Outsourcing reform: who wins and who loses

Specialists give us their opinion on outsourcing reform. (Photo: iStock)

President Andrés Manuel López Obrador addressed big business in May when he spoke about outsourcing reform, but SMEs are also concerned.

Analysts interviewed by Tec Review They question the time in which the changes were approved and are concerned, because the pandemic affected – precisely – small and medium businesses.

Entrepreneurs interviewed say that, many times, the best option is outsourcing, but now they are considering reducing their staff.

More on outsourcing reform

An untimely reform?

“The timing of the reform to the outsourcing law was not the best,” he admits. Mauricio Ramirez, economist and professor at the Tec de Monterrey Business School, Campus Aguascalientes.

The specialist in economic development affirms that the reform has some good intentions, but adds that in terms of public policy, the government first had to carry out a fiscal reform, in terms of spending and collection.

“Let’s not forget that Mexico is one of the countries that collects the least and that, at the same time, it has a very large informal employment rate,” he says.

For this professor at Tec de Monterrey, greater regulation in this regard “means higher implementation costs and greater obstacles. [para las empresas]”.

He says it is still “early” to pass judgment on the reform. However, “protecting the worker so much, in practice means less productivity and less employment.”

What in a context of almost zero economic growth – less than 1% according to the latest measurement – is a blow to the development of Mexico.

Also, a near-fatal wound for most of the country’s small and medium-sized companies.

“Let’s take into account that between 60 and 70% of Mexican employees work in SMEs,” that is, companies with fewer than no more than 250 employees, says Ramírez.

Only large companies were consulted

For Ramírez, the narrative of dignity of work that was used officially has other edges. “It seeks to collect more taxes. The Law was approved without consulting SMEs, ”he says.

He adds that “there were negotiations with large companies to decide what remained in the new law and what was eliminated, but the SME sector was not listened to and will be the most affected,” he concludes, for his part, Fabian Trejo, director of Growth Partners Up, a human resource management consultancy.

The expert is optimistic that – after the June 6 elections – “there is the possibility of proposing a counter-reform. Now, the government is closed to dialogue ”.

Gaps and ambiguities

As a specialist in human capital, Trejo affirms that the reform was “necessary, since employment had degraded a lot and bad practices had to be eliminated”.

But, in its eagerness to clean up, the government has exceeded. Exemplified: “It is as if you hurt your finger and instead of healing it, they told you ‘let’s cut it’, because regardless of the gaps and ambiguities of the text of the new law, what is clear is that it truncates any possibility of economic development “.

For Trejo, one of the “gaps” that remained in the reform is precisely the definition of specialization.

“It is the only thing that companies are going to be able to subcontract. That is, activities that do not coincide with the main activity in which they were enrolled. But, To what extent will an activity be considered a specialty? There the misunderstandings will begin ”.

Trejo agrees with the Tec de Monterrey professor that it is still “early” to venture forecasts.

Remember that the new law grants “90 days for outsourced employees to migrate to your company’s payroll. But, this will cause greater precariousness. We are already the country with the most informal employment. Y companies that cannot absorb these burdens will end up offering more informality, without benefits or social security ”.

Faced with those who wonder what was the real motivation for these new changes, Trejo, believes that it goes beyond respecting the rights of workers.

“I agree with this point, but in practice the workers will be affected by the reform. The outsourcing business that used to belong to others will now pass into new hands ”.

And the entrepreneurs?

Keys to national economic development, entrepreneurs are perplexed by the scope of the recent reform.

TO Teo Martin, a businessman from Mexico City who before the pandemic had 50 employees and now has 25, the outsourcing law does not affect him directly because in his activity (gastronomy) outsourcing is not frequent.

“A consulting firm once presented me with a calculation of supposed advantages that in practice were not such, since in my case the employer’s costs increased by 25%. It was convenient for me to continue keeping employees on my payroll, ”he says.

Regarding the motivation of the law, “I do not know if the objective is to harm SMEs or if (the government) does not know what it is doing. But, the reality is that in addition to reducing my staff to 50%With the health crisis, I had to close half of my eight stores. And I bill half that in 2019 ″, he says.

outsourcing reform(Art: Tec Review)

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A big hit

In the technology sector, on the other hand, where outsourcing is the norm rather than the exception, the picture is different.

“The law indicates that I cannot subcontract consultants. But our business is consulting, a very volatile activity, “he says. Harumi Tinajero, director of IT tactics, startup dedicated to software consulting for SMEs.

It is clear to this systems engineer that “outsourcing is not ideal, but we opted to outsource rather than take freelancers. In this case, the latter, when the project is finished, are left without a job ”.

At the head of a company with 11 employees, Tinajero considers that outsourcing is not so negative, since it is “halfway between being on the payroll and being freelance”, which is a more precarious status than outsourcing.

Faced with the labor reform, Tinajero is not very optimistic: “we cannot assume the cost of incorporating all of our subcontractors. This costs us between 25 and 30% more expensive. And less in a pandemic context. We will have to decide which employees we will put on payroll assuming the cost. Either liquidate them according to the law and reach an agreement for fees or not to hire more“, Declares the young entrepreneur.

“A major blow is coming for small businesses, which generally lack a legal or tax department. The reform barely gives us 90 days to put the subcontractors in order ”, he concludes.

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