Every process in the business needs a highly qualified staff. However, not always companies can afford to maintain a large staff. That is why the services of attracting non-staff personnel and the transfer of business processes to services by companies by contractors are so in demand in Ukraine. If you want to read more about how to Outsource Web Development in 2020 you could read here. These services are outstaffing and outsourcing.
Let’s see what outsourcing and outstaffing are
Outstaffing is a service of personnel removal outside the official staff of the organization. At the same time, the official employer is changing for employees, it becomes an outstaffing agency. In addition, nothing changes for workers. They perform the same work as before, the tasks given to them by the previous employer. For the employer, this service can reduce costs by up to 30%, but more on that later.
Outsourcing is the transfer of responsibilities for coordinating personnel and the business process. Outsourcing agencies can select the necessary staff, but do not provide for tax benefits when applying for employees.
What are the differences between outsourcing and outstaffing?
- Form of labor relations. When outsourcing, the company the provider selects personnel for the customer according to the specified criteria and sends him to work in your company. With outstaffing, the staff is registered in the jur. face of the provider company.
- Hiring staff. With outstaffing, the staff is officially registered in the contractor’s company and works in your company as “on a business trip”. Making outsourcing with the contractor conclude a subcontracting condition.
- Personnel functions. Outsourcing is more characterized by intellectual work, while outsourcing – all types of work.
- Salary. Outstaffing staff receive regular salaries, just like with regular hiring. When outsourcing, depending on the contract, employees can receive monthly wages or piecework.
The main features of what the difference between outsourcing and outstaffing are as follows. Staffing is a way of transferring employer responsibilities to a contractor. You get rid of the need to conduct personnel records management, to carry out the calculation and payment of wages and other related duties.
Outsourcing service is a complete transfer of certain tasks of a company for servicing. When outsourcing, the contractor coordinates the work of employees, monitors the progress of its implementation, and you get a ready-made result from the process.
Outstaffing and outsourcing services
External HR management aims to optimize company expenses. Outstaffing services are relevant for individuals (IPs) and legal entities (LLCs and others). They allow you to distribute fixed staff costs into variable items, optimize taxation, simplify the process of personnel management at the enterprise, and prevent regular visits by representatives of migration, social and other public services.
With the help of this management technology, it is possible not only to reduce the costs of the company, but also to increase its income. This is achieved due to the concentration of exempt cash, time and labor resources in the conduct of the main business activity, which significantly increases its productivity.
Outsourcing services are often used by legal entities when it is necessary to quickly find personnel or ensure the fulfillment of a specific business task, and its own personnel department does not cope with the task. This service can be considered as a temporary solution to certain tasks, usually the minimum term for signing an outsourcing services contract is 3 months, or for long-term cooperation.
When to switch to outstaffing?
Absolutely not all companies are suitable for this or that type of HR optimization, therefore, it is necessary to clearly understand in what cases which service will be beneficial to you.
The relevance of the use of services of external management of labor resources increases in the following cases:
- Personnel costs account for the lion’s share of the total costs of the enterprise.
- Excessive growth in official staff becomes an obstacle to using the most profitable tax system.
- To conduct HR management, you have to maintain an impressive HR department and accounting.
- Representatives of the HMS and other public service inspectors regularly check the legality of personnel registration at the company’s office.
If you need to maintain control over proven labor resources, but get rid of the need for their documentary and financial content, outstaffing is the best option. This service allows you to shift the responsibilities of the official employer of employees to a personnel contractor. You continue to manage personnel in the usual way, paying for the services of an outstaffer in accordance with the contract.
Sharing outstaffing and outsourcing between different contractors
For the purposes of personnel optimization, a combination of outstaffing and outsourcing services is often an effective solution. The former are used to retain the most valuable employees in the actual staff. The second ones allow you to get rid of most of the ordinary workers, replacing them with external ones.
Such services can be applied by establishing partnerships with both one and several contractors (for example, if separate business processes are transferred to external management). Outsourcing service is poorly developed on the Ukrainian market, most companies are ready to find and provide personnel to your requirements, but they will not be responsible for personnel management, design, calculation, etc. staff provided.
Therefore, many customers prefer to combine recruitment services in personnel services or on their own, and transfer personnel management to outstaffing in order to save personnel costs.