Outstaffing and outsourcing - differences and features. The difference between various concepts: personnel leasing, personnel rental, personnel outsourcing, personnel outsourcing and outstaffing.

History of outsourcing

In the nineteenth century, the United Kingdom and several other European countries began to purchase services to hire security officers, domestic staff, accountants and stenographers.

In the 20th century, outsourcing began to develop rapidly. One of the key figures can be called General Motors, which received a powerful impetus for development thanks to the attracted qualified personnel.

In the 1950s, the first highly specialized companies in the United States began to emerge in the United States to recruit and hire personnel in a specific field. For example, an IT outsourcing company or a company that hires accountants for small industries. Such services have become very popular because they help save money without hiring full-time employees. Outsourcing came to Russia quite late: already in 1990. The first agencies had limited capabilities, but gradually employers realized the benefits of hiring employees from outside. Currently, many business structures and government organizations use outsourcing technology.

Outsourcing - what is it?

Even a small enterprise involves a huge number of business processes. Many of them are secondary and only cause headaches. By wasting your time on trifles, you can miss the main thing. When outsourcing, a company transfers non-core work to third parties.

According to the Pareto rule, 20% of efforts give 80% of results. The numbers are quite arbitrary, but the main point is that if you highlight the activities that generate the main income and focus on them, any activity will be much more effective.

Instead of hiring accountants, security guards, or an advertising department, an organization can delegate these functions to a specialized company. This will cost much less and save a lot of time and effort. Translated from English, outsourcing means “external source”.

Personnel outsourcing

In the field of personnel management, organizations most often outsource the solution of the following problems:

• search and hiring of employees;
• searching for employees to perform one-time, seasonal work;
• personnel administration;
• calculation of wages and compensations;
• submission of reports on taxes and contributions to social funds.

Many recruitment agencies are engaged in searching and hiring employees, but there are few suppliers of comprehensive personnel outsourcing in Russia. selects employees at the request of the client with further registration in its own staff. Personnel outsourcing makes it possible to hire not only Russian workers, but also foreign workers. The service allows the customer to avoid routine personnel work, conflicts with the labor inspectorate, and inspections by the migration service.

Outstaffing mechanism

One of the areas of personnel policy that has become widespread in the field of labor relations is outstaffing (translated from English as “removing personnel beyond state boundaries”). The form of providing services to the customer company in this case is the provision at its disposal of a certain number of employees, whose role is to provide services or perform work specified in advance by the contract. There are no direct civil law relations between hired personnel and the customer. Synonyms for outstaffing are categories such as agency labor, rental or leasing of personnel. There are two varieties:

1. Use of newly recruited employees.
2. Involving personnel included in the enterprise into new areas of activity.

The first type is that the enterprise receives at its disposal employees who are knowledgeable about the necessary activities and are able to perform duties at the customer enterprise. This mechanism is used to reduce the tax burden and reduce its own staff. An example of the savings that outstaffing provides is the complete abandonment of the personnel department, since the task of selecting employees falls entirely on the shoulders of a third-party company. Outstaffing is the only effective way to organize the labor of seasonal enterprises.

In the second type, providing your own personnel to other institutions is only a mechanism for optimizing activities and is used within the divisions of large holdings, where, if it is necessary to replace employees and optimize labor, the time and money spent on moving them between divisions would be unreasonable and inconvenient for both the employer and the the employees themselves. There are cases when outstaffing is used as a temporary mechanism to reduce costs while retaining qualified personnel - in Western countries, responsible employers resort to such measures when market conditions worsen.

Despite the external similarity, the areas of outsourcing and outstaffing have a number of differences. The first term means the involvement of third-party specialists to perform services, and the second term means the transfer of employees under the management of another company. Upon closer examination, the main difference lies in the working hours of the involved personnel. Outsourcing involves the temporary or periodic involvement of specialists to provide specific, strictly defined services.

What are the similarities between outstaffing and outsourcing?

The main reason for confusion between the concepts is the legal implications of the procedures. The workers are registered with the contracting company - outstaffer or outsourcing company. The customer company does not enter into employment contracts with employees, but works within the framework of an agreement with a contractor. The contractor resolves all personnel management issues and also bears the consequences for mistakes.

As a result, the company is freed from personnel problems, reduces costs associated with accounting for employees and paying them wages, and can focus on its core activities. Both technologies solve the problems of minimizing costs, reducing risks from inspections, and saving time.

Goals of outsourcing and outstaffing

When maintaining a highly qualified employee at an enterprise is unprofitable and ineffective, an outsourcing scheme is used. The volume of work required in this area does not cover the full working time of a specialist. And outsourcing ensures effective remuneration depending on the volume of services consumed.

This is also important to know:
Outstaffing and outsourcing - differences

Executing companies take care of the correct distribution of their employees’ time so that they are able to serve a large number of enterprises in the shortest possible time. The requirements for specialists to work in the field of outsourcing include the ability to quickly find the right solutions to assigned tasks.

When outstaffing, the main goal is the effective organization of the entire labor complex of the enterprise to achieve maximum cost savings. The absence of its own staff can help overcome legal barriers that are put forward to the organizational forms of enterprises. If an individual entrepreneur has a staff limit of 15 persons for a patent scheme of work and 100 for the use of a single tax, outstaffing will help him, since from the point of view of legislation, the number of hired workers will not increase when attracting outside personnel, while the size of the actual states may exceed such limits.

Outstaffing helps to avoid other issues related to labor organization, providing an opportunity to reduce the number of employees in the accounting and human resources departments. Executing companies specialize in selecting candidates based on the exact requirements of the customer and actually participate in the work of employees only from a legal point of view.

Summary

So, what is the difference between outsourcing and outstaffing? Both concepts imply the transfer of certain issues and topics of the company’s functioning to third-party contractors (on a contract basis).

And here, outsourcing is a broader concept, since outstaffing implies exclusively personnel issues. But the latter concept is directly related to the topic of generating company revenue, while outsourcing implies taking “overboard” secondary, non-core topics. This is the fundamental difference.

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:

1. The entire scope of work is assessed. The employee’s rates and the main terms of the contract are agreed upon.
2. A special agreement is formed. After which it is signed by the customers and performers of the work.
3. The outsourcing employee implements all the tasks assigned to him, according to the schedule attached to the contract.
4. Reporting is generated in a pre-established form upon completion of all work.
5. Payment is made in the prescribed manner. If there are no disagreements, a work completion certificate is drawn up.

This is also important to know:
How overtime hours are paid during a shift work schedule

Outstaffing is carried out as follows:

1. 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.
2. Based on the data received, a contract is formed, which reflects the exact cost of the service.
3. 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.

Advantages and disadvantages

Both of these processes are aimed at reducing the costs of the customer company, so the practice of using outsourcing and outstaffing is quite wide. But we cannot help but note the fact that each of these processes has its own pros and cons, so let’s try to compare them from the point of view of the positive and negative aspects of such types of cooperation.

If we talk about the advantages of outsourcing, then the absolute advantage for the customer is the optional provision of a workplace.

In addition, payment is made only upon actual delivery, i.e. for the final result. As for the disadvantages, it is quite difficult for the employer to control the progress of the work itself.

Outstaffing involves the constant presence of workers on the territory of the customer company, so he can fully control their actions.

Accordingly, in case of violation of labor discipline or incompetence of individual employees, the employer may apply various punitive actions.

As for the disadvantages, the employer is obliged to pay the employee’s salary in full, and not for the service itself.

In general, I would like to note that these labor relations schemes are aimed at optimizing the organization’s costs, so they are quite popular in various fields and industries.

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:

1. Nature and scope of work.
2. Payment.
3. Number of external employees.
4. The result of their activities.
5. Maintaining confidentiality.

When concluding an agreement for outstaffing services, the employer carefully describes:

1. Number of recruited employees.
2. Remuneration.
3. 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.

Comparison table with the main differences between outsourcing and outstaffing

The table fully reflects the main differences between outsourcing and outstaffing:

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 the difference between freelancing, remote work, contracting, outsourcing, outstaffing and subcontracting?

People often confuse the concepts of freelancing with remote work, outsourcing with outsaffing, Tiffany with turquoise, white with Ivery, etc., including us. Especially the last one. In order not to provoke a facepalm reaction, the international freelance platform for language specialists 2Polyglot.com decided to dot all the “E”s.

All these concepts are closely related to each other, so it is not surprising that many sometimes substitute concepts. I admit, we ourselves have sinned with this. Regular office work is gradually beginning to lose ground due to job cuts. In modern times, specialists have to learn new skills and stock up on new knowledge in order not to drop out of the race for earnings. The familiar concept of “in a row” has many branches and nuances. As a result, new terms with old meanings are born. Cleaners retrained as cleaning managers, and salespeople became sales managers. But time is inexorable and it requires the ability to distinguish between similar concepts.

Find 23 differences: remote work, freelancing, outsourcing and outstaffing

What is freelancing

Freelancing

– this is a form of labor organization in which the employee is an independent specialist, i.e. is not a full-time employee of any company, and, as a rule, has several employers at the same time (although most often just the opposite). A freelancer performs a specific task related to a particular project, but is not responsible for the project as a whole, for example, translating text, writing an article, developing a design, etc. This is a bird of free flight that flies to where it gives more. In most cases, this is an honest hard worker who will work exactly as much as he was paid for. He doesn’t charge extra for promoting the brand, “and I also finished my MBA” or “can I leave early today.” Here the rule “time is money” is the main boss of such a specialist. This is a businessman who often does not declare his income and who “I saw them all in their graves with their taxes.” Freelancing is characterized by high competition among performers and a low level of “sorry, the supplier is delaying raw materials.” Here a person values ​​his name more than money. His name is his money. He alone is responsible for his own mistakes, and the proximity of the deadline scares him more than the proximity of his own death.

What is remote work

Distant work

- these are the same eggs as regular office work for hire, only in profile. The only difference is the workplace and dress code. The dress code for a remote worker usually consists of a three-piece suit: socks, socks and a white T-shirt with a greasy stain. A remote worker is a full-time employee and has one permanent employer (here, too, most likely the opposite is true). Here, workdays are the main measure of work efficiency, and an open tab with a paused snack and a cold cup of coffee is a sign of workload. A remote employee enjoys all the benefits of being on the company’s staff except table football and free cookies. But he more than makes up for these shortcomings by not having to buy clothes and pay for travel in cramped public transport. Communicating with the team exclusively online often backfires for a remote worker during corporate events - they simply forget to invite him there. The remote employee is responsible for all work within his competence. In the event of a screw-up, he must always have an ironclad excuse and a lever to move the needle in his arsenal, otherwise he risks losing his job or losing his bonus. The employer saves money on workstations and office equipment, and the remote employee saves the hassle of communicating with annoying colleagues outside of work. Although for many this may be a disadvantage. The lack of personal communication with the team is the main disadvantage of working remotely.

What is outsourcing and subcontracting

Outsourcing

- this is a fashionable word that in our country simply means in a row.
An outsourcing company is a contractor who will do at exorbitant prices what a freelancer will do for $20. But with all the accompanying papers, seals, reports and guarantees. Here, who has how much money and who needs what: completed work or completed paperwork. Outsourcing work means entering into a contract with a third-party company to perform some work on a long-term or permanent basis. Subcontracting
differs from outsourcing only in the shorter duration of work and the limitation of responsibilities within a specific order. Simply put, a subcontractor is a freelance company, and an outsourcing company is a freelance employee company.

What is outstaffing

Another representative of the “contract-legged” type. Outstaffing

involves hiring an employee who is actually a full-time employee of another company. Not to be confused with poaching. This, so to speak, “I honestly borrowed for a while, but the salary didn’t turn my head at all, so I’m giving it back.” This is a sublease of a specialist from another company without transferring him to your staff. No, this does not mean that in another company this employee was doing something very serious, then a free minute appeared and the employer allowed him to take a walk and earn extra money on the side. In this case, the employer is interested in employing a specialist in another company, since he acts as his agency. An important difference from pimping is that it is the client company that dictates the rules: how much to pay whom, and the landlord modestly agrees to his share in accordance with the contract with the specialist. Since legally the employee’s employer is an outstaffer (agency), the employee’s taxes must be paid to him. And this is an advantage for the customer. Legal, cheap and cheerful.

Conclusion

Interestingly, many outsourcing companies actively use the services of freelancers. This is done in order not to refuse lucrative contracts in the absence of the necessary specialists on staff. For example, translation agencies often cooperate with freelance translators, telling them one price, the customer another, and taking the difference for themselves. As you can see, all roads lead to freelancing. This term was heard earlier than all of the above: even in Walter Scott’s novel “Ivanhoe,” hired spearmen were called freelancers. Essentially, a remote employee is a full-time freelancer, outsourcers and subcontractors are freelance companies, and outstaffers are freelance agencies. So why pay more?

Personnel leasing

In addition to outsourcing and outstaffing, there is leasing of personnel hired by seasonal workers. One of the parties to the lease are employment agencies that search for and provide the necessary personnel. On the other hand, there are companies that need time frames. For example, for seasonal cleaning of the area or renovation of premises. The difference between leasing and outstaffing is that in the latter case, the staff is provided by another non-member organization. Leasing is usually handled by professional recruitment agencies.

Agreement on outstaffing and outsourcing

The difference between outsourcing and outstaffing concerns not only the forms of employee involvement, but also the contract. The outsourcing service application displays the following parameters:

• Nature and scope of work.
• Payment.
• Number of employees brought in from outside.
• The result of their activities.
• Confidentiality.

When concluding an agreement for the provision of outsourcing services, the employer clearly describes:

• Number of employees involved.
• Payment from work.
• Additional legal agreements with time frames.

Thus, the main difference between outsourcing and employment contracts is that the outsourcing service is a complete agreement, while outstaffing is only an essential agreement for the provision of personnel. But even in this case, the recruiter must meet certain criteria specified in Art. 56 of the Land Code of the Russian Federation. The differences between outsourcing and outsourcing are clearly visible at the legal level, so the concepts are compared accordingly.

Comparison of outstaffing and personnel outsourcing

In some cases, technologies are interchangeable. The advantages of outsourcing are the possibility of short-term hiring of additional personnel, the absence of the need to provide a place of work and payment upon completion of services. One of the disadvantages is the difficulty of monitoring the execution of work.

The advantages of outstaffing are: cost, constant availability of personnel and the absence of the need to indicate the final result in the contract.

The legislative framework for outstaffing and outsourcing is in its infancy, so there are no clear definitions of these processes, and the contracts are very different. This allows companies offering recruitment services to take an individual approach to each customer.

Our specialists will help you choose a solution that meets the customer’s needs based on specific tasks. Many years of experience and hundreds of satisfied clients in St. Petersburg and the regions are our guarantee.

Additional questions

Who accredits private employment agencies?

A private employment agency is accredited by the Federal Service for Labor and Employment.

In order to undergo accreditation to provide the services of a private employment agency, you must submit an application for receipt (extension) of accreditation and provide all the necessary documents (list below) to Rostrud - the Federal Service for Labor and Employment at the address: Moscow, Birzhevaya Ploshchad, 1, index 109012.

For assistance in obtaining accreditation of a private employment agency, as well as answers to questions about the accreditation of private employment agencies in Rostrud, you can call 8-800-707-88-41.

The work schedule of the Federal Service for Labor and Employment in Moscow is from Monday to Thursday from 9.00 to 18.00; Friday – from 9.00 to 16:45; Saturday and Sunday are days off. Break from 12.00 to 13.00.

Upon arrival at the Federal Service for Labor and Employment, to submit an application for accreditation of a private employment agency by Rostrud and related documentation, you must contact authorized officials by phone.

The use of outstaffing: in what cases do they resort to removing employees from the company's staff?

Employers resort to outstaffing services when it is necessary to officially employ an employee so that his work activity on the employer’s territory is legal, but for some reason the employer does not want or cannot officially place the employee on his staff.

Thus, HR outstaffing is used when:

1. The employer needs to reduce costs for employee salaries and payroll taxes.
2. The employer wants to relieve itself of the financial and resource burden of servicing personnel and maintaining their personnel records, simplify office work and accounting, and reduce the risk of errors in the field of labor and tax legislation.
3. The employer wants to use cheap foreign migrant labor, but at the same time does not want to monitor the workers’ migration documents or hire an additional accountant and personnel officer for this purpose.
4. The employer wants to reduce legal liability to employees and be completely invulnerable not only to its employees, but also to government agencies and inspections by labor services, salary commissions, etc. (the employer’s responsibility automatically passes to the outstaffing company)
5. It is required to increase the number of employees without losing the simplified tax system.
6. The employer does not want to employ workers who are on a probationary period or temporary workers.
7. An employer wants to hire a specialist from another region, but does not want to open a branch or representative office there.

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.