Outsourced Business Services Sector Seeks Urgent Financial Assistance

Hit hard by COVID-19 pandemic, the outsourced business services sector—private security, facility management, hygiene and sanitation management, manpower supply and cash logistics business—has sought financial assistance in the form of GST cut and PF contribution support (among others) from the finance minister Nirmala Sitharaman.

Representing this sector, which comprises of one crore-strong workforce, the Federation of Indian Chambers of Commerce and Industry (FICCI) says this sector wants financial assistance that may be provided in the form of a reduction in Goods and Services Tax (GST), extending working capital credit at a subprime lending rate (PLR) or provident fund (PF) contribution support. As per industry estimates, there could be a 25 per cent to 50 per cent decline in revenues in coming months and these circumstances will compel job cuts. Hence, to avoid any layoff, FICCI has urged for subsidizing 35 per cent of the wages for at least 50 per cent workforce for the next three months and six months for 25 per cent workforce.

The outsourced business services sector, with about Rs 1 lakh crore per annum business, is among the top three GST contributors that paid around Rs 25,000 crore last year. Besides, the sector claims the lowest input credit (ITC) amongst all other major verticals. The sector, comprising of 10,000 plus MSMEs, has requested subsidizing 35 per cent of the wages for at least 50 per cent workforce for the next three months, and six months for 25 per cent workforce. This will be critical to supporting members in maintaining current employment levels, FICCI Committee on Private Security Industry chairman Rituraj Sinha said in the letter addressed to the Finance Minister.

"A sector with such low margins and high working capital intensity is too frail to support wages of 1 crore workers if our customers reduce service volume, cut service charges and delay payments". Besides, the industry also requested the Finance Minister to consider providing GST relief as the industry expect a 3-4 months collection delay.

"We do not have resources to ensure GST compliance as per norms under prevailing circumstances," it said, adding given the wafer-thin margins of the sector, working capital credit should be extended at sub-Prime Lending Rate. "Banks may be instructed to not adversely impact our revenues and ensure they maintain Q4 FY20 service revenues for period March to September 2020. This is especially critical as our members are helping extend banking services across Branches, ATMs, Cash movement etc," the industry body said. It further said similar to the Rs 50 lakh provided to government employees, suitable health insurance cover should be extended to contracted private security guards, hospital cleaning, support services staff, fumigation workers, cash van/ATM crews that continue to operate as essential service workers during the lockdown.

"We have incurred significant costs in providing our workforce with protective equipment such as gloves, masks and also installation of sanitisers across facilities and vehicles. We are also incurring expenses in providing safe transportation and housing facilities. We request such expenses to be allowed as eligible spends under our CSR funds," it said. The body also requested to extend existing PF assistance scheme for employers with less than 100 employees to all companies or employers in the sector and added that the government should support by contributing employer and employees share of PF contribution for next six months till situation eases.