There is a type of outstaffing in which employees of another company are, as it were, rented by the customer enterprise. That is, the employees have never been on the customer's staff and are not transferred there, although they actually perform work for the tenant organization.
At the end of the contract, the staff returns to their original company, where they are officially employed. In a leasing agreement, there is the possibility of the tenant "buying out" the employees upon completion of the agreement.
Now let's see in which cases it is more profitable to use one or another type of contract:
If there is a need to perform one-off or temporary work, when it is necessary to attract additional labor resources or replace those who are absent, an outstaffing agreement will be of great help .
The lease applies to specialized employees.
Personnel outsourcing is beneficial when a company is forced to solve some non-specific tasks that it is not prepared to perform and cannot accomplish using its own employees.
All three types of contracts related to the use of other people's resources are aimed at reducing personnel costs.
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10 Interesting Facts About Personnel Outsourcing
The name outsourcing was first given to an agreement between Kodak and IBM by Howard Anderson, the founder of the Yankee Group, back in 1990.
The practice of personnel outsourcing is very common in Europe, Israel, and the USA – there, representatives of small and medium-sized businesses (80-95%) use this type of relationship.
Companies often outsource their recruitment functions. The first company to use this method was the American company First American. The contract was adjusted and improved, but over 5 years it saved $12.3 million.
The history of personnel outsourcing includes the names of major politicians. For example, the founder of the accounting outsourcing ADP was the future Senator of the State of New Jersey Frank Lautenberg. And the creator of the company EDS – one of the first outsourcers in the field of IT processes – was Ross Perot, who at one time tried to become the President of the United States.
The benefits of personnel outsourcing can be judged by the numbers. In the 21st century, the costs of this type of service amounted to more than a trillion dollars.
In 2002, Procter & Gamble was looking for an organization to provide IT outsourcing services. If you put the documents received as an offer for the relevant contract together, they would be 180 cm high and weigh 70 kilograms. After the winner was chosen, which was Hewlett-Packard, a contract was drawn up for as much as 10 years worth 3 billion dollars. It consisted of 10 thousand pages.
There is a known case when an employee of a large American company transferred part of his work to workers in China for a purely symbolic fee (20% of his salary). When his ingenuity ceased to be a secret for the management, the enterprising programmer was fired.
In 2004, the Vatican clergy was awarded the Ig Nobel Prize. Due to a shortage of ministers, some of the prayers for health were transferred to Indian priests. This process was established, and the requests were sent through religious organizations. The Indian assistants did not lose out, as they received five times more for their work than for similar activities in their homeland.
In the US and UK, the government even trusts tax collection to outsourcers.
The leading countries in the personnel outsourcing market are India, Indonesia, Estonia, Singapore, China, Bulgaria, the Philippines, Thailand, Lithuania and Malaysia. Russia occupies only 24th place in the rating.