Labor costs might not be the high overhead variable affecting overall costs it was 30 years ago, but it still a cost reducing solution managers choose to utilize when they feel pressures from upper management and shareholders to lower costs. Outsourcing of employees is not the evil predicament many think it is. It is simply a solution that provides flexibility and allows costing reduction in different compensation areas. Outsourcing of a firm's workforce can occur in various ways. A company can choose to hire employees through job agencies in order to acquire a staff that is legally not theirs. Under this type of work arrangement the employee belongs to the job agency, but performs work and it is supervised by the manager of a firm. Once integrated into the company's system in reality the job agency employee and the directly recruited employee is treated equally and there is not way to differentiate them within a work setting. This alternative is chosen to reduce fringe benefits compensation costs and to have flexibility of not being forced to retain an employee after the typical short probation period expires.
An outsourcing arrangement occurs when an enterprises hires a consultant to perform work in any type of project within the organization. ...Show more