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Home » Professional » Reducing costs in Cleaning Contracts:A Report

Reducing costs in Cleaning Contracts:A Report

 Achieving high productivity at low costs is a top business priority. But cutting costs doesn’t necessarily have to mean cutting jobs. It just means taking a smarter approach to do what is being done every day without increasing costs. The same goes with cleaning too but sadly when it comes to making reduction in the overall expenses, there is a major cut made in cleaning jobs. Mohana M discusses the implications of reducing costs and cutting corners in the cleaning service business.

One of the major challenges in the cleaning service is to improve application performance and work with existing SLAs without adding too many new resources/costs. As the demand to address customer needs and meet SLAs increases while budgets shrink, the major blow is dealt upon the actual worker in the service chain. Cleaning contracts are mainly based either on a headcount basis or on the square feet area to be maintained.

Headcount Contract

In every other case of outsourcing, the cleaning contract is sealed on the number of workers deployed to clean a given area. In an industry where salaries are structured around “unattractive” minimum wages, absenteeism and job switching are common. “Consequently, even if a single worker does not turn up on a particular day, the client company complains of non-performance and lack of quality,” says Sandeep Palwankar, Director, Clean Sources, Mumbai. There is a total disregard to the present workers putting in extra hours to ensure that the area is cleaned as it is done during full strength. “Over and above, the worker does not get paid for the extra hours put in!”


At the end of the day, the client is always right. We have to work keeping this fact in mind.
– Sandeep Palwankar

 

 While workers switching to better paying jobs may seem justifiable, the client refusing to pay anything above the minimum wages is not. “We are already facing a major crunch in labour supply, and a few years down the line clients will have to pay more to get their cleaning done,” says Sandeep. Contracts should be based on the work to be done and not on the number of workers. “If the contract is on square feet of area to be cleaned, the cleaning contractor can deploy man and machine accordingly. What takes three to four workers to clean an area can be done by much less manpower along with machines.”

In the headcount based contract, the number of workers is employed to service a particular area as agreed upon in the SLA. “However, there are many instances of workers being called to maintain an additional area without a corresponding increase in manpower or payments. This adds to the pressure on the cleaning contractor in meeting costs and quality. At our end, we sit across with the client and make amends in the contract in such cases.” But many clients are known to dismiss the additional work as a goodwill gesture of the cleaning contractor, who succumbs to pressure in order to retain the contract. It is impossible to meet costs under such circumstances.

Delayed payments from the client end are not only the cause for cleaning contractors losing workers but it also creates additional problems. “It is not always that the full payment is made to the contractor as per the SLA. There are deductions made. If a client pays after a lapse of three or four months and deducts payments for not cleaning a particular area in the first month, there is no way the contractor can ascertain or cross check. Over and above that, the contractor is so stressed due to delay that he is happy with whatever he receives.

“The irony in all this is that, even though the client makes delayed or less payment, after 15 to 20 days the same cleaning contractor will go back to the client asking for additional job.”

Area-based Contracts

In the past, many IT companies preferred contractors based on the area to be cleaned. “In many cases, where the contract has been signed on area-based terms, all does not work well always,” says C Srinivas, Chairman, Iris Services Corporate Housekeeping. The cleaning contractor is able to meet expenses and abide by statutory compliances as long as there are no changes made in the terms and work conditions. There are clients who insist on increasing workers on grounds of not meeting expected standards of cleaning. “Any demand made by the client, to increase workers without corresponding increase in payments puts pressure on the contractor. Few months down the line, the cleaning contractor finds it difficult to even pay workers their statutory benefits. In order to retain the client, the cleaning contractor eventually resorts to malpractices and cutting corners,” explains Srinivas.

 

One should refrain from taking up contracts that result in the violation of statutory compliances.
– C. Srinivas

 

 Achieving high productivity at low costs is a top business priority. But cutting costs doesn’t necessarily have to mean cutting jobs. It just means taking a smarter approach to do what is being done every day without increasing costs. The same goes with cleaning too but sadly when it comes to making reduction in the overall expenses, there is a major cut made in cleaning jobs. Mohana M discusses the implications of reducing costs and cutting corners in the cleaning service business.One of the major challenges in the cleaning service is to improve application performance and work with existing SLAs…

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