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Outsourcing on agenda at AIT

In the increasingly competitive global marketplace for education, the Asian Institute of Technology (AIT) is determined to ensure its long term sustainability by reducing its headcount and overhead to below current levels. Key to this will be implementing a cost and salary structure that reflects market rates in Thailand, senior administration officials say. 

Three years after AIT experienced serious financial difficulties that threatened its very viability, the central administration, under the direction of AIT Executive Committee and the Board, is now considering contracting external resources as a way to relieve skills shortages and boost productivity.

Over the past year, AIT management has been studying the possibility of outsourcing its non-core activities. Once finalized, the AIT Board will consider an outside proposal from a professional technical facilities management firm to manage the campus infrastructure.

AIT President Prof. Said Irandoust says such actions are necessary if the Institute is to control its costs, maximize efficiency, and flexibly plan for strategic investments. The idea is to pare down staff to encompass core areas only, allowing selected external contractors to assume responsibility for certain administrative and maintenance operations on campus.

President Irandoust firmly believes that some degree of outsourcing to the private sector is in the very best interests of AIT. “It will enable AIT to concentrate on its core work, which is education, research and outreach activities,” he explained, adding that areas identified for outsourcing will be those in which the Institute lacks skill and expertise. The president stressed that AIT is actually late in considering such a move, saying many other similar organizations in Thailand and abroad have already outsourced non-key operations, and have benefitted in the process.

Prominent members of the alumni agree. One notable alumnus, who is now the CEO of a major Thai corporation, said outsourcing is standard practice in Thailand. The CEO said it’s a very good way for any organization to control ever increasing payroll costs, especially when existing salaries far exceed market level pay scales.  

A recent survey by Thai consulting firm Prasena found that outsourcing is increasing in popularity across all sectors in Thailand. The study shows that employers more than ever before are using temporary and seasonal staff, as well as freelance consultants and outside experts.    

In fact, outsourcing is nothing new at AIT. It has been implemented in the past for some functions, such as janitorial cleaning services. All on campus security guard personnel were also on the Institute’s payroll at one time ─ but no longer.

A former director of the AIT Physical Plant, Mr. Noppadon Muangkroot, implemented a systematic plan of re-structuring and outsourcing during his entire twenty-six year tenure as unit head from 1975 until 2001. The sixty seven-year-old retiree explained how he reduced his staff in half while at the same time doubling worker productivity. “When I arrived at AIT, my unit had far too many workers. I started with a staff of 160 and eventually ended up with 80 employees. When I retired, the reduced team maintained an infrastructure set-up that was twice the size as when I began.” Such a change was accomplished through staff attrition, outsourcing, and investment in staff training and professional development, he explained.    

Noppadon believes outsourcing is the best way to eliminate excessive labour costs and, if done correctly, will benefit AIT in long run. “Apart from injecting more professional modes of operation, it lets a manager avoid problems and costs associated with excessive and aging staff, including lower levels of productivity,” he said.  

Still, even though he supports the use of outsourcing as a strategic management tool, Noppadon believes some existing staff should be retained to oversee and monitor the work of an externally contracted firm, and to relay all developments to senior managers.

Transparency and good communication between management and staff is the key to successfully implementing such a policy, Noppadon believes. “It is important that affected workers receive all the protection and entitlements accorded to them under the labour law of Thailand,” he said.

On this point, President Irandoust readily agrees, and affirms that AIT employees’ rights will be protected to the utmost. “I want to be very clear that it is my highest priority to defend the interests of the Institute and AIT staff during this process, and I have assured the representatives whom I met that I will not accept any agreement that does not reasonable safeguard the interests of our staff,” President Irandoust stated in a recent open letter circulated to all staff, students and faculty of AIT.

Steadfast in his view that many talented and capable staff members will actually gain new opportunities for career development under the new set-up, the president added: “I have repeatedly stated that all interested AIT staff will be guaranteed a job in the outsourcing company, although it would be under market rates.”