Is Staff Outsourcing Good or Bad for Employees?

Staff outsourcing is defined as outsourcing employee services to third-party services.


Many companies are now outsourcing employee services to reduce their HR workload, achieve flexibility, and reduce overheads.


The third-party service provider recruits, hires and trains employees as per the client’s requirements, and within weeks.


They also take care of the employee files, manages their benefits, promotions, increments, and salary, not to mention handling other performance management issues.


Outsourcing enables companies to focus on other essential tasks that increase revenue by outsourcing employee services.


With remote working on the rise, companies have started to outsource their services to agencies or contract workers.


Staff outsourcing can bring many advantages to a company.


These include lower operating costs, access to new resources and technology, and the ability for the organization to focus on its most important activities.


But along with the many benefits that outsourcing companies gain in engaging in this process, there are also many challenges and difficulties attached to it.


One of these challenges is that employees may perceive the decision of a company to outsource as a possibility of losing their jobs to people from the company providing such services.


Another risk associated with turning to an outside firm for services is the feeling among regular employees that they are not good enough at what they do and this may lead to demotivation and reduced productivity.


But with clear communication of the intentions that prompted the management to make such a decision, it should reassure the regular employees. This way outsourcing will be good for your employees.


Need for employee outsourcing


One of the top priorities of companies is to expand their business and grow their client base. To achieve these two goals, they would have to outsource those tasks that take a lot of time, money, and effort.


Companies outsource their work to run a successful business model. There’s not one major reason why companies outsource their workforce.


Many factors are put in place, and they all are different depending upon circumstances.


Some of the common issues handled by outsourcing are:


  • Reducing and controlling costs of operation;
  • Improving the company’s focus;
  • Increasing efficiency for some time-consuming functions that the company may lack resources for; and
  • Using external resources as much as possible.


Different companies have different reasons to outsource, but the end goal is to achieve their goals and finish their work quickly and efficiently.


In fact, we have an article that dives deeper into the main reasons why companies use outsourcing.


You can take a look at it when you’ve got some free time to spare.


Let’s now look at the impact of staff outsourcing on employees and how companies can handle negative situations arising from outsourcing in order to maximize the benefits of outsourcing.


Why staff outsourcing may be bad for employees



The use of outsourcing services by companies may raise some concerns among their employees – which may harm the morale of the workers.


1. Lower morale

is staff outsourcing good or bad for employees - lower morale


Outsourcing can harm employee morale and company culture.


While managers may see outsourcing as a cost-effective option, employees may feel like they are being replaced.


That leads them to feeling as though they aren’t valued enough by the firm due to the fact that their duties are being stripped away from them, and an unfortunate by-product of that is they may be less motivated to work hard for the company.


They could also be confused as to why some company services need to be outsourced.



2. Anxiety

is staff outsourcing good or bad for employees - anxiety


Another challenge is when regular employees feel that their qualifications may be lower than those of outside workers.


That anxiety may become the basis for dissatisfaction and/or reduced quality of work and may even lead them to quit the job.


Imagine having to worry about whether you’re going to lose your primary source of income because of a company deciding whether or not they’re going to outsource your daily tasks to a third-party.


You’d definitely be quite anxious and that could also have a negative knock-on effect on your performance at work.



How to prevent anxiety among staff?


Company executives and managers should not allow the situations described above to occur.


In order to prevent fear and insecurity among the company’s employees, you should talk to them.


Having the intention to use outsourcing services communicated at the onset will get employees involved in implementing this business model, which can contribute towards future success for the company as a whole.


Presenting the real reason for outsourcing will make the staff feel more confident.


And by doing so, the company will avoid a number of adverse events ranging from a deterioration in the quality of work to professional burnout or layoffs among staff.




Employee outsourcing is something that companies continue to adopt and it’s only going to rise.


The main reason behind outsourcing services is to lessen their workload, finish their work quickly, and profit in less time.


They can hand over tedious and time-consuming tasks that often take lots of time and effort.


Thus, by outsourcing, regular employees can focus on more critical work.


But as we can see from the discussion above, the impact of outsourcing on regular employees can be negative.


In order to make sure that it works for both parties, it is therefore important that the management involves the employees from the onset in the process of outsourcing to reduce any anxiety that may arise.


Flexi Personnel offers staff outsourcing as one of their services. Reach out to us here for further information


We have a proven track in the full employee life cycle spectrum which includes; recruitment and onboarding, payroll management, HR compliance, risk management, and exit management.


All this to let you focus on the most critical core functions for continued business growth.


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