Cometh the hour, cometh the charlatan.
And in business, coronafraud is not just confined to online ads by individual twicers for non-existent supplies. It’s becoming part of corporate policy.
As most will know, the UK Government has stepped up to the plate and will pay 80% of an employee’s salary, up to £2,500 per month, if the company opts to put said employee into the deep-freeze. This is officially called the Coronavirus Job Retention Scheme (CJRS), and it allows employers to put staff who can’t work on ‘furlough‘ and not lay them off.
It’s a helpful move, but for organisations in some industries, it’s simply deferring the inevitable crash.
Outsourcing is one such sector that should by rights be crashing and where covering these direct employee costs ought not haul the collective chestnuts out of the fire. As you may well know, I have a penchant for the shenanigans that take place within the world of Business Process Outsourcing (BPO) and Recruitment Process Outsourcing (RPO) organisations. I wrote a couple of books on them: Flypaper for Freaks and Freaking Hired!
These organisations deliver high volume services supported by swathes of staff all pulling in minimum wage, or close to it. The staff are hired and remain in place as revenue earners. Gross profit on your average BPO will largely fall between 20% to 40%. In an RPO, they can cream it at over 70%.
But to ring it up on the tills, employees will need to be transacting, or client organisations will need to be underwriting their time.
The BPOs and RPOs need profit in order to meet the heavy debt incurred by rapidly depreciating infrastructures. Many of them bill a high proportion of accounts on a transactional basis, so revenue will fall when they under-transact. For those accounts that support outsourced operations on an underwritten hour, matters are in principle rosier, but those hours are currently being slashed as demand falls for client products and services. Direct employee costs can be covered with furloughing, but profit in pound notes will plummet.
In RPOs, the exposure might in places be starker. Many clients pay a cost-per-hire fee that covers all the transactions in supporting candidates from the point of the first job advertisement going but is paid when the candidates are offered positions. With these models, the risks are where the organisation over-transacts (performs more work while the billable amount stays the same), or ends up hiring fewer than planned, or worst of all, hires zilch. Now, so many organisations have frozen or even abandoned recruitment campaigns, these RPOs will be high and dry or at least dramatically exposed in key areas with the zilch option.
Of course, some accounts in the BPO space will remain busy and may even grow during the coronacrisis (public sector services and online shopping, for example), but this will likely not offset the organisation-wide burdens.
Most leaders in service outsourcing will have realised for a number of weeks that a fiendishly clever plan would be the order of the day, were they intent on survival.
Enter Mr Sunak and the government windfall. That had the high priests of chicanery singing hallelujah at the altars of bastard. Not at the furlough money alone (though they certainly did love it) but at the concomitant opportunities.
The job retention scheme would be rocket fuel for a clean-up and the launch pad to planet profit.
And as a chap with his ear very close to the ground, I can enlighten you on precisely how they’ve gone about it.
Indeed, a former colleague provided me with the PIN to a management conference call within an RPO some weeks ago. They thought I might be both entertained and be scouting for more material for my books.
Right on both counts, old boy.
On that call, the instructions to the management team were eye-watering.
Roaring out edicts to ‘fucking rinse it’, the divisional MD and operational head, the two hoarse men of the apocalypse, expounded sub-1980s call centre blunt brutality that was as dated as the monkey boots and the ankle-length trousers (with striped socks) that they respectively and laughingly sport with a sense of misplaced mutual kudos.
First of all, staff were – with web-based applications – comfortably set up remotely, so any emerging tomfoolery would be one step removed from the mind’s eye. Few outside the conspiratorial management circle would be exactly sure what was happening as everybody would be isolated. Classic divide and conquer stuff.
And then to the plan.
Some were to be furloughed as per the rules. They would receive their 80%. They would be selected on the basis of lower productivity and lower ability. On ice and the first candidates for redundancy if/when the time came.
Then, the next group would to be furloughed but allocated a percentage of work to fulfil – the alternative for them would have been microscopic statutory redundancy. Guess which way they’d be sure to go?
Recent leavers – mainly students – were if possible to be re-engaged on furlough but would be tossed enough work to keep all parties sweet (80% of pay in exchange for 40% of a remote working week).
A further slither of the payroll was to receive their 80% but perform tasks and have a top-up payable in expenses, pension contributions, and other off-line goodies. These staff would be the ones with the most knowledge and experience. They wouldn’t be working flat-out but would pick up the challenging queries and escalations that would make the ongoing service provision viable to clients and customers and not just a question of bums on seats.
And then the pièce de résistance. A section of bods would be furloughed but would be formally engaged through charlatan agencies on a part-time basis. It’s absolutely not against the rules for these staff to get other jobs. The scam, however, would be that they’d be performing work for their own organisation. Their agency work would go through on the agency payroll, so nobody would be the wiser. Simplistic genius.
All of these measures would be complemented by a concentrated push on all the well-honed double-bubbling and invoice component hiking we’ve all come to know and love about outsourcers, and the fix would be in.
This is premier league tomfoolery, and a lot of the dastardly deeds are being done on government contracts to boot for that added piss-take cherry atop the flack foraged shateau.
But this particular shyster hive is not alone in the outsourcing world. BPOs and RPOs the length and breadth of the county will be pulling these cunning stunts. I’ve already sniffed out others who are at it. Even if overall revenue is down, margin is pumping, steroided.
And most of these outsourcing businesses are foreign-owned, so the British taxpayer is picking up the tab. What is more, it’s not going to be too much of a stretch to believe that if this is already prevalent in outsourcing, it’s already de rigeur in other sectors.
At the end of it all, these organisations will survive and thrive, but nobody will really be able to articulate how they did it. And nobody will really care, because the economy will be so shot away that even scumbag survival will be celebrated.
And there’s little risk of any accounting post-mortems on what goes down. There are neither the resources nor the legal requirements for autopsies on real bodies now, let alone the ones buried in cooked books.
What a time to be alive.
Sad, but very true. Exactly what’s going on in our company right now. And yes, we have plenty of government contracts too.
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Thank you for the positive feedback – much appreciated.
Great article and very much on point (as I know only too well from working at a UK RPO!!!). I guess that some of these crooks are not just furloughing their statf on the quiet? So claiming the money and their staff just work at home none the wiser?
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No, I would think that this would be unlikely because HMRC would have sight of the taxable pay each month – and would be expecting to see 80% of the norm.That is why there are all these variations at play.
They are run by people who, while dim in the accepted sense of the word, are sharp on essential villainy. They won’t be leaving any fingerprints at the scene.
It’s a shame that these outsourcers are likely to get away with it, but then again they’ve been rotten to the core for decades. They’re well-versed in criminality.
Furthermore, I would think that those furloughing and then topping up the remaining 20% would be the first to be checked.
Therefore the 100% fake furlough with staff unaware would represent too high a risk?