Outstaffing, leasing and outsourcing of personnel. Hiring permanent and temporary staff
OUTSOURCING AND OUTSTAFFING - WHAT IS THE DIFFERENCE?
Outsourcing and outstaffingare two foreign terms that have been actively introduced into the business environment of Armenia for several years. Despite the fact that some 7-10 years ago even experienced managers were not familiar with this term, now many companies are successfully using such “relationships” in practice.
WHAT IS THE ADVANTAGE OF SUCH “RELATIONSHIPS” AND WHAT IS THE DIFFERENCE BETWEEN OUTSOURCING AND OUTSTAFFING?
In order to understand the difference between these concepts, and even more so to evaluate the benefits, you must first accurately determine the meanings of the terms.
So OUTSOURCING (from English "outsourcing") - if translated literally means "using someone else's resource". In other words, outsourcing is the transfer by one company, on the basis of an agreement, of certain business processes or non-core functions to be serviced by another company (outsourcer), which specializes in the relevant area. Such actions allow you to get rid of non-core functions for the company and fully concentrate on the core business of the enterprise. At the same time, the employees of the outsourcer company remain at their workplaces (perform tasks remotely) and are on the staff of the outsourcer company.
BENEFITS:
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ensuring the continuity of the business (since the business process is outsourced not to a specific person, but to a company that is responsible for compliance with contractual obligations to the client);
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the possibility of full concentration on the main activity of the company;
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minimization of own risks as a result of tasks performed by professionals;
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the level of work performed by a group of specialists is higher than that offered by one full-time employee;
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significant savings on: the payroll and its taxation, the provision and payment of sick leave and vacations, the arrangement of the workplace, advanced training of specialists.
OUTSTAFFING –(from English “outstaffing”) - literally means “freelance” - this is the transfer of part of the employees from the staff of one company (outstaffer) to the staff of another organization. In this case, employees are employed in one company (outstaffer), but actually work in another, where they have their own jobs and job descriptions.
BENEFITS:
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there is no need to engage in the selection of qualified personnel to perform certain work (now this is the task of the outstaffing company);
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the ability to reduce staff without losing valuable specialists;
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savings on personnel maintenance costs (tax and social burden, vacation pay, sick leave, etc.);
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there is no need to open a branch or representative office in another region to perform one-time work, and recruit staff there.
It can be concluded that the concepts of outsourcing and outstaffing are very similar to each other, and that is why they are often confused, but there is still a fine line.
MAIN DIFFERENCES BETWEEN OUTSOURCING AND OUTSTAFFING:
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Form of cooperation.
Outsourcing is the execution of works or the provision of turnkey services, the maintenance of a specific business process. Outsourcing most often transfers such functions as bookkeeping, translation services, legal support for the economic activities of the enterprise, advertising services, security services, programmer services, transport services, etc.
Outstaffing - provision of employees by one company to perform the work of another company for a certain period, until a specific task is completed. Outstaffing does not involve the transfer of functions, but the transfer of specific specialists. Often found in trade, manufacturing, construction, food industry, fashion industry, sports, etc.
2. Work organization.
Specialists working under an outsourcing contract have a flexible schedule and perform work on their territory. When performing work under an outstaffing contract, employees are subject to the customer's labor schedule, have their own workplace on the customer's territory and job description.
3. Salary.
Under an outsourcing agreement, remuneration is received after the fact, and under an outstaffing agreement, employees receive a monthly salary.
4. Agreement.
The legislation of Armenia does not give a clear definition of either outsourcing or outstaffing, nor does it contain norms that would regulate these relations.
Most often, outsourcing is a long-term relationship between companies, secured by a contract for the provision of services for a period of 1 year.
When outstaffing, a contract is concluded for the period necessary to perform certain work.
5. Interaction with the customer.
Cooperation under an outsourcing agreement is almost always carried out according to the same principle: the customer transfers a certain business process to the outsourcing company.
And with outstaffing, there are two options for interacting with the customer:
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The company-outstafer provides its qualified employees for temporary use to the customer company.
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The customer company dismisses its employees, and the outstaffing company enrolls them in its staff. Thus, they are registered in the outstaffing company, but continue to work in the customer company and perform their usual duties, comply with the internal regulations of the enterprise.