Outsourcing - an important strategy to ease labour shortages

Kim Le, outsourcing and staffing manager for North Vietnam of ManpowerGroup

In you role for ManpowerGroup, you often work with customers on human resources (HR) related issues. What are the challenges facing the majority of businesses today?

The biggest challenge facing businesses in Vietnam and the world nowadays is the inability to balance the HR supply and demand. Forty five per cent of businesses out of a total of 39,195 in 43 countries and territories joining ManpowerGroup's Talent Shortage Survey said that they cannot find the skills they need, and for large organisations (250 + employees) it is even higher, with 67 per cent reporting talent shortages.

As per our survey, most of the top-ten in-demand roles today require post-secondary training and not always a full university degree. In the digital age, employment will not always require a college degree, but rely heavily on continual skills development as even the most traditional roles are augmented with new technology.

What are businesses doing to solve talent shortages?

Globally, businesses apply different strategies to overcome talent shortfalls based on their demands and capacity. According to ManpowerGroup's surveys, the most effective and popular strategies include providing additional training and development (54 per cent); adjusting education and experience requirements (36 per cent); recruiting from outside the traditional talent pool (33 per cent); offering additional perks and benefits (32 per cent); exploring alternative work models: contract, freelance or temporary work (30 per cent).

In regard to salary, the survey produced an amazing result - when the rate of employers (29 per cent) increasing salaries is not as high as in the past.

In addition, allowing employees to have flexibility in working time, or distance working is also an effective strategy that employers should pay due attention to as the young workforce (aged 18-33 and accounting for around 30 per cent of the world's workforce) are very concerned with these issues. Outsourcing is a strategy that is becoming a trend across the world and one we are seeing effectively deployed in Vietnam, contributing to ease the HR supply-demand imbalance.

With a specified management process, outsourcing is proving to be an effective tool for businesses to find the skills they need.

You have talked about the ways that businesses use an outsourcing service from suppliers. What are the advantages of the service in comparison with traditional HR recruitment and management methods?

Outsourcing has four advantages above traditional HR recruitment and management, enabling businesses to gain flexibility in HR organisation and management.

Firstly, cost effectiveness. Outsourcing does not mean a cut of overhead costs because businesses have to pay the service fees for suppliers. Outsourcing can lead to cost savings for businesses as outsourcing enables businesses to switch over HR costs - the fixed cost - to operation cost, which has time flexibility and helps them make a cut as requested from business demands.

The second advantage is in meeting businesses' short and long-term demands. When businesses want to recruit a large number of labourers for a project development which covers several months, years, or a certain period in a year, they cannot depend on their current employees to satisfy such a changeable demand. Instead, they can work with a supplier of outsourcing services who has professional staff and managers.

What's more, suppliers of an outsourcing service can share part of the risk, training and HR development costs with businesses. Instead of spending time on addressing unexpected risks, or finding qualified training programmes to develop and retain talented employees, businesses can work with a service provider who offers advice and gives some suitable strategies. This supplier can even provide training programmes for existing employees of the businesses.

Last but not least is that outsourcing enables businesses to approach high-quality manpower as these labourers are all trained and selected carefully. With the service, a business can also increase or decrease its human resources in different development periods without being worried about personnel organisation, thus helping them increase labour productivity.

A number of businesses still hesitate to use outsourcing services for fears of difficulties in management of leased labourers. Is this a serious issue?

Outsourcing and staffing is now the trend in the labour market. In order to catch up with the rapid changing world of work, businesses have to supervise and manage the workload with proper procedures and processes, instead of overseeing every job in a detailed way. Businesses who are still hesitant will find it difficult to gain a competitive edge. To ease their concerns, businesses should assess labour supply ability, professionalism of staff, financial capacity, experience and professionalism of potential suppliers of this service.

What are your forecasts on outsourcing trends among domestic and foreign firms in Vietnam at present and in the future and what can Vietnam learn from other countries around the world?

Nowadays, outsourcing and staffing is the obvious trend in the labour market globally. For foreign investors in Vietnam, the majority already uses outsourcing and staffing services based on their operation scale.

For example, one customer of ManpowerGroup Vietnam outsources up to 70 per cent of its workforce, while the common rate for the majority of customers is 30 per cent. For Vietnamese companies, not many of them use this service yet because of certain preconception and concerns against this rather new service.

To create a momentum for business developments and to catch up with the global business governance trend, Vietnamese firms should overlook the concerns to learn more about the advantages of new HR solutions and then apply new HR models and HR solutions in an appropriate manner.

Regarding a larger governance view, the government has issued a number of legal documents as well as suitable and concrete working rules to support businesses in approaching new HR solutions such as outsourcing and staffing services.