The FINANCIAL — Demand for service outsourcing has been noticeably increasing on the Georgian market.
Despite the fact that the job of external professionals does not fit into the category of ‘job for life’, it appears that both clients and experts benefit from the outsourcing of certain jobs.
These are several reasons for this: service outsourcing means higher quality and a wider range of service. Some companies prefer outsourcing a service instead of training and adding personnel to their staff, which is associated with high costs. For instance, hiring a cleaning company instead of an office cleaner, a legal service company instead of a lawyer, computer service company instead of an IT technician. In the case of outsourcing, the client gets not just one person but a whole group of professionals instead.
It is mainly associated with fewer expenses – an employee needs a monthly salary, space in the office, and other benefits which tend to cost more than is required by just outsourcing to a service provider.
“Having a good lawyer costs more than 800 GEL for a company. However if the company decides to delegate the responsibility to outside the organization, there are advantages for both sides: on one hand the organization is saving money, on average up to 300 GEL, and on the other hand one professional in an outsourcing company serves 3 other companies on average, therefore earning more than the average fixed salary,” explained Archil Kublashvili, Director of INGB.
INGB is a business consultancy, management advisory and investment management company which offers outsourcing & business consultancy services to customers. Their methodology allows customers to create easily manageable businesses, with significant focus on process optimization and cost efficiency.
One of the functions of INGB outsourced from the clients is juridical consulting service which includes preparing and putting together contracts, taking part in different negotiations, supporting the legalization of property, legal expertise of investment projects, legal and tax risk analysis, preparation of a main civil-legal documentation project: contracts, letters, statements, orders, regulations, letter of attorney, etc.
“60% of overall demand is for accounting service, 30% for juridical service and the remaining 10% for business consulting services. As for the revenue, 20% comes from accounting, 15% from juridical, while 65% is from other business consultancy services,” explained Archil Kublashvili, Director of INGB.
Professional appraisers
Georgian businesses and customers are becoming more familiar with the services of valuation appraisers. A professional appraiser’s report is reliable as it is one of the most trustworthy means of real estate valuation.
Demand for professional appraisers is increasing; from both private and governmental organizations. The majority of demand comes from the banks: appraisers are a key point when issuing mortgage loans.
As well as those entities, any individual/investor can use a valuation service. For example, if one wants to buy real estate, the first thing to do is investigate the real market value of the property. Valuation is becoming important in the insurance sector, as this is highly important while insuring property. Appraisers might be hired by real estate agencies as well.
In the past, real estate valuation was conducted by auditors. In developed countries, International Standard on Auditing (ISA) forbids real estate valuation. Instead they should cooperate with experts or appraisers in this field.
This tendency has recently become popular, which has caused a demand for professional appraisers on the market. So in 2008, the Professional Certification Body was established and accredited according to ISO 17024:2006 – General Requirements to the Bodies Operating Certification of Persons.
Training is offered by the Association for the Protection of Landowners Rights (APLR), which is not obligatory but voluntary. The Association for the Protection of Landowners Rights is a member of IVST (International Valuation Standard Council) which confirms the high standard of the service offered.
The Professional Certification Body is involved in the certification process itself. It does not take part in giving applicants training in order to avoid conflict of interest according to ISO standard requirements.
“Our role in valuation is to offer high quality service to customers that corresponds with international standards,” said Eka Sabadze, head of the Professional Certification Body.
“As the sphere of valuation is a reasonably new tendency in our country, higher or professional education in this subject is not available. There are some lectures being given in the field of valuation in different specializations, however most of the experienced experts offering this service in our country gained their degrees abroad,” Sabadze explained.
“Recently vacancies have been announced for appraisers where economic or technical education is required in addition. It is desirable but we do not absolutely require it. Everyone should have the right and opportunity to try their strengths out at any time. Even philologists can apply if they have certain skills, such as mathematical or engineering ones. However, it would be better if the applicant had some kind of higher or professional education, or relevant work experience,” Sabadze added.
Already more than 50 appraisers are certified. The exam is quite strict. It consists of 2 stages. The first stage is a theoretical test. The applicant passes to the next stage if they have more than 70% correct answers. The next step is practical work. Real estate valuation has to be done by future appraisers with a minimum 2 methods out of three. The result is checked by 3 different independent experts who make the final decision on whether or not to issue a certificate.
In order to enrol for the course, applicants must fill out a form. The course is quite intensive. It includes up to 120 hours distributed over two and a half months. Lectures are held 3 times a week.
The certificate expires after two years however. When this time period is over, the appraiser must get certified again, therefore the qualification is always up-to-date.
Professional appraisers are compensated on hourly bases like auditors.
One more service to have recently arrived on the market is bad debt payback service outsourcing. Clients of such services are mainly legal entities and banks which have problems with overstated debtors. In such cases they hire a team of professionals to do the work on their behalf.
According to the statistics, the number of debtors has decreased but regardless of that, demand for this service exists on the market.
Usually the goal is attained through negotiations, without having to refer to court. “The procedure, in general, is very specific. Each case needs an individual approach. First we try to find a solution to the problem via negotiations. If an outcome is not reached, we appeal to arbitration or the court. After the verdict, the case is classified as complete,” said Giorgi Sadzaglishvili, Director of JSC Financial Assets Management Agency.
However a 100 percent guarantee cannot be achieved in all cases. “Approximately 70% of the matters can be ranked as successful following our involvement. In some cases we give our clients a 100% guarantee while in others it is impossible. It completely depends on the specific case in question,” Sadzaglishvili added.
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