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Outsourcing individuals versus a company

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  • Outsourcing individuals versus a company

    I know of a company that deals in packaging they source out the materials and even does the printing aside from manufacturing the desired packaging particularly cartons and boxes. One foreign company specializing in dairy products established a branch here. But instead of hiring workers, they hired the entire packaging company. The president said that it saves them from the hassles of HR problems. It is more expensive though but the dairy company said it is worth the cost.

  • #2
    Re: Outsourcing individuals versus a company

    Absolutely. If you look to Internet marketing, for example, you could easily outsource every element of the site's design if you merely are certain what will make it profitable. The layout, traffic, content, etc, all could easily be outsourced, but whether or not it's worth the money is the ultimate question. If something as basic as a site can be outsourced, outsourcing must obviously be a large player in more robust businesses.

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    • #3
      Re: Outsourcing individuals versus a company

      Outsourcing is now becoming the fashion in big businesses. Some companies I know of are abolishing a department or 2 in favor of outsourcing. Although outsourcing involves more costs than hiring individuals, the upside is that they can always ask for a replacement of the employee if the performance is not satisfactory while a hired employee cannot be terminated just like that. Besides, an outsourced firm has no retirement pay and all other benefits like bonuses. So in the long run, outsourcing is more economical.

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      • #4
        Re: Outsourcing individuals versus a company

        The first book on IM I ever read was 100% focused on outsourcing as an ideal choice. There's so many people that want to work that don't need as much money to survive that paying them $5 an hour USD means they get to eat for a few days, where as here in the states, everything is so inflated that its only a meal or two unless you're thrifty with your calories per dollar.

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        • #5
          Re: Outsourcing individuals versus a company

          Originally posted by TheFunneler View Post
          The first book on IM I ever read was 100% focused on outsourcing as an ideal choice. There's so many people that want to work that don't need as much money to survive that paying them $5 an hour USD means they get to eat for a few days, where as here in the states, everything is so inflated that its only a meal or two unless you're thrifty with your calories per dollar.
          This reminds me of the story that my husband saw when he was in California. In a street corner, there were men in workclothes. And then a truck comes to pick them up, but not all of them, there was a sort of selection process. In the afternoon, that same truck comes back with the selected men who now was richer by a day's labor pay. That outsourcing of illegal migrants has been happening ever since. That system saves the agricultural companies big money in worker's benefits and retirement pay. Those outsourced are contracted work for the day only so there is no commitment whatsoever.

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          • #6
            Re: Outsourcing individuals versus a company

            If the outsourcing company assigned to perform duties on behalf of another company is situated in a country with significantly lower currency value then the firm can save up on operational costs. Established companies can deliver quality performance at a faster and efficient rate compared to just hiring a slew of freelance individuals. You would have trouble computing their working hours.

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            • #7
              Re: Outsourcing individuals versus a company

              I think this is the much better option because you don't have to deal with individuals anymore and instead the process can be overseen by a separate company which can be held accountable for all the passed on responsibilities. I agree that it is probably worth the extra cost especially if it means you can ramp up progress or production because of it.

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              • #8
                Re: Outsourcing individuals versus a company

                Sometimes it is more economical to outsource an individual because outsourcing a company is more expensive for what you pay includes their total operating expenses plus benefits and perks. For smaller jobs like typing and encoding, big companies resort to individual outsourcing. The contract is 5 months and it is understood that the outsourced individual is considered terminated after the said period. It is called contractualization that is now being protested by the labor groups.

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                • #9
                  Re: Outsourcing individuals versus a company

                  Agreed. I think outsourcing whole companies is only recommended when your foreseen expenses of hiring each person individually starts to become too much of an expense that you are better off just hiring the whole group as a whole. Also the management of it tends to be a lot easier especially if you are just acquiring services of someone else in which case they will be held accountable for any lack of quality.

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                  • #10
                    Re: Outsourcing individuals versus a company

                    The trend nowadays is that many large companies have resorted to the outsource their labour force requirements to a management company instead of directly employing the labour. The management company hires the workers and is responsible for their working terms and conditions. The workers employed by the management company are given contractual work and are paid at a lower rate than if they were directly employed, with almost no fringe benefits.The outsourcers resort to this measure in order to eliminate the cost of insurance and other benefits costs which would have accrued, thus resulting in a great deal of savings to them

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                    • #11
                      Re: Outsourcing individuals versus a company

                      There was a time that the Philippine government had outsourced the customs collection to a foreign company called SGS (of Switzerland). The company's prestige earned the full trust of the Philippine government. However, some decades back, the service contract of SGS was not renewed so now it is the Philippine government's customs agency that is handling the operation for the incoming product importation. And there are complaints of corruption so some quarters are asking for the SGS contract again.

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                      • #12
                        Re: Outsourcing individuals versus a company

                        I have witnessed this in what I would call madness. I know of many companies that outsource in the form of temporary employees. While it is good for people who are in need of work, it is bad for society I believe. I have been in situations like this and the problem that it brought to employees, such as myself was the lack of protection from the government because of these contracts.

                        My old supervisors would terminate my position without giving a reason, I did not work for the company, I worked for the temp agency. I hated that because after you start to build a life style for yourself, you could easily loose your job. Possibly ending up bouncing around a lot.

                        Outsourcing is fine, but I think in a way that the employer needs to consider what they are going to be doing for those employees who don't work for the company.

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                        • #13
                          Re: Outsourcing individuals versus a company

                          Originally posted by explorerx7 View Post
                          The trend nowadays is that many large companies have resorted to the outsource their labour force requirements to a management company instead of directly employing the labour. The management company hires the workers and is responsible for their working terms and conditions. The workers employed by the management company are given contractual work and are paid at a lower rate than if they were directly employed, with almost no fringe benefits.The outsourcers resort to this measure in order to eliminate the cost of insurance and other benefits costs which would have accrued, thus resulting in a great deal of savings to them
                          I think this is a great method and even better than doing the outsourcing yourself because this way you could save even more time and effort as well as keep yourself even safer from more liabilities. It might cost a bit more but considering you're probably getting a bit of savings already from outsourcing not only in terms of finance but probably also in effort then I do think it is worth the extra cost if your company can afford it.

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                          • #14
                            Re: Outsourcing individuals versus a company

                            OUtsourcing to individuals is quite risky. Someone you hire may for some reason be unable to do the work you want them to do and you'd have to be forced to hire someone else. Delays aren't great for business. That's why though hiring a company or an agency that earns money only when work is done will cost more, you'll have little to worry about because you have the assurance that the company or outsourcing agency will see to it that what is promised is delivered on time.

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                            • #15
                              Re: Outsourcing individuals versus a company

                              It actually depends on the scale at which you want to outsource.

                              If you just need a couple of workers, most of the larger companies would not be willing to work with you but if you can easily afford upto 7 to 8 workers and would probably expand to a higher number in future then outsourcing to the company is a better choice.

                              Moreover, it is a much better idea to start small when it comes to outsourcing as you are never sure about the quality at the start.

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