18-20 October Frankfurt, Germany
All illusive: Outsourcing vs Outstaffing in Russia
Yury Efrosinin
Director of Kelly Outsourcing and Consulting Group Russia
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Outstaffing is widely used across all
industries since last century
Market is stable and players are known
Decision to oustaff is part of strategy, by
HR Dept
Outstaffing service becomes commoditized Customers learn how to assess costs
Lack of strategic approach on top
management level
Outsourcing market has potential for
growth
Outsourcing has limited number of
segments
OUTSOURCING VS OUTSTAFFING YESTERDAY
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-3,8 % latest forecast 2015
Economic outlook – Russia economy trends
Massive ruble volatility and slumping oil
prices downgraded economic estimates for
2015 and 2016, instable Ruble rate (from 36
up to 66 RUR per USD) can cause decrease
of stabilization fund.
Inflation in 2015 forecasted at 15% (World
Bank, May)
Consumer activity will be hit by negative real
wages and consumer spending will be down.
Elevated interest rates currently at 11%
(Central Bank rate) and therefore tight
financing in rubles and FX
The economic outlook for Russia in 2015 is poor and a small recovery will only occur in 2016
8,2 8,5
5,2
-7,8
4,54,3
3,41,8
0,4
-3,8
0,5
-14
-12
-10
-8
-6
-4
-2
0
2
4
6
8
10
12
14
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
ИнвестицииКонечное потреблениеИзменение запасовЧистый экспортВВП
InvestmentsFinal consumptionChanges in inventoriesNet exportGDP
GDP growth input
FACTOR #1: RUSSIA ECONOMY TRENDS
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Data from Federal Service of State Statistics
Labor force
Ministry of economy estimate
for 2014 - 2015: 434 000
people
Demographic curve
Skills shortage
High number of working places
Generation “Y” approach at work
Unemployment dynamic in Russia
FACTOR #2: LABOR MARKET TRENDS
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Prohibits the use of contingent labor:
• evade providing workers with appropriate payments
and guarantees
• escape paying insurance contributions
• during strikes and at reduced working hours
• for carrying out works of 3.3, 3.4, 4 hazard class
It prohibits сIt authorizes
Permits to lease workers through accredited Private
Employment Agencies:
• During temporary increase of the production (up to 9 months)
• To replace temporary absent members of staff
• To provide employment for full-time students, single parents
or parents with a large number of children
• ! The approval of the relevant local union if the number of
workers exceeds 10 %
FACTOR #3: NEW TEMPORARY STAFFING LAW
EFFECTIVE JANUARY 2016
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Prohibits the use of contingent labor:
• evade providing workers with appropriate payments
and guarantees
• escape paying insurance contributions
• during strikes and at reduced working hours
• for carrying out works of 3.3, 3.4, 4 hazard class
It prohibits сIt authorizes
Permits to lease workers through accredited Private
Employment Agencies:
• During temporary increase of the production (up to 9 months)
• To replace temporary absent members of staff
• To provide employment for full-time students, single parents
or parents with a large number of children
• ! The approval of the relevant local union if the number of
workers exceeds 10 %
FACTOR #3: NEW TEMPORARY STAFFING LAW
EFFECTIVE JANUARY 2016
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OUTSOURCING VS OUTSTAFFING TODAY
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Time - AUGUST 2015
Number of participants – 98
COMPANY
NUMBER OF EMPLOYEES
35%
65%
Russian company
Multi-National
46%
18%
36%Up to 500
500 - 1000
1000 - 2000
INDUSTRIES
All illusive: Survey Results
4% 5%7%
18%
28%
38%
0%
5%
10%
15%
20%
25%
30%
35%
40%
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Do you know about new Temporary Labor Law?
61% ˃˃
36% ˃˃
3% ˃˃
I know about the Law,
but am not aware on
details
I know the Law in
general
I don’t know
anything about
the Law
All illusive: Survey Results
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Что знают?
What will be restricted by new Law? Will the new Law influence your business?
51% Yes, negatively
27% No
14% Not sure yet
8% Yes, positively
All illusive: Survey Results
10%
10%
24%
57%
0% 10% 20% 30% 40% 50% 60%
Outsourcing services
Other
Providers of outstaffing
Outstaffing services
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Does your company plan to transfer employees from outstaffing to outsourcing programs?
?
Does your company plan to transfer employees from outstaffing into company books?
All illusive: Survey Results
59% - No,
we don’t
11% - Yes, we
do
19% - Yes, we do, but the
decision is not taken yet11% - Don’t know
35% - No, we don’t 27% - Yes, we do 24% - Don’t know yet14% - Yes, but the
decision is not taken yet
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Do you plan to use outsourcing?
All illusive: Survey Results
15%
23%
31%
31%
0% 10% 20% 30% 40%
Yes, but the decisionwas taken yet
Don't know yet
No, we don't
Yes, we plan already in2015
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What is main limitation to use outsourcing?
All illusive: Survey Results
5%
22%
23%
24%
26%
0% 5% 10% 15% 20% 25% 30%
We don't have experienceto use outsourcing
We don't have needs touse external provider
Other
Lack of reliable provideron the market
Lack of strategic decision
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16
78 8
3
8
25
15
10
0
5
10
15
20
25
30What business functions your company use/plans outsourcing?
All illusive: Survey Results
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ФЗ-116
Solutions
Solutions in 2016 год
Temporary Staff with 9
month contract (FL-116)Business Process
Administration
Business Process
Outsourcing
Model «Service
Hours»Standard
pricing model
Model «Service Hours
+ SLA (KPI)»
OR OR
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OUTSOURCING VS OUTSTAFFING TOMORROW
Most of Oustaffing contracts will be transferred to Outsourcing increasing the
market
Challenge for Customers will be to pick “real” outsourcing Provider
Challenge for Providers will be to deliver customized cost-effective solutions
Skill shortage will prioritize investment into human resources rather than into
technology
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