Staff leasing is an arrangement or an employment/outsourcing model where a company (sometimes called a subscribing company) contracts with another company (an offshore provider or a professional employer organization) to hire and manage their employees, thereby shifting the human resources (HR) responsibilities to the second company. The arrangement is also known as employee leasing or outsourced staffing.
There are various proportions in the sharing of employment responsibilities in the staff leasing arrangement. Some subscribing companies give all employment responsibilities to the outsourcing staffing provider, so the provider operates as the staff’s official employer. These responsibilities would include human resource management functions such as recruitment, training, performance management; payroll and benefits administration, risk administration, and many more. Other subscribing companies prefer to manage and control the staff’s day-to-day activities, with the staff leasing company having recruited the staff and providing assets (such as a dedicated office space, furniture, computer equipment and Internet connectivity), and a range of shared support services (including facilities management, IT support and/or quality assurance).
It is not surprising that all sizes of businesses – small to large – have been opting to outsource their staff to ensure growth. These are some of the many advantages of staff leasing:
- Cost savings. Instead of hiring and training their own employees, subscribing companies lease staff from outsourced staffing providers from countries where HR costs (including salaries, benefits and insurance) are lower. Even if the company pays the provider a fee to lease the staff, costs are still lower. More cost savings are realized from lower overhead and operational expenses, such as office rent, etc. Moreover, the staff’s skills and experience will not be sacrificed due to the lower price tag. The leasing company can expect that education and skill levels will be at par with those of employees in the leasing company’s country.
- Keeping ownership and control of the company. Even if the staff is not on the leasing company’s premises (and perhaps not even on the same continent), the leasing company maintains control because the work is customized to the business’ requirements and the leasing company can make changes, manage costs and ensure compliance to its dictated service standards and statements of work.
- Operational flexibility. The business requirements for additional staff may be short term, or only for a particular project and period. Staff leasing offers the flexibility of fast mobilization that accommodates growth and allows seamless transition.
- Focus on core functions. Often, companies choose outsourced staffing for non-core and time-consuming functions. The staff whose time is freed up from these non-core functions can thus focus on the companies’ core business.
There are many advantages and few, if any, risks to outsourced staffing. Global companies in all types of industries realize these benefits and will continue to do staff leasing in the coming years.