“The important thing about outsourcing or global sourcing is that it becomes a very powerful tool to leverage talent, improve productivity and reduce work cycles.” --- Azim Premji
Temporary Staffing or Contractual Staffing is not a modern day phenomenon; it was quite prevalent in traditional time also but was not recognized well. Let’s understand the concept in a layman’s language. Assume, how we used to get our house built/constructed. We either used to hire a contractor with whom we used to fix lump sum cost of fully built/constructed house or we used to arrange everything from labourers to concrete, bricks etc. and used to micro manage their work. The second arrangement, used to be very tiring, time consuming, requires lot of efforts and pain whereas first arrangement seems quite peaceful, tireless and effective. That’s how temporary staffing became need of every organization.
Metaphorically, hiring of talent for a short term based assignment is termed as temporary staffing or contractual staffing. The temporary staff provided by the outsourcing firms are recruited, screened, trained and are on their pay rolls, then assigned to client organizations. The concept is gaining popularity in most of the new age firms for its numerous advantages.
Temporary recruitments reduce the liability for the organizations as such projects/contracts may not include all the perks for the temporary staff which the company may otherwise give to its permanent employees. Also as the temporary employees are not part of the permanent staff, they are less likely to be affected by the office politics or management issues in the company.
Most companies hire contractual personnel to fill the short-term requirements for the qualified employees while retaining employee-related expenditures. The short term assignments make the transition of the talent post the project hassle free for the companies. The major reasons that the modern day organizations prefer outsourcing are mentioned below:
- If they require huge number of manpower for their business operations and recruiting them is difficult.
- They want to concentrate on their core business and don’t want to keep them involved in non-productive activities.
- Attrition is very high and backfilling is difficult.
- Entry level or blue collar staff are required in large numbers.
- Do not want to involve their company into legal litigation.
- Don’t want union formation.
- Only want to keep skilled/trained/productive resources on their own payroll after observing their performance while keeping them through contractor.
- Nature of business is seasonal, hence require manpower during seasonal time.
- Flexibility in employment. Companies can reduce or increase their strength as per business requirement.
Employing someone on a temporary contract with a chance of renewal if they perform well can be a great motivating factor for the temporary staff to be more productive and prove themselves in the work. Also the contractual employees give their best performance in their tenure in order to enhance their reputation with the parent company. Thus they try to put the “best foot forward” to achieve targets and impress the employer with quality work.
The companies after evaluating the employee’s performance can establish whether or not the he/she is suitable for the full time or on-going position. Entrepreneurs who choose the option of outsourcing have greater chances of hiring value employees. Thereby saving time and efforts on recruiting and training of the new joiners.
More and more companies are relying on outsourcing or temporary hiring to supplement their regular staff. There are different types of outsourcing prevalent in the market, some are discussed below
- Functional outsourcing – like company accounts and its management outsourced to an Accounting Firm. Tele-calling function outsourced to BPO etc.
- Project outsourcing – generally happens in IT, large real estate and infrastructure development industry. If a company wants to develop a software for their business operation, then an IT firm develops that software in the client’s premises through their resources is an example of Project outsourcing. IT outsourcing is a type of professional outsourcing for the technology related work which can be used for a wide range of function like development of infrastructure, IT management, software maintenance and support and so on.
- Need based outsourcing – like security guards, PSO’s, housekeeping managements etc.
- Offshore outsourcing – implies having the outsourced business operations done in another country. With the advent of future internet and globalization, Offshore outsourcing is a smart business strategy to explore new markets.
Different companies opt for outsourcing for varied reasons like minimizing expenses, skilled employees, timely completion of projects and so on. The concept of temporary staffing is here to stay and provide solutions tailored to the company’s requirements.
“Outsourcing and globalization of manufacturing allows companies to reduce costs, benefits consumers with lower cost goods and services, causes economic expansion that reduces unemployment, and increases productivity and job creation.” --- Larry Elder