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Outsourcing: Definition, Workflow, Types, and Benefits

Outsourcing has become a solution for many companies in dealing with the lack of human resources they have. An outsourcing workforce is very reliable in dealing with technical problems that the company has.

In addition to its usefulness, companies do choose subcontracting to do better management. You may use systemized HRIS Software to acquire new manpower. Check out the following article to find out clearly what outsourcing means.


What is Outsourcing?

The definition of outsourcing or subcontracting is the provision of labor services. We can interpret outsourcing as the use of labor from a third party to complete certain jobs within the company.

It is also the usual action companies take when they hand over some of their activities to outsiders. With the goal of course, apart from solving problems that exist in the company, as well as supporting the goals and objectives of business activities, it is also useful to cut cheaper operational costs.

Outsourcing Workflow:

Calink implements a five-step subcontracting workflow:

  1. Planning: Evaluate outsourcing opportunities and strategies to move a business organization to a leveraged business model by focusing on core products and outsourcing a specific department or project.
  2. Agreement: The contract is agreed upon and signed by both parties.
  3. Implementation: Daily meetings and weekly progress reports are mandatory once projects are handed over to the partner.
  4. Delivery: Products are deployed after UAT is accepted by the client.
  5. Support: provides a full product warranty and maintenance support package by point releases.

Recruitment System

Recruitment systems typically include written tests, interviews, and a variety of other processes, which many companies do. In fact, this is done by the service provider company, not by the company that uses the service.

Payment system

The payment system uses a method whereby service providers will pay outsourced workers. Then, the service provider company will charge a fee to the company that uses the service.

In a sense, outsourced workers do not get a salary from the company where they work, but will receive a salary from the outsourcing service provider company. Besides that, they will get things such as giving salaries, and allowances to workers through service providers or outsourcing. To manage the salaries of outsourced workers, the service provider can use the right Payroll System.

Types of Outsourcing

Furthermore, there are several types of work that outsourcing workers can do, including:

  • Done separately from the main activity.
  • Done by direct or indirect order from the employer.
  • It is a supporting activity for the company as a whole.
  • Does not hinder the production process directly.

Furthermore, these points explain that outsourced workers cannot do the core work of what the service company does. Examples of some of the jobs that outsourced workers do are call centers and cleaning services to software developers. 

Related article: 7 Proven B2B Sales Strategies to Win More Deals

Benefits of Outsourcing
1. Companies are becoming more focused

By outsourcing, companies can become more focused on their core business. Apart from being able to develop both strategy and restructuring of resources, another advantage that companies can get is that the focus of resources can be on meeting customer needs by diverting outside work from the main business by giving it to global outsourcing companies.

2. Shared business risk

When the company cooperates with the outsourced party, the risk that the company has and will be divided and reduced. Because the HR under outsourcing will be the responsibility of the service company.

3. Operational cost savings and control

By using the services of outsourced workers, companies can save the budget for providing training. In addition, companies that hand over HR management to outsourcing are because the operational costs that come out are less if we compare them to managing HR independently.

4. Help solve problems

Businesses within the company are no longer as efficient as they were before, making work even more ineffective. However, with such problems, outsourcing can resolve them properly. In addition, you can check some outsourcing digital services or outsource graphic design to find the best fit for your company and succeed better.

5. Obtaining more professional human resources

One of the good benefits of outsourcing is that all the workers they provide are professional and have the appropriate classification from the company that uses the service. Because they have above-average competencies, companies can rely on them to help with outside affairs of the main business without needing to train them.

6. Accelerate the process of adapting to business changes

Because outsiders who have been recruited have the skills to work in the same field and industry. This makes changes and adaptation processes in business faster. Where the process of adaptation and change can a company achieve because of outsourcing?

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Disadvantages of Using Outsourcing

1. Company information is vulnerable to leaks

The function of outsourcing is to do technical work outside the company. therefore outsourcing companies do not help the main business work. This is because hiring outsourced workers in the main job of a business can increase the chances of selling company information to other parties or even spreading it to competitors.

2. Dependence on outsourced labor

Companies that use outsourced workers have the potential to experience dependence. This is very likely to happen if there is a system or working method that is kept secret by the outsourcing company itself so that companies that use the services of outsourcing workers cannot find out about it.

3. Loss of Managerial Control

Because outsourcing companies push to make a profit from the services they provide. Companies can lose managerial control of their companies.

4. Short contract

Relatively short employment contracts for outsourced workers, because they have to frequently renew contracts or look for new outsourced companies. This will make the company quite troublesome. If you hire a new outsourced worker, it will take more time to shift tasks and the recruitment process. so this is one of the shortcomings that have quite an impact.


Of course, recruiting outsourced workers is very helpful for companies to complete certain jobs because it is easier and more practical. There are many benefits and advantages that companies can get. However, we need to note that outsourcing has several drawbacks so that companies can still develop their business without going through problems.

For that, immediately switch to the HRIS Software from HashMicro! As Singapore’s best ERP Software service provider, HashMicro is competent in designing systems with fully integrated features.

HashMicro’s HRIS System can help you monitor your work progress in real-time. In relation to the outsourced workforce, this system also functions to assess and review performance with the help of an automated KPI monitoring system. Thus, the various shortcomings of using outsourced workers are easily controlled. You can start HashMicro’s EVA Talent Management Software demo for free now.


Interest in getting savvy tips for improving your business efficiency?

Chandra Natsir
Chandra Natsir
A content writer with a strong interest in writing and technology. Chandra is dedicated to writing useful, entertaining, and relevant information for readers, and he continues to develop content that connects and inspires them.

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