Would you believe that larger companies like Amazon and United Airlines are using staffing companies to handle many of the personnel aspects of their business? They are doing this because they’ve seen the
financial advantages.
Airlines used to provide everything involved in the passenger experience. From curb-to-curb, airline employees did it all. Food, fuel, baggage handling, even passenger service agents all worked for the airlines. But then the low-cost carriers came along and drove prices down. Even the legacy carriers had to get onboard and look at outsourcing as a means of reducing costs.
About ten years ago, United Airlines began shifting their warehouses to a staffing company. They did this because they recognized that their core business is flying airplanes. While they of course need pilots and flight attendants, they don’t need all the personnel costs, issues, and liabilities that go along with all those other ancillary services. Now many airlines fly the planes, but everything else is outsourced.
So, how would outsourcing be financially beneficial for your company?
You may have considered staffing companies and even gotten a quote. If, for instance, the quote was a 40% markup of the regular wage, one would immediately think that there’s no way that a Staffing company could be cheaper than your company, right? Well, the answer might surprise you. (See table below)
First, many of the costs are the same whether your company pays them or a Staffing company pays them, like wages and taxes. Second, there are some “hidden” costs in your company’s numbers like Worker’s Comp Insurance. These numbers may not be depicted at the department level, but that doesn’t mean the company doesn’t incur them. In comparison, MaintenanceBest most likely pays less for Worker’s Comp because your company pays a blended rate of all jobs whereas we only pay a job specific rate.
Also, MaintenanceBest has a safety program that has been recognized as one of the best in the business and have attained a perfect safety record, which greatly helps keep our insurance rates much lower. If an employee of yours suffers an injury, then your company and the insurance provider pay the expenses. These costs could last for years and the rates would most certainly increase for 3-5 years.
Furthermore, if your company doesn’t “own” the employees, then you no longer worry about other issues like: wage garnishments, child support payments, vacation/sick, health care and dental programs. No more 401(k) administration or documentation of counseling sessions and/or disciplinary actions. All of those are taken care of by the Staffing company. Plus, no pending lawsuits from disgruntled employees.
Finally, we’ve seen companies equate the employees’ benefit package to anything from about 24% to 43%. Now add on the administration of all those programs to come up with the true cost and it’s a good deal more than the Staffing company. So, given all of this, companies like Amazon and United Airlines have shifted to a staffing model, even if it’s only for the first three to nine months of employment.
