Especially in South Africa labour brokering is often confused with outsourcing and the biggest culprits in promoting this myth is the labour brokering industry itself. Now I would like to state very clearly that I am not against labour brokering and I am a firm believer that there is an important place for the industry in South Africa. That said I think it is prudent to ensure that the two very different industries are not confused.
Firstly, labour brokering is the provision of staff on an outsourced basis, whilst outsourcing is the fulfilling of a function within which a staffing solution may be provided. The methodology and profit generation of these industries is vastly different. Allow me to explain in slightly more detail.
A labour broker earns its revenue from employing and deploying as many staff members as possible. The profits are generated from invoicing their clients more than what they pay the employee. The biggest reason a company is willing to pay a premium for this service is the “passing-on” of risks associated with employing staff and in some cases the increased costs, if any, can be justified by the decreased administration requirement.
A true outsourcing company, on the other hand, generates its revenue from addressing the need of the company within a function at as low a cost as possible and charging the client a premium for that service. Usually at a lower rate than employing staff to fulfil that function. The focus of the outsourcing company is therefore not on their clients staffing requirement but rather on the function that needs to be fulfilled.
So in other words the outsourcing company generates its margin from increasing its efficiency and by leveraging the intellectual capital within the company. For example using better software and more expensive staff than what its clients could afford and sharing these resources with more than one client. On the other hand the labour broker generates its margin from its administrative abilities and from decreasing legal risk.
So which one should your company choose? Simple, it depends on your need. If you require a warm body and do not want litigation risk and the administrative head ache of employment, labour brokering is a viable option for you. If you on the other hand require a function within your company to be managed more effectively and at lower cost outsourcing should then be looked at.
In conclusion, both industries have an important place in the South African economy and address the needs of companies to reduce risk and potentially costs. That said they should not be confused or pit against each other.
Showing posts with label Protection of Private Information Bill. Show all posts
Showing posts with label Protection of Private Information Bill. Show all posts
Monday, April 12, 2010
Monday, September 28, 2009
Property Syndication and King III
Although King III was only “launched” on the 1st of September this year we have to already start asking whether the Property Syndication is gearing towards the compliance of King III. That said it may even be extremely prudent to ask if they have ever been King I or II compliant. As the aim of the King reports was directly related to Public and Listed companies.
A lot has been said about the Property Syndication industry with a wave of allegations made against the operators. Some warranted and some maybe not. I believe that most of the attacks have been along the wrong avenue. We have seen some esteemed writers hammering the syndication industry about shareholder communication, so called inflated returns and poor and expensive management principles. Although these items are obviously extremely relevant and more than just idle points of discussion I believe that more emphasis should be placed on whether property syndication promoters subscribe to the King II and now King III rules of governance.
The basic reality is that most may not even know of the King reports. For example the directors of the now defunct Blue Everest Investments never even attempted to subscribe to King I and II and I believe that this was due to ignorance to its existence. Is that an excuse? I don’t think so, Asset Manager City Capital also never attempted compliance to King. Why not? Is it pure ignorance from the public, the promoters and from brokers alike? Is it that the so called governing body ,the Public Property Syndication Association better known as the PPSA, does not even mention compliance of King in their constitution? Or is it because we never demanded it?
In an industry that is bombarded by negative press brokers still keep selling their products and we are led to believe that it is merely the high commission being paid that motivates selling the products. I am however of the opinion that the concept behind the industry is solid and could be a fantastic investment for investors, but only if the syndication industry is more aggressively regulated by us, the public. Having an FSB number is no longer enough to protect the public, as clearly evident in the Capital Investments debacle. Capital Investments was/is a fully licensed Asset Manager and millions of rands are alleged to have been lost in this investment platform.
The focus for the immediate future should be to look at items like proper governance, ie. King III and the broker industry should demand compliance to these codes.
To find out more about the New Companies Act, King III and the Consumer Protection Act please visit www.sinkorswim.co.za
A lot has been said about the Property Syndication industry with a wave of allegations made against the operators. Some warranted and some maybe not. I believe that most of the attacks have been along the wrong avenue. We have seen some esteemed writers hammering the syndication industry about shareholder communication, so called inflated returns and poor and expensive management principles. Although these items are obviously extremely relevant and more than just idle points of discussion I believe that more emphasis should be placed on whether property syndication promoters subscribe to the King II and now King III rules of governance.
The basic reality is that most may not even know of the King reports. For example the directors of the now defunct Blue Everest Investments never even attempted to subscribe to King I and II and I believe that this was due to ignorance to its existence. Is that an excuse? I don’t think so, Asset Manager City Capital also never attempted compliance to King. Why not? Is it pure ignorance from the public, the promoters and from brokers alike? Is it that the so called governing body ,the Public Property Syndication Association better known as the PPSA, does not even mention compliance of King in their constitution? Or is it because we never demanded it?
In an industry that is bombarded by negative press brokers still keep selling their products and we are led to believe that it is merely the high commission being paid that motivates selling the products. I am however of the opinion that the concept behind the industry is solid and could be a fantastic investment for investors, but only if the syndication industry is more aggressively regulated by us, the public. Having an FSB number is no longer enough to protect the public, as clearly evident in the Capital Investments debacle. Capital Investments was/is a fully licensed Asset Manager and millions of rands are alleged to have been lost in this investment platform.
The focus for the immediate future should be to look at items like proper governance, ie. King III and the broker industry should demand compliance to these codes.
To find out more about the New Companies Act, King III and the Consumer Protection Act please visit www.sinkorswim.co.za
Monday, September 21, 2009
Are Financial Advisors ready for the new challenges?
The New Companies Act brings opportunity the Consumer Protection Act brings some additional strain whilst the proposed Protection of Private Information Bill will place additional strain on marketing methods and additional responsibility on database management within the financial services practice. This is a clear indication that 2010 and 2011 is going to be a very interesting time for financial advisors and business owners alike.
That said, I had to ask the question are Financial Advisors ready for these paramount changes and the opportunity and challenges that it holds. The extremely interesting part is in a quick survey, conducted with 40 companies that have attended the Sink or Swim Seminars, only about 15% of them had a active relationship with a financial advisors and most of these were merely related to pension funds and medical aids on not to any other business critical issues.
Even more over I was surprised that in a phone call to about 20 brokers only one offered business risk insurances, and I am not referring to asset insurance. Now the question I have is why don’t business owners have relationships with financial advisors and why don’t financial advisors focus on providing these key risk insurance instruments to their client base.
In recent years we have seen how the pendulum have swung in favour of the consumer and I have to wonder if Financial Advisors will now also be found wanting if their clients are not properly insured for these business critical risks. Never mind the massive opportunity that lies in this market segment.
That said, I had to ask the question are Financial Advisors ready for these paramount changes and the opportunity and challenges that it holds. The extremely interesting part is in a quick survey, conducted with 40 companies that have attended the Sink or Swim Seminars, only about 15% of them had a active relationship with a financial advisors and most of these were merely related to pension funds and medical aids on not to any other business critical issues.
Even more over I was surprised that in a phone call to about 20 brokers only one offered business risk insurances, and I am not referring to asset insurance. Now the question I have is why don’t business owners have relationships with financial advisors and why don’t financial advisors focus on providing these key risk insurance instruments to their client base.
In recent years we have seen how the pendulum have swung in favour of the consumer and I have to wonder if Financial Advisors will now also be found wanting if their clients are not properly insured for these business critical risks. Never mind the massive opportunity that lies in this market segment.
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