Outstaffing and outsourcing: main differences. The main differences between outstaffing and outsourcing The difference between outsourcing and outstaffing

In recent years, in order to save money, more and more employers are using outsourcing and outstaffing. The English language even has a new verb “to bangalore”, which means “to disband the IT department and transfer affairs to outsourcers from India.” We figured out how these two types of hiring employees differ, what their pros and cons are.

Outsourcing and outstaffing of personnel - what is it?

Both of these concepts mean cooperation with a contractor who is not a representative of your company. However, despite the similarities, the differences between outsourcing and outstaffing are more than significant.

Outsourcing- This is the transfer of work functions to a third-party company or individual who is not directly related to your organization. As is the case with IT workers from India: you enter into a contract for the provision of services with performers (company or individuals), forget about equipping workplaces, taxes and insurance, pay only a salary (often lower than for full-time employees), and get maintenance and reporting.

Outsourcing is in demand in cases where:

• it is necessary to reduce the administrative burden,
• avoid large expenses on taxes and salaries,
• connect additional resources for seasonal work
• find a temporary replacement while the current employee is on vacation.

Outstaffing- type of “rental” of personnel from a third-party company. The mechanism is as follows: you contact an intermediary (mostly recruitment agencies) and make a request - what level of personnel, for what time and why do you need it. The recruitment agency looks for candidates and concludes a service agreement between you. You pay a fixed amount to the staffing agency for each employee and assign the hired employees to perform certain tasks.

Outstaffing is most often used when:

• you need to solve a single large problem, and there is not enough staff for this,
• want to avoid legal problems when hiring foreigners,
• want to save on taxes and wages.

You can call a taxi, pay the money, and not think about anything else. This is very similar to outsourcing.

Outstaffing begins when you rent a car. The company you contacted selects a car in accordance with your requirements - model, engine size, horsepower, receives money and expects you to return the car on time.

Learn the standard sample outstaffing agreement:

• the customer provides everything necessary for the work (fills in gasoline, chooses the road);
• the customer pays money to the company recruiting staff (rather than leaving money in the glove compartment of the car);
• the customer requires only the agreed services to be performed (and does not transport the cabinet to the dacha in a passenger car).

An outstaffing agreement gives more freedom, because the customer does not purchase a solution to a specific problem, but a “tool”, which, if used correctly, can be done 3 times more for the same money. However, with more freedom comes more responsibility: the customer will have to create all working conditions, direct and control employees.

If you need help determining what will be effective for your company, then order an audit. Our business analyst will contact you, monitor the entire business process and suggest the most profitable option.

What is the difference between outsourcing and outstaffing?

We have collected the main features of the two types of hiring in a single table to make it more clear. So, outsourcing and outstaffing - differences:

As we can see, the difference between outsourcing and outstaffing is quite significant, and apparently, the former wins. It is enough that turning to outstaffing in Russia is not only dangerous and a violation of the law, but also not always as effective as in the case of outsourcing.

In which industries is outsourcing useful?

There is a stereotype that outsourcers can only be used in the IT sector. There is some truth in this - this is truly the most “convenient” area for remote work. But that’s not all: among the industries leading in terms of outsourcing are accounting, logistics and law.

In addition, the following work is often outsourced:

• providing food for employees;
• cleaning and inventory;
• maintenance of consumer service centers;
• product repair;
• office printing (set of printed pages);
• call centers.

Another stereotype is related to scale - they say that only large corporations can use outsourcing and outstaffing. In fact, this is a real lifesaver for small businesses. Only if it is more convenient for a large company to use the services of outsourcing companies or rent staff en masse, then a small business can easily rely on individuals. You can’t pay for the services of a full-time accountant, but your accountant friend is on maternity leave? Consider both saved.

According to a study by the independent organization Whitelane Research, 89% of employers who use hired labor are satisfied with outsourcing contracts (2016). If you approach contracts with freelancers wisely, your company will probably also fall into this percentage.

In modern commercial activities, personnel technologies such as outstaffing and outsourcing are widely used. They are often confused with each other, and therefore both terms need clarification.

Explanation of terms

They call the transfer of secondary areas of the company's activities for servicing to another company. Among these areas it is worth mentioning accounting, legal support, human resources management, and technical services.

This is called a personnel management scheme in which one organization (outstaffer) hires specialists, and another company (customer) rents them. Outstaffing is used in all areas of the economy, from production to trade.

The main differences between outsourcing and outstaffing

1. 1. Design and work schedule. The representative of the outsourcing company has a flexible work schedule. He is not assigned a workplace. He is paid only for the work performed (although advances are not excluded). His colleague, hired as an outstaffer, receives a salary every month, but is forced to work, as a rule, on the customer’s premises.
2. 2. Recruitment procedure in outstaffing differs from the hiring procedure in outsourcing. In the first case, hired specialists enter into legal relations with the performing company (outstaffer), but perform the functions of the customer company. In the second case, employees fulfill the terms of the contract concluded between the customer company and the outsourcing performing company.
3. 3. Application area. Outsourcing is used mainly to solve “intellectual” problems. This concept is often associated with accounting and legal services, information technology. Outstaffing is more universal. Representatives of blue-collar professions often work under outstaffing agreements.
4. 4. Interaction diagram. Outsourcing almost always follows the same scenario: the customer company transfers some of its functions to representatives of the outsourcing company.

   Outstaffing involves two schemes of interaction between the parties:

   The customer company officially fires several employees, and the performing company officially employs them. From now on, they are listed as an outstaffer, and continue to work for the customer (under the same conditions and in the same place). The relationship between the customer and the contractor is regulated by the contract for the provision of personnel.

   The performing company selects qualified workers and then provides them for temporary use to the customer. These workers may be part of the outstaffing staff, or they may be recruited externally.

It has been noted that in terms of economic benefits, outsourcing is more effective, since when implementing this model, the outsourcing company controls the quality of work of its employees. An outstaffing company does not have such an opportunity. When outstaffing, responsibility for the quality of work is assigned exclusively to the staff.

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Today, foreign terms are beginning to actively appear in the business environment of Ukraine, and company management tools are developing. This is due to the fact that we are so actively entering the international market, so it is necessary to understand what they mean and what their essence is. Outsourcing and outstaffing are terms that are now in circulation in the market and in business. What is it and what is the difference between these concepts? What is more effective and what is the best way to organize the company’s work?

What is outsourcing?

Today, outsourcing in Ukraine is just beginning to develop, while Western companies have been using such employees for many years. At the same time, the word “Outsource” suddenly became fashionable, so it is used without thinking about the essence.

Outsourcing is this type of cooperation during which the customer company transfers part of its tasks to a remote employee or outsourcer company. Most often, to organize such work, special contracts are used that regulate tasks and functions.

In most cases, the outsourcer is a professional company, which specializes in performing a specific job. But this is also the name for unofficial employees who constantly perform tasks or supervise projects, but are not active employees of the company - freelancers.

The main difference between freelancing and outsourcing is that with the former there are no contracts, but everything is done routinely. At the same time, the employee may have great responsibility, he performs many tasks, supervises other specialists and submits work reports. This is convenient because a freelancer can work from anywhere in the world (if he has a computer), and the head of the company receives results without paying taxes for additional employees.

Outsourcing differs in that the company establishes a special contract that will regulate the work, and also pays a much larger amount than when collaborating directly with a freelancer. But in this case, the manager will have at least some guarantee of completing tasks.

Example:

A company selling fuel for cars needs to create an original company logo. Since the task will be performed only once, it makes no sense to hire a special person. Therefore, they turn to an outsourcing company that provides web design services. A specialist remotely creates a new logo, sends it to the customer and receives payment.

Today, almost any enterprise that provides services is engaged in outsourcing. Most often, remote work is performed by:

• consulting and permanent lawyers;
• company accountant;
• IT professionals;
• call center employees;
• recruitment agents;
• general workers (mechanics, installers)
• cleaning specialists.

The advantage of outsourcing is that the company owner will not need to hire many employees, rent an office and work on solving the problem. In addition, this can ensure smooth operation of the enterprise, even if you do not have an employee with certain skills.

Outstaffing - concept and features

Outstaffing is a fairly new direction in business, so in many countries (including Ukraine) the system is not fully thought out. Basically, the difficulties concern the employees themselves who want to work in outstaffing companies.

Outstaffing is a form of work in which employees of one company on staff provide services to another company. Actually. specialists are “loaned” for a certain time, and all issues are resolved by the company that hired them.

A better example might be popular seasonal worker hiring agencies today. A specialist goes to work for such a company, signs an agreement, but after that he is transferred to permanent work at another company. For example, a person is hired by such a company, after which the manager finds him a job picking berries at another company. Once the season comes to an end, the employee returns to the original company and either performs work in the same company or waits for a job to become available in a similar seasonal company.

Often company employees are simply removed from the staff, but they remain to perform their duties. In this case, the manager pays the agreed salary, and the company to which the specialists were transferred handles all the documentation. But in fact, the staff is employed by another company.

Advantages of outstaffing:

1. Removal from the staff of personnel who are not needed on a permanent basis, but work only periodically.
2. There is no need to select new employees or have a HR department - the company will do everything.
3. Possibility to reduce the number of specialists without dismissing the majority of employees.
4. Savings on employee maintenance - all taxes, sick leave, vacation pay and other expenses are borne by another company.

The difficulty in understanding the difference between outsourcing and outstaffing is that the original names are practically the same in essence. Outsourcing – outsourcing, literally translated as “external resources”. Outstaffing - outstaffing is translated as “out of state.” If you do not delve into the essence of the terms, it may seem that there is no difference between them.

You need to understand that although laws are constantly being adopted that regulate the work of outsourcing and outstaffing, in our country such systems are not yet organized at the appropriate level. When collaborating with an intermediary company or when hiring freelancers, it is necessary to draw up contracts that are checked by lawyers. Only in this case can only benefit be obtained from such forms of cooperation.

In recent years, the Russian language has been actively “enriched” with new words borrowed from foreign cultures. This was especially evident in areas such as management, trade and marketing. Outsourcing and outstaffing literally 7-10 years ago were not familiar even to experienced managers, but now these areas are considered incredibly promising for business. What are the differences between them and which form is suitable for different companies?

Definition

Outsourcing– this is delegation of authority, a form of labor organization in which non-core functions of the company are transferred to third-party performers. Most often this is the management of personnel and legal issues, accounting, less often - the production of secondary and auxiliary products, and the sale of goods.

Outstaffing– a form of employment in which personnel are hired by one organization, but are actually provided “for temporary use” to another company. This is suitable for any sphere of the economy, from production to trade.

Comparison

So, the general principles of the division of labor turned out to be relevant for Russia. Thus, outsourcing is the transfer of non-core functions to a third-party company. Most often these are personnel matters, accounting, and legal services. Outstaffing is the removal of personnel from staff when an employee is employed in one company, but actually works in another. With this organization of work, he has his own workplace, job description and receives a salary.

The outsourcer is not included in the staff under any circumstances. He has a flexible work schedule, no workplace, and payment is made upon delivery. It is worth noting that both schemes in Russia are on the verge of law, since the legislative framework in this area is at the stage of formation.

Conclusions website

1. Form of work. Outsourcing is the provision of services or completion of turnkey work; outstaffing is the temporary provision of personnel for certain tasks.
2. Hiring staff. When outsourcing, a contract is concluded with the contractor; when outstaffing, the personnel are actually employed in another company.
3. Transfer of functions. Outsourcing is characterized by intellectual tasks - accounting, personnel affairs, legal support; outstaffing is characterized by both complex and simple work.
4. Salary. The outsourcer receives remuneration “after the fact”, while outstaffing the staff is “on the payroll”.

The concept of outsourcing can be literally translated as “external source”. In practice, it most often means the transfer of functions of certain internal departments (for example, human resources and accounting departments) to some external contractor.

Production outsourcing refers to the transfer of any production functions or business processes. In this case, the main goal is not saving money, as one might think upon a quick analysis, but freeing up resources for developing new directions or focusing efforts on really important things.

Accounting outsourcing actively began to develop in 1996, when the law “On Accounting” was adopted. It was this regulatory act that made it possible to transfer accounting management to any external organization specializing in this type of service. It is worth noting that today this particular practice is very common (unlike other types).

The main problem in the development of outsourcing in the Russian Federation is the lack of a legislative framework that would regulate the relationship between customers and performers. This concept is not reflected in the civil code. There is no clear legal structure or scientific classification of contracts, so everyone draws up such transactions based only on their own assumptions.

Outstaffing

The term outstaffing, in turn, can be translated as “freelance”. The essence of the mechanism is as follows. Some of the company’s personnel are transferred from the main staff and registered in the executing company. A newly hired employee fulfills the same obligations, but on behalf of a new company, while receiving remuneration.

The difficulty is that employees, while continuing to actually work in the same place and perform the same functions, switch to a contract for paid services on the part of the customer company, as well as to work on a travel list from the performing company. So, the main difference between outstaffing and outsourcing lies in the relationship of the customer to the staff.

In fact, all legal relations end at this stage. The outstaffer does not have any responsibilities other than working with staff. The actual result is not guaranteed in any way, and they are directly connected with employees only on paper. The responsibility, by the way, lies entirely with the staff.