Definitions of Outsourcing
What is outsourcing?
Outsourcing is the act or effect of hiring another company to perform a certain function of the business instead of doing it internally. It is a measure that, from a strategic point of view, helps to improve the production process allowing the company to focus on its core business, that is, on its main business.
It is also a way to r educe costs in the company and guarantee the quality of production, as it hires a third firm specializing in particular segment, with competence and own expertise, and sometimes has a lower cost than if the area were implemented in the contracting company. The biggest examples are the information technology and cleaning companies created with a focus on offering outsourcing.
Labor relations, in the case of outsourcing, are the responsibility of the contracted service provider, even if the worker develops his function in the contracting company. The outsourcer is responsible for hiring, training, remunerating and managing the employee.
Outsourcing in Brazil is regulated by law No. 13,429, sanctioned on March 31, 2017. It was previously mentioned by law No. 6,019, of January 3, 1974, but which only influenced the temporary work, carried out by third-party companies, given the replacement needs, or complementing the staff of the company that outsourced.
As of the new law of 2017, in addition to making changes to temporary work, it started to characterize and regulate outsourcing, pointed out in some specific aspects:
Under the old regulation, outsourcing was only allowed for those considered to be middle activities, which are those that are not related to the main objective of the company, such as cleaning services or surveillance.
The new law authorizes the provision of services for core activities, which are practiced to perform the function that is objective in the company, such as, for example, hiring outsourced teachers to teach in schools.
The normalization of the outsourcing law did not change the employee’s rights provided for in the CLT. Guarantees for workers were reinforced, with the company providing services, the responsibilities with the contract and the signed work card, as well as labor rights, being holidays, 13th, FGTS, contribution to the INSS and maternity leave.
Changing the old law, in which the maximum temporary contract time was 90 days, the new regulation now considers temporary employment contracts for a period of 180 days, which may be extended to an additional 90 days.
Law No. 13,467, of July 13, 2017, known as the Labor Reform, complements the regulation of outsourcing in Brazil. This reform prohibits a company from firing its employees and hiring them again through an outsourced company, for at least 18 months.
Another rule that this law applies is in relation to access to the premises by the outsourced employee in the company where he works, for example, using the cafeteria for food, transportation services and distribution of safety equipment.
Advantages of outsourcing
- Increased productivity and efficiency for the contracting company.
- Cost reduction (labor, production, maintenance, etc.).
- Competitiveness, as it gains greater productive capacity at a lower cost
- Promotion of autonomous activity in the country
- Possible reduction of informality in labor relations
Disadvantages of outsourcing
- Labor relations are still uncertain, which can harm both employees and companies.
- Precarious working conditions, a point alleged by the employees themselves.
- Difficulty in unionization and organization of workers.
- Lower wages. According to an IPEA survey released in October 2015, outsourced employees receive an average of 17% less than the contractor’s staff.