Today, many Indian and foreign companies have realized the importance of outsourcing labor. Outsourcing means subcontracting to a third party company for the completion of an assigned task or project. Outsourcing labor is necessary when a company needs to complete a task where it does not want to hire new employees. Outsourcing is one of the most efficient ways to save costs. Today, many information technology (IT) companies and call centers rely on outsourcing.
Labor outsourcing concept
In outsourcing, a company or external company carries out the management or development of a product on behalf of another company. The concept started when companies were reluctant to hire new employees for short-term jobs. Hiring new employees means more work for human resources staff, security checks, and other overhead, which wasn’t worth it for a small project. The subcontracting of labor responded to this problem, since in this case the main company does not hire the worker directly. Outside companies that supply skilled workers are called labor contracting companies. Lack of skilled workers is another scenario when labor outsourcing is required. Many IT companies sometimes require people who are well-versed in specific technology that they might not otherwise have in their resource pool. In such cases, they may hire qualified professionals, also called consultants, to complete their tasks.
Labor outsourcing procedure
Once a company decides to outsource, it searches for a suitable vendor and requests a Request for Proposal (RFP). RFPs are sometimes requested from multiple vendors. In RFPs, providers cover the process they will follow to complete the project, the current financial position of the company, the technical capacity of their employees, and all the information that can help gain the trust of the company. The company then negotiates with the companies and decides on its “best and last offer” (BAFO). Both parties finalize the contract and sign it. The next step is the transition of knowledge and information from the source company to the company providing the workforce. The delivery schedule is decided for the delivery of the product. Upon completion of the project, the source company may decide to terminate the contract or renew the contract.
why outsource
Some of the benefits of outsourcing are listed below:
o In the first place, and by far the most important aspect, is the cost reduction of the development of the overall project.
o Hiring labor from an outsourced company that has good trained professionals in the field can improve product quality.
o Reduce pressure on the human resources department to hire and retain qualified professionals.
o Companies can put more emphasis on product design and research rather than striving to meet deadlines.
Disadvantages Along with the benefits, people also see some disadvantages in outsourcing. Some of the disadvantages of outsourcing are:
o The subcontracting of labor can affect the workers or employees of the company. Sometimes companies cut jobs at their companies and outsource the work to a third party.
o Most of the time, outsourcing companies cannot meet standards and deadlines.
o There are also fraud and security concerns, as there is always the possibility of identity theft or misuse of sensitive information.
future
Businesses today compete to keep their customers while providing quality service. The only way they can survive is by reducing their cost of operation. IT is one of the best and most efficient ways to reduce the cost of developing a project.
