Should Singapore outsourcers abandon their lowest wage mentality?

The Ministry of Manpower seems to believe that chasing the cheapest option is not always the best.

The use of grading and accreditation schemes go a long way in helping service buyers determine the best value for money instead of simply basing decisions on price, claims the Ministry of Manpower said as it updated its official advisory on best sourcing practices.

"Some service buyers assume that going for the lowest quotes makes good business sense for their bottom line when they outsource their services. What they may not realise is that cheap sourcing increases time spent on managing contract non-performance and the risk of service disruptions," said Mr Hawazi Daipi, Chairman of the Tripartite Committee for Low-Wage Workers and Inclusive Growth, Senior Parliamentary Secretary (Manpower & Education).

Aside from factoring in service quality, best sourcing practices also involve looking at service-level requirements and a more long-term engagement with providers. Respecting worker rights and providing a decent work envionment also help raise outsourcing outcomes, argues the advisory and its proponents.

"Best-sourcing can provide the win-win-win approach for service buyers, providers and workers. Best sourcing practices assure service buyers of quality and reliable services delivered by trained workers, who are motivated to excel in their work when they trust their employers to treat them well." Mr Koh Juan Kiat, Executive Director, Singapore National Employers Federation.