In employment contract terms, you may have heard the term outsourcing. What is outsourcing? The definition of outsourcing, in general, is one of the work systems in which a company assigns tasks and responsibilities to outside parties.
To get to know more about outsourcing and the advantages of outsourcing for companies, here is a little explanation.
History of outsourcing
Work with an outsourcing system has been carried out since Greek and Roman times. At that time, the two nations hired foreign soldiers to fight with their troops. They also often hire foreign builders to build their royal palaces.
In the business world, the outsourcing system is carried out based on sharing risks in the world of work, because not all companies can solve the problems that exist in their company.
What is outsourcing?
Referring to the terms stipulated in the Manpower Act Number 13 of 2013, the meaning of outsourcing or outsourcing is the provision of labor services. This outsourcing system is more fully regulated in articles 64, 65, and 66 of the law.
In essence, outsourcing is a company-enforced system where they leave some of the company's activities or their work to outsiders. This party is called the outside provider. All assignments, rights, and obligations of each party are usually regulated in a cooperation agreement or work contract.
In this case, the party who is outside the provider has an equal position in the company, neither as a superior nor as a subordinate. Outsourcing aims to solve problems that exist in work that cannot be resolved by the company alone. Apart from that, outsourcing is also often done to support the goals and objectives of business activities.
Benefits of Outsourcing for Companies
some of the advantages of outsourcing for companies that rent services outside the provider. The most important advantage is that companies can focus more on handling main business activities or what are called key activities. By using outsourcing workers, the company can also reduce the budget because it does not need to provide work facilities and allowances for outsourced employees, including food allowances or health insurance for workers.
Companies that provide outsourcing services also usually have more competent skills to deal with the problems they face, because they focus on this type of work. Using outsourcing services also means limiting the number of company employees, this is one of the advantages for the company to reduce the risk of business uncertainty in the future.
Also read: 5 Benefits of Managed Service for Companies
In addition, using outsourcing services is also able to increase efficiency and non-core jobs in the company. This outsourcing work system has been regulated in Article 56 of the Manpower Act.
Type of outsourcing work
Initially, the types of work that used outsourcing were jobs that were not related to the company's core business, for example, call centers, cleaning services, or security personnel. However, nowadays many companies use outsourcing services to handle major jobs, such as marketing, design, or finance.
These outsourced workers will be paid by the company that uses their services, which is paid through the outsourcing service provider company. The company will provide work contracts to outsourced employees, either in the type of PKWT or a certain time work agreement and non-permanent contract or non-specified time work agreement. Meanwhile, the recruitment system is carried out by companies that provide outsourcing services.
That's a glimpse of what outsourcing is and the benefits of outsourcing for a company
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