Due to manpower shortages and the high cost of maintaining in house employees, many companies in Singapore has resorted to outsourcing their air con installation jobs to sub-contractors. Such practices have many advantages for a company. However, there is also a thick silver lining in doing so.
Recruiting an experience and skilful air con installer has always been a very great challenge for companies in Singapore’s air con industry due to shortage of skilful installer. Even if a company managed to recruit a good installer, they will be faced with the problem of high staff turnover. Therefore, retaining experienced installer in a company is another difficult and challenging task for all air conditioning companies in Singapore. Instead of taking up these great challenges, most companies ultimately resorted to outsourcing their aircon installation job to local or foreign individuals. For these individuals it is good money because the more installations they complete, the higher their income. Therefore, many installers opt to be a sub- contractor for greed of higher income. However, sub-contracting work is a feast or famine kind of job. There are months where you work like a candle burning at both ends and the money just flow in. On the other hand, during low or rainy season, there is no need to light the candle at all
For companies outsourcing their aircon installation jobs to sub-contractors, there seems to be many advantages. The company need not maintain a headcount in their payroll. They can save on CPF or a substantial amount of levy for foreign workers. They can also save on the need to provide for annual leave, insurance, medical expenses, training and many expenses required to maintain a workforce. Sub-contractors also use their own vehicles to carry out their work and companies can also save on investing in motor vehicles and its related expenses. In summary, outsourcing can help a company save substantially on both fixed and variable expenses and at the same time overcome the problem of manpower shortages. Most important of all, a company only need to pay sub-contractors on a per-job basis. It does not need to bear losses due to lack of revenue to offset huge payroll during low season.
Despite so many advantages, there are also a number of drawbacks when a company outsource its services to third party sub-contractors. The following are some of the drawbacks:
- Lack of assurance over quality of work, especially if the sub-contractor is new to the company.
- Lack of commitment from sub-contractors as they are not permanent employee of the company.
- Sub-contractors are motivated to save time and finish their jobs quickly as the more jobs they complete, the higher their income, thus compromising on the quality of delivery.
- Sub-contractors may try to save on material cost because the lower the cost the higher their margin and this will definitely compromising on quality of delivery. (Note that in the air con industry, sub-contractor has to provide for the installation materials because material costs are very expensive and it is almost impossible for company to provide these to sub-contractors for fear of misappropriation.)
- There is always a risk that the company can’t locate the sub-contractor when problem arises subsequent. This is especially so if you are dealing with problematic foreigners.
In conclusion, it is very cost effective for a company to outsource its installation services to sub-contractors. However, on the other hand dealing with the quality of service can be a big challenge. Companies also have to consider how to deal with consumers who may or may not be aware that there are using sub-contractors for their installation services.
From a consumer point of view, when you purchase a new air conditioner, it is always advisable to check with your vendor whether they have a team of experience in house installer or they outsource their air con installation to third party sub-contractors. Of course, you may or may not get an honest answer from the air con vendor. The vendor knows what’s in your mind when you ask such a question. As a result, most companies will require their sub-contractor to wear their uniform and represent themselves as an employee of the company. Therefore, it may require some technique for you to find out the truth. In many instances, companies that engage sub-contractors are in a much better position to offer lower package pricing for their new air conditioners. However, consumers need to weigh the pros and cons before they finalise on their purchases.
