someone is offering something for Rs.80 against another quote of Rs.100, the principal employer has to re-look and find out if the service can actually be provided at Rs.80. And, if the client feels that the services offered for Rs.80 is correct, then he should go ahead with the lesser bid. Hence, if the client has a better understanding of what is being offered by the housekeeping company, he is in a better position to select the right service provider.

Educating contractors

Bhupendra Singh,

Classic Hospitality Services, Udaipur

It’s not just the client who needs to have better understanding of the cleaning process; there are many contractors who may not even be aware of equipment available for cleaning. Being in this business, firstly, I should know the various equipment, its applications, the tools and chemicals to be used. Only then will I be able to explain to the clients.

Take for example, a big industry that needs to be maintained. I deploy 50 workers initially and thereafter introduce mechanised cleaning and reduce manpower to 25. Now, if I am giving better performance and increased efficiency with reduced manpower and am able to lower the quote from Rs.300,000 to even Rs.290,000, the client stands to benefit.

Headcount based contract

Bhupendra Singh

When we talk of mechanised cleaning, the calculations are still based on per head basis. If I am deploying five machines costing Rs.400,000 which have a life of three years, it is divided by the per man head count and the costing is added. In this case, around 11 more will be added to the actual count of workers in place of machine. Over and above the equipment, I would be using chemicals and tools which will go unaccounted. I also have to convince the client about the usage of eco-friendly chemicals that will not damage the floor; about special tools like telescopic rods to clean high ceiling.

The housekeeping services that we offer is not a sweeper’s job and we also have the scope to provide value-added services like checking civil problems, electricity problems, etc. The client too will realise that there is so much more to it.

Though the awareness levels have improved today, it was not so eight years back. I still remember this customer who called me to “wash” his sofa set. I did not take up the job, firstly because sofas have to be shampooed and not washed, and secondly, the fabric was not of good quality.

Convincing clients

Bhupendra Singh

Housekeeping is hard work and hence if a client tells you that this is only ‘just a cleaning job’, you have to convince him that it is more than just that. It is professional cleaning. If a client demands to get his job done in Rs.3000, I would charge him Rs.5000 because I believe in paying PF, ESIS and also service tax. When a client does not agree, then I don’t want to do that job. There is no use of working for a client who is not quality conscious. You either convince the client or quit.

No layman’s business

Bhupendra Singh

I pay my workers Rs.7000 and have a turnover of over Rs.2 crores in a small city like Udaipur. It is only those who really want to do this kind of job should be in this field. Many think housekeeping is as simple as vacuum cleaning, print their visiting cards and get down with business. They may not know the advantages or disadvantages of using certain chemicals. They will definitely not go for cheap chemicals, if they understand its harmful effects on the workers. These are small concepts which when put across in the right perspective will definitely yield results.

In a greater horizon, we may not be able to get more contracts as there are many who are ready to work at a lesser wage. In Kolkata, there are workers who are put to work for 12 hours but we do not engage in such exploitation.
Pulak K Mukhopadhyay
Bardsai Management Group, Kolkata

Confused clients

Shivkumar Tiwari,

Scorpio Facility Management Pvt Ltd, New Delhi

We cannot entirely blame the client for not giving the right wages or honouring the contract proposal, as we are equally at wrong. Just imagine the plight of the client, when I quote Rs.200,000 and my industry colleague quotes Rs.150,000 to the same client company for the same service! Definitely, the company, who is the principal employer, will try to reason this wide discrepancy.

At a place where it is not possible to quote with Rs.50,000 margin, if my colleague is ready to offer services, there is sure manipulation at some end. It could be in the wages of the employees or their security benefits or the standard of cleaning products being used. If the principal employer gets a PF bill of say Rs.40,000 against Rs.60,000 being paid to the earlier vendor, he is certainly going to find it fishy and he will start exploiting. Hence, we just can’t blame anybody but the faulty system of procuring contracts.

Spokesperson,

IT company, Mumbai

At our end, we have never had a problem with the wages or any other payments. This is an IT company and we have five facilities being serviced by one of the leading FM companies. We have various departments like the procurement department that decides on the vendor and ensures the payments are made on time. We do not face any problems with our vendors. Yes, we are very strict with the documentation as regards the benefits and compliances are concerned. Every quarter the facility in charge gives its input to the procurement team who decide accordingly on the renewal of the annual contract.

Spokesperson,

Leading paint manufacturing company, Mumbai

We are a brand conscious company and do not face any problem with our vendors. Definitely, the payments made to them are on time. If any housekeeping company is complaining about non-payment, it could be they are facing such problems with some companies but with us we ensure not just payments but also statutory compliances.

Skilled workers

Ashok Bhola,

Krishna Housekeeping Services, New Delhi

Today, most of the demand for services comes from MNCs and naturally there is a demand for well-mannered and groomed workers. The trend today is to recruit boys with at least Std X education for routine cleaning where unskilled manpower was used earlier. It is becoming all the more difficult to find such labour. In fact, why would a Std X passed labourer work for minimum wages in India? He would rather migrate to the Gulf and get better paid for the same job. Whether skilled or unskilled, even the MNCs are keen on giving only minimum wages.

Educating clients

Pulak K Mukhopadhyay,

Bardsai Management Group, Kolkata

There is a huge gap in the understanding of cleaning with the client companies, especially the corporate sector. Anything that looks clean is clean for them. What is deep cleaning, the methods of cleaning, the chemicals used, green chemicals, etc., especially where cost is involved, they either have no knowledge or are reluctant to invest. Hence, there is a lot of demand but we are unable to sell a good product to the clients. We have to compromise on the products. Again, to sell a good product, the client has to have the knowledge. Who is the client we are dealing with in the first place? It is either the admin supervisor or HR head who probably has just about the knowledge of cleaning.

Bhupendra Singh

Every client has a different requirement. There are some who have a five-star premise and expect five-star service by paying pittance. But when you explain to the client the procedure and necessity for cleaning a particular area, the requirement of equipment and chemicals along side skilled manpower and the results of such cleaning, they definitely will agree on better payments. It’s a matter of educating clients.

Contractor’s employees

Parmeshwar,

Creative Management Solutions India Pvt Ltd, Bangalore

Where is the question of asking the principal employer for paying minimum wages? They are my employees; I am recruiting them, training them, putting them in service, giving them wages, then where is the question of the principal employer paying him benefits? I will have to pay them their PF, ESIS, etc. Why should we relate our employee with the principal employer? If there is any relationship, it is between the principal employer and the employer. Whether the employer is agreeing upon a contract on 5% or 10% service tax with the principal employer is the employer’s concern. The employee will be given his wages, his benefits, and bonus irrespective of the contract terms.

It is a matter of our company policy. We give our workers basic wages, PF, ESIS, bonus and statutory holidays. The problem of the client not giving anything more than minimum wages or less service tax amount is our problem and not the employee’s problem. It is a risk we are taking as an employer.

Being upfront

Ronnie Almeida,

Shona Corporate Services Pvt Ltd, Mumbai

It’s a matter of every individual’s perspective. If a client believes in following the statutory norms and pays the wages and benefits, he will pay the servicing company. If he does not pay, we should not take up the contract. Today, if service providers are ready to take up such contracts, they are the ones who were probably working with some MNCs and one fine day decided to start their own company. These companies tend get into illegal practices to get their equations right. But this is not the case with small companies only. Last week, I was sitting with a client, who told me that my competitor was ready to take up the contract for a lesser amount. I refused to take up the contract for less. The client came back to me and we bagged the contract because, the client lost trust in my competitor who was ready to do ‘adjustments’ to get the contract. Since, I was upfront in not compromising, I got the contract. If you lose one contract, you are not going to lose the whole world. Put your foot down and don’t compromise on minimum wages, as ultimately it is those poor workers who toil for us and build our reputation, who are going to suffer.

Employee’s benefits

Ronnie Almeida

Many complain that workers look at benefits as a cut in their wages. It is our responsibility to make them understand about the PF deductions and its benefits. They do not jump jobs if they are benefitted. If you do not pay them the benefits and another company lures them with the same benefits, he will certainly switch jobs. But, if you are giving them wages on time and the PF is being deposited into his PF account, he certainly will stick to his job. We have to make them understand that with PF and ESIS, their family will be covered even for medical expenses. In case of any unfortunate incidence, his family will have the money to survive and not be on the streets.

Solutions in hand

All said and done, more than 50% of these companies that participated in a sample survey by Clean India Journal believe that statutory or other benefits and higher wages to workers can be given to them only if the principal employer provides for it. While the rest included those medium & small companies which did not take up such contracts and those bigger ones which provided for all benefits irrespective of the principal employer.

The housekeeping sector is showing a wide disparity between two segments – one that is striving to be ethical & professional and the other, which adopts unethical & unprofessional methods to stay in business. But, the existence of companies that are ready to work on unethical grounds is “hampering the healthy growth of this industry”.

Besides the issues within the sector, some of the major challenges before the housekeeping sector include the minimal awareness level about the science of cleaning at the client level; the indifferent attitude towards cleaning; demand for best performance at low rates; short term service contract/termination of contract; among others.

While, many housekeeping companies understand that by spreading awareness on the cleaning science and educating clients on the need for ethical practices could make a difference, not many have been successful. This could be either because the service providers are not well-versed with the subject of cleaning themselves or are into this business for a fast buck. They pick up a handful of workers from the nearby site, give them on-job training, deploy second hand machines and sign a contract for an year. They pay workers just about enough, make profits and move on to the next job.

The big housekeeping companies, on the other hand, invest in their workforce and do business on much higher margins. They have well equipped training facilities to groom their workers’ skills. They enter into much bigger contracts, educate the client, invest in the required equipment and offer professional services.

The medium sized housekeeping companies having a workforce between 500 and 3000 workers strive to do better. Though they do not have full fledged training facilities, they provide basic training in house and put them with the experienced workers at the site to learn the job. “In Kolkata, we don’t have a training structure as such. We give them basic training in house and put them with some experienced workers on site to learn the job.”

The workforce employed in this sector is either school dropouts or those who have completed education between Std IX-XI. According to the World Bank report of July 2009, 48 out of 100 students in India pursuing secondary education do not go beyond that level. At least 37% students fail before the final examination and 11% drop out between Std IX and XII. The housekeeping sector, considered as one of the largest employment generating sector has been identified by the Micro, Small and Medium Establishment, the Ministry of MSME, which has recently begun providing formal training in soft service skills.

Out of the companies that responded to the survey, mostly in the small and medium category, more than 48% had a workforce ranging between 100-500 workers, followed by 30% in the below 100 category. More than 20 companies CIJ spoke to employ a combined workforce of over 13,400.

Some of the solutions suggested by these companies include proper training facilities, government intervention to check payment of minimum wages and benefits, minimum contract term of at least three years…

“When we take up a contract, we invest in manpower and machines, which can be recovered over the contract period. One year is too short a period to recover costs. A minimum of three years should be the stipulated period of a contract,” suggested one of the service providers.

Finally, it all depends on the client’s understanding about the whole concept of cleaning and for this to happen, one has to spread awareness and educate the client company.