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Outsourcing to avoid extra expenses

Discussion in 'Employees and Human Resources' started by Corazon, May 12, 2016.

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  1. Corazon

    Corazon Member

    In the Philippines, outsourcing means your business wants to hire employees that cannot be permanent. Take note that permanent employees have benefits particularly the bonuses. An outsource is the responsibility of the agency or outsourcing company and the host business is freed from the responsibility of added expenses. This is legally done and the standard not only for small but also big businesses. Most of the outsourced workers are security guards and maintenance people (janitorial).
  2. T J Tutor

    T J Tutor Member

    I use a great deal of outsourcing and have for over forty years. Outsourcing has been around a very long time. I've done it in the restaurant and nightclub business, the auto industry, IT supplies manufacturing and distribution, angel investing, location sourcing, software development, real estate, and a host of other industries.

    Outsourcing is sometimes long term and sometimes short term. It isn't generally chosen as a means of avoiding benefits as much as not having to add to staff, also as a matter of convenience, and often the independent contractors don't want to be an employee.
  3. briannagodess

    briannagodess Member

    I remember in my university, we have the cleaning personnel and security guards. They were from an agency called "Jamas," it says so in the uniforms of the cleaning staff. Anyway, we usually talk with them and bond with them, the cleaning staff. Most of the guards are snobbish, though there were a few that were nice.

    Basically, it works like you said, they were outsourced and the company or agency they came from found them. But after six months, they would be replaced by new workers. We were always sad whenever our favourite workers are gone since we have bonded with them and has developed friendships as well. But yes, that's the thing with outsourced workers, they cannot stay in a place for more than six months.

    I don't know with other countries... But from where I am, outsourcing these contractual workers are more beneficial for the companies and agencies. They don't have to pay for their benefits. There is no 13th month pay as well. They can just get a newer batch of employees after six months.

    But as @TJ Tutor said, that isn't always the case. Of course, some employees do choose to be freelancers or contractors and that's great as well. I think the benefits for said employees are that they don't really need to pay taxes, at least here in my country, for freelancers. Then, they can work on different part-time jobs and potentially earn more money in a day.
  4. Josephine Stuart

    Josephine Stuart MVP Member

    I'd be careful with the term "evade" -- it has a bit of a negative connotation. Other than that, I think outsourcing can be incredibly beneficial for the company in question, both cost-wise and in regard to company culture, etc.

    However, businesses that outsource many of their services to other countries (or even states) need to understand that they may earn a negative reputation because of it. At least in America, we value businesses who create jobs for their communities. When we see businesses outsource their services to areas outside of their own communities, we start to think they're far more interest in money than they are with improving the world around them.
    djbaxter likes this.
  5. djbaxter

    djbaxter Administrator Moderator Member

    @Josephine Stuart That is also true here in Canada. The "shop local" and "support small business" movements are strong and getting stronger.

    But of course outsourcing doesn't necessarily mean outside your country or even outside your city or town. Our federal and provincial governments are well known for outsourcing to independent contractors within the community, for a number of political and financial reasons.
  6. Josephine Stuart

    Josephine Stuart MVP Member

    @djbaxter And I love that those movements are growing! I think they really help pull communities together.

    Like you mentioned, though, not all acts of outsourcing take something away from the local economy. Many businesses simply outsource tasks to independent contractors in the same city or state, and IMO, this is just as good.
    djbaxter likes this.
  7. Divine Tumenta

    Divine Tumenta Member

    Outsourcing can be the key to scale your business. Most small businesses are not well versed on how they can save funds in order to grow, so they end up hiring costly employees that set them back ten fold. The key here is to focus on what you know and outsource what you don't.

    This will help you stay productive and provide a window for your business to explore and grow.

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