Why do companies choose to outsource work?

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In the present world, start-ups to big corporate companies outsource works from home or on their premises. However, these are happening due to HR consultancies presence, who takes this opportunity and places their staff in your company as outsourced employees. The blue color service providers do serve labor for the manufacturing or labor-intensive industries. There are many advantages of outsourcing. It might differ from industry types. We have answered here why companies choose to outsource work from third-party agencies.

Peak Season Business

Every company has some peak seasons in their business. You might know those months, where your existing staff cannot handle the additional flow of customer, process, or functions. Hiring a new team will be a burden on the payroll. As they will attract statutory compliances, and you might not need them after the peak season is over. However, such employee productivity monitoring software will be ideal during non-peak seasons. Hence, you might be paying a higher salary than what they work.

  • It is advisable to hire outsourced staff from staffing solution service providers.
  • They meet your business standards and sign a contract for paying them for outsourcing employees on the off role payment.

Thus, you will maintain the staff volume according to the business seasons throughout the year.

Cost-cutting on Statutory Compliances

Paying a higher percentage on statutory compliances might affect your revenue. Hence, many companies maintain a limited staff, and the rest of the team is maintained by third-party outsourcing from HR agents.

  • A company can save on paying EPF, ESIC, Professional Tax, Insurance, maternity benefits, and special allowances.
  • When you hire outsourced staff, you can pay a fixed cost per head to the recruitment agent.
  • Here, you are going to pay service tax only.

The statutory payments are continually increasing as the government gets more revenue to compensate for their deficit funding. Thus, you can avoid paying the government by outsourcing employees from a third-party HR consultant.

Hire Local Talents

A company can see some productivity when they outsource employees frequently. It is because; they will be more talented than your existing staff. When they are employed, they might work better than your present staff. Moreover, you are going to pay less when compared to your on-roll employees. They will work smart during the peak seasons. Hence, you will reach higher productivity and realize above supernormal profits.

  • Human resource service providers will select those candidates who know how to process the functions of your industry.
  • They will provide you as much talented staff if you need them to work on low wages.

Offshore outsourcing is the finest example to hire local talents and pay them less. The staff who might join at a low wage might wish to gain work experience or wish to work until they get the right pay and opportunity.

Cost-cutting on Salaries

Paying salaries per your company norms might be a burden to your existing staff as they seek promotion and increments yearly. However, these costs will not arise when you place outsourced employees. Here, there is no question of a bonus issue, payment increments, and other allowances. Hence, you save much on salary increments, bonuses, statutory, professional, and service taxes.

Control your Company by Focusing on Business   

When you outsource your work to a third-party agent, you share your work burden with them. Hence, they will do well to get payment for the outsourced staff. Hence, you can focus on your business to improve by proper planning as you have time now. You cannot focus when you have a large number of employees in your company. It is because; you will focus on the HR side than on the functional side. By hiring outsourced candidates, such issues can be avoided, and there will be no pressure on your HR team.

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