Interview: Congressman discusses outsourcing law
Posted by By Angelica Mari at 18 May, at 19 : 46 PM Print
Laércio Oliveira is a Brazilian congressman and vice chairman of the National Trade Confederation. Oliveira is pushing ahead with his proposal to create a commission intended to regulate outsourced work in Brazil. In this Q&A, the politician tells IT Decisions about the initiative and how it would improve the outsourcing environment in Brazil.
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What is the main driver for the creation of the outsourcing commission – who decided there is a need?
I have a services background and I know that for a long time, union and trade associations have voiced the need for an environment within the national congress to discuss issues related to outsourcing.
The services sector is massively important in terms of Brazil’s GDP, but this industry never received special treatment by any government and never had a proper forum to discuss its problems and opportunities.
In order to address these needs, we formed an outsourcing commission and a parliamentary front. The initiatives prompted positive reactions and we had a good uptake of congressmen and senators for the front, so things are quite positive so far.
By ‘special treatment’, I mean that we are looking to bring a sense of representativeness and legitimacy about the sector to the fore. There is a need to understand the sector’s activities and its needs such as government incentives that may be applicable and so on.
Because we never were an organized sector, there has never been unity in our actions and people always sought their individual space. My intention was to create a common platform for discussion, to analyse of what is required by the sector and address any issues.
How will the commission encourage the security of Brazilian workers when legislation already exists for employers?
At present, there are no laws regulating outsourcing in Brazil. We base decisions on loose rules set by the Supreme Labour Court and this has caused several contractual problems between the companies hiring services and the service providers – there is no legal security at all.
There is a lot of goodwill from the industry, but we can no longer work under the current set-up: the outsourcing market in Brazil involves some 8,5 million workers, so we need to immediately bring in laws to steer that relationship between service companies and employees. That will only be achieved with the introduction of specific laws.
There are already several projects around bringing regulation to the sector. We want to build laws that help Brazil and its companies, but also ensure that the weakest link in the services sector – that is, the employees – do not suffer the consequences of a [irregular] relationship with their employers.
My concern is to establish a law that is not paternalistic, but a fair legislation built on legal grounds, so we do not have to talk about or listen to stories about substandard employment.
After all, outsourcing is a service that lends itself to boosting businesses, so employers and contractors should be able to perform their own roles based on that very principle and on full transparency.
Has there been any consultation with industry bodies or large companies on this commission?
The idea is to create a discussion forum, we need as many ideas an input as we can get. The parliamentary front that we are launching in a few days is another relationship channel to support the industry. We have politicians from different parties, trade associations, workers unions, thought leaders, businesspeople and specialists in areas such as regulatory laws all taking part in this initiative.
What are the boundaries of this initiative? Is this covering IT and hi-tech, or any kind of outsourced service?
This is about the services sector as a whole. The parliamentary front is divided into several areas, from facilities management to accountancy services and IT. The IT sector deserves special attention, for many reasons including its ability to help Brazil solve its management problems – which are not just a few.
We need to add the IT sector to the front’s activities and give it a closer look, but all clusters of service activity are important to us. But definitely, the IT sector is very important in terms of growth in Brazil and I can see that relationships with and all the forces that contribute to the industry can generate very positive results.
Outsourcing is just an agreement between two companies – a client and supplier – and this practice has taken place since companies began, so why is there a need now for a commission?
The committee was formed for the purpose of establishing laws for those hiring outsourced services, which does not exist at present. There are contractual rules between buyer and seller, but no law that governs those agreements. The consequence is a series of irregularities concerning the labor force, with people using only the lower price driver when hiring a service and that cannot continue, we need to establish some parameters.
The labor market has evolved greatly in the last few years and we need to bring laws to reflect these changes in their plenitude. Today, companies could in theory outsource anything that is not core to their businesses, but the current environment in Brazil does not allow this. There are also other issues around, for example, companies having to pay suppliers even in the case of “bad contracts”: what we want is to create juridical security for all parties concerned.
Brazil has an international reputation for bureaucracy and red tape. Executives outside Brazil have showed concern that these initiatives will bring even more red tape and hamper foreign investment – what would you say to that?
I would be surprised if that is what [international decision makers] think. The international community wants transparency and this commission was formed for the express purpose of shortening this battle around the creation of laws for the sector, which has been going on for many years.
The Commission will concentrate all [outsourcing] projects and analyze them, discover the issues stakeholders are experiencing and work on finding a consensus, which may turn into formal proposals and become law in a very short space of time.
What we are actually trying to do is to lighten as much of the bureaucracy burden around outsourcing as possible, while speeding up creation of laws that will benefit all parties concerned: workers unions, companies buying and selling services and the government itself.
There are many foreign companies [using outsourced services] in Brazil that complain about the lack of legal mechanisms. If I am a US company looking to outsource here, what is the law I will need to abide to or fall back on? There isn’t any.
Having said that, I think that the work we are doing will be a major step forward for the sector and we’ll be working hard to get this law creation process well underway before the end of this year.
Image by pasukaru76 licensed under Creative Commons.
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