Outstaffing and outsourcing: main differences
To do this, we first define the concepts:
- Outsourcing is the delegation of authority, a form of labor organization in which non-core functions of the company are transferred to third parties. 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 is 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.
Outstaffing is very often confused with outsourcing. Meanwhile, these are completely different services. They have legal, legal and functional differences.
Outstaffing companies provide their personnel to third-party organizations for a period of 9 months or more. The peculiarity of this form of personnel selection is that legally the employees remain registered with the outstaffing company. They are bound by a temporary contract with the customer company, under which the company undertakes to pay the agreed amount after completion of the work.
The main point of outsourcing is to transfer part of the business processes to a third-party company, and this is the main difference between outsourcing and outstaffing. But there are other differences. An employee of an outsourcing company, as a rule, receives a workplace, a salary and a number of job descriptions. In fact, he differs from a full-time employee only in that he is hired for a short period of time. If a specialist is hired by an outsourcing company, then his schedule is usually not standardized; he is only required to complete the assigned tasks.
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Having studied these features, you can get an idea of how outsourcing differs from outstaffing. It should be noted that both forms in Russia are still poorly developed at the legislative level, so there are often scammers among outsourcers.
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Outstaffing - what is it in simple words?
Outstaffing literally translates as “freelance”. Outstaffing refers to the removal of personnel from the staff of an enterprise. At the same time, the jobs and functionality of the employees are preserved, but the employment contract is concluded with another organization (outstaffer).
Such a reorganization will not affect the company’s activities in any way; employees continue to perform their job duties. But all legal aspects related to personnel - hiring, dismissal, payment of labor, payment of benefits and insurance - are decided by the outstaffing company.
The emergence of outstaffing is primarily associated with the regulation of labor relations. In America, technology flourished in the 90s, when the number of labor laws increased sharply. Filling out HR documentation began to take up to 20% of small and medium-sized companies' time, and outstaffing has become a simple way out of this situation. By 2005, 80% of small companies laid off employees.
Outstaffing in Russia
In Russia, the emergence of technology is also largely associated with government control. Large fines, various sanctions, and many regulatory organizations can paralyze the activities of any company. With outstaffing, enterprises are insured against possible errors in labor legislation, and, therefore, save on fines and reduce costs.
Another reason for the withdrawal of employees from the company’s staff is the legal limitation on the number of employees for small and medium-sized companies. These companies enjoy tax breaks and other preferences. Outstaffing allows you to retain employees and not go beyond the limits.
The terms “rent” and “leasing” of personnel are closely related to the concept of outstaffing and have practically no differences with it. They are used to explain the meaning of the service provided using simpler and more understandable analogies. In some cases, personnel leasing, as a separate service, may be assigned additional nuances and details. But in fact, they are not significant, and the terms rent and leasing themselves do not legally imply their use in relation to people.
In practice, the following are taken out of staff:
- frequently checked employees;
- personnel at high risk of injury;
- new employees during the probationary period;
- support service workers.
Foreign companies accept Russian specialists under outstaffing contracts, who cannot be hired due to budget restrictions.
Comparison table with the main differences between outsourcing and outstaffing
The table fully reflects the main differences between outsourcing and outstaffing:
| Characteristic | Outsourcing | Austaffing |
| Target | Transferring the implementation of business processes and enterprise functions to third parties. | Providing the customer with qualified personnel. |
| Place of employment | The outsourcing company works remotely. The customer receives the result of the work. Employees carry out their activities in the outsourcing company. A company that has placed an order to perform a certain type of work is provided with a finished project or a completed service. | The customer’s territory in compliance with the internal charter and labor regulations. The entire work team carries out its professional activities on the territory of the main employer, i.e. customer company. Accordingly, workers must obey the rules established by this organization. |
| Agreement | On the provision of services and on maintaining data confidentiality. | About the provision of personnel. |
| Subject of payment | The quantity of work performed, its quality and volume. The customer does not pay taxes, sick leave, vacations, bonuses. When outsourcing, you pay for a specific result, i.e. he is not interested in the means by which it was achieved. That is why he is of little interest to the employees’ working hours; the main thing is that the service provided is of high quality. | Human resources provided by the outstaffer. The customer does not pay taxes, sick leave, vacations, bonuses. The entire process of carrying out the work takes place on the customer’s premises, so he can control its progress, execution, as well as make claims and demands. Accordingly, the entire work process is paid for. |
| Risks |
|
|
| Advantages |
|
|
| Cooperation scheme | When outsourcing, it is the service provided that is paid for, so the powers of the customer do not extend to the involved employees. | The contract clearly states that the customer is provided with a certain number of workers. The executor of the contract can be a different organization, including a recruitment agency. |
| Legislative regulation | Article 779 clause 1 of the Civil Code – the possibility of concluding a contract for the provision of services. Letter of the Federal Tax Service No. 20-12/066875 - the agreement is a contract for the provision of services. | Article 56 clause 1 of the Labor Code (2021 edition) - prohibition of agency labor. Art. 18.1 clause 6 of Federal Law No. 1032-1 – allowing the transfer of employees outside the state if the recruiter meets certain criteria. |
Also, the difference between these two processes is the specificity of the work performed. Outsourcing, as a rule, is aimed at performing intellectual work, while outstaffing involves performing absolutely any work.
What is outsourcing?
Outsourcing was popular several centuries ago for a reason. It is based on the idea of separating individual business processes and delegating some tasks to third-party companies. The division of labor is very effective, and not only for large organizations. Conducted studies prove that when an employee works in multitasking mode, his ability to work decreases, and the quality of task performance suffers. Transferring some of the responsibilities to a professional has a positive effect on the speed of work and the result. More than 84% of company owners remain satisfied with the outsourcing services provided. Among other things, the concept of outsourcing helps improve the quality of the product. Thus, attracting personnel “from outside” has an impact on three sides:
- Time of production or provision of service.
- Cost of goods.
- Quality.
There is a certain classification of outsourcing companies by industry and production. As a rule, one company specializes in only one area. What kind of industry recruitment companies can you find?
- Construction.
- IT.
- Accounting.
- Financial.
- Legal.
These are the most popular destinations in the modern world. It can be quite difficult to attract qualified personnel on your own, so companies often use the help of outsourcing companies. The benefits of this practice are obvious: for example, in America, where hiring has been flourishing for decades, labor efficiency is several times higher than in Russia.
Order of conduct
The outsourcing procedure may differ depending on the field of activity of the enterprise and various nuances. In standard format, this procedure looks like this:
- The entire scope of work is assessed. The employee’s rates and the main terms of the contract are agreed upon.
- A special agreement is formed. After which it is signed by the customers and performers of the work.
- The outsourcing employee implements all the tasks assigned to him, according to the schedule attached to the contract.
- Reporting is generated in a pre-established form upon completion of all work.
- Payment is made in the prescribed manner. If there are no disagreements, a work completion certificate is drawn up.
Outstaffing is carried out as follows:
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- The organization providing the personnel to study the field of activity. Finds out the tasks that need to be solved at the expense of hired workers.
- Based on the data received, a contract is formed, which reflects the exact cost of the service.
- After signing the contract, workers begin to perform their work.
It must be remembered that the outstaffing process itself does not necessarily imply the final action - like a contract agreement for outsourcing.
Outstaffing: the essence of the service
Outstaffing is the process of transferring HR management responsibilities to a professional contractor. The service is used to relieve the company of the need to document and financially support staff. Instead, he is registered with a specialized agency, where he is on staff and receives a salary. The budget for the formation of the payroll is allocated by the customer. The contractor only distributes it, collecting his remuneration. This tool allows you to officially reduce the organization’s staff and entrust HR administration to a partner.
Main differences in the agreement
The difference between outsourcing and outstaffing lies not only in the forms of attracting personnel, but also in the contract. The application for outsourcing services displays the following parameters:
- Nature and scope of work.
- Payment.
- Number of external employees.
- The result of their activities.
- Maintaining confidentiality.
When concluding an agreement for outstaffing services, the employer carefully describes:
- Number of recruited employees.
- Remuneration.
- Additional legal agreements with temporary staff.
Thus, the main difference between outsourcing and outstaffing agreements is that with outsourcing services a full-fledged agreement is concluded, and during outstaffing only an agreement on the provision of personnel is valid. But even for this, the recruiter must meet certain criteria provided for in Article 56 of the Labor Code of the Russian Federation. The difference between outsourcing and outstaffing is clearly visible at the legal level, so it is incorrect to compare these concepts with each other.
Outstaffing
Management development dictates new criteria for optimizing business processes. One of these technologies is outstaffing, which allows you to reduce production costs. Many people confuse it with outsourcing. But there are differences between outsourcing and outstaffing, despite the similar sound of the terms. What is outstaffing? This is a kind of “loan” of personnel from another organization that has the necessary personnel. This is indicated by the origin of the word: out - “outside” and English. staff - “staff”. The employing company enters into an agreement not with another enterprise, but with employees who are placed at its temporary disposal. At the same time, they enter into a temporary agreement, which specifies a list of works that they undertake to perform. That is, formally, employees are on the account of one company, but perform the tasks of another.
Outstaffing is usually a temporary measure that is required under different circumstances:
- During maternity leave or sick leave of a full-time employee.
- To complete short-term projects.
- To perform work under hazardous working conditions.
The concept of outsourcing and outstaffing helps you choose the right way to attract personnel. Outstaffing gives employers unlimited freedom of action. They are not required to deal with tax deductions and paperwork - this is usually taken care of by the company that provides the personnel. Also, the employer can refuse the services of such an employee at any time, without explaining the reasons for dismissal and without paying a penalty. Therefore, in 2016, amendment 53.1 was made to the Labor Code, which limits outstaffing of personnel. Now temporary staff must work for the company for at least 9 months.
List of sources:
- https://buhonline24.ru/autstaffing/otlichija-autsorsinga-ot-autstaffinga.html
- https://www.kakprosto.ru/kak-899385-chem-otlichaetsya-autstaffing-ot-autsorsinga-
- https://delatdelo.com/spravochnik/vidy-dogovorov/autsorsing-i-autstaffing.html#razdel4
- https://businessman.ru/chem-otlichaetsya-autsorsing-ot-autstaffinga-i-chem-oni-pohoji.html
- https://bizakon.ru/kadry/priem-na-rabotu/otlichiya-autstaffinga-i-autsoringa.html
- https://thedifference.ru/chem-otlichaetsya-autsorsing-ot-autstaffinga/
- https://kompanion.online/biznes-termini/autstaffing-i-autsorsing/
- https://telegra.ph/CHem-otlichaetsya-autsorsing-ot-autstaffinga-i-chem-oni-pohozhi-05-04
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