Outsourcing

Although not usually conceived in such a manner, for all practical and legal purposes, Outsourcing (or Externalization) is very similar in nature, setup, functioning and finalities as temporary staffing. Outsourcing is often believed to be no different from temporary work, meaning in very broad terms, exporting the payroll administration and managerial functions to a specialist third-party organization. However, this oversimplification limits the scope and conceptual understanding of outsourcing, concealing its enormous potential as a vehicle to achieve goals in an effective and affordable manner.

Outsourcing (or Externalization)

Just like temporary staffing, outsourcing consists of a triangular relationship between three distinct parties and is usually applied when work organizations, for several reasons, prefer to outsource (or externalize) the management of an entire operational unit or group of activities instead of simply using temporary workers to respond to their manpower needs. In short, outsourcing is the business practice of hiring a party outside a company to perform services or create goods that were traditionally performed in-house by the company’s own employees and staff. Three parties A – Employment agency worker B – Employment agency (in the role of Employer/Contractor) C – Client (Beneficiary of the service provided)
The employment agency worker (A) is employed by the temporary work agency (B) – the contractor, who is then responsible for accomplishing objectives that were agreed to with Client (C) – beneficiary of the service provided. In this case, the legal employer (or employer of record) (B) is NOT ONLY responsible for paying salaries and all other employment related costs to the employment agency worker (A) BUT ALSO for directing, controlling, supervising his own workers in order to achieve whatever objectives were agreed to the with the Client (C) – the Beneficiary of the service being provided.

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Benefits / Advantages of Outsourcing (or Externalization)

- Work organizations can benefit from manpower located abroad without having to hire them, deal with any red tape, take on any managerial role or take responsibility for performance or business outcomes

- Work organizations can benefit from manpower located abroad that will only consider accepting a job in another country if the Social Security and other employment related benefits and contributions are directed to their home country accounts

- Employers benefit from the possibility of holding the temporary work agency to whom an activity as been outsourced accountable for results.

- Possibility to define a clear budget and establish limits to expenses.

- No hassles or responsibilities, not only for with payments and other human resource administrative procedures, but also with management and supervision

- A solution for situations where manpower needs are more permanent in nature or for when it is not legal or feasible to contract staff on a temporary basis.

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