Legal Literacy - Learn the pros and cons of outsourcing. Understand its benefits in cost savings and potential risks to your business.

What is Outsourcing?

Outsourcing is a practice in a company that hands over part of the work from its business activities to related parties, also known as service providers in the outsourcing process. Through the outsourcing process, the company no longer manages these activities itself, but transfers responsibility to an outsourcing service company. In the context of employment regulations, outsourcing is usually limited to labor involved in supporting processes (non-core business). However, in practice, some companies may also choose to outsource all of their lines of work.

Here are some definitions of outsourcing according to experts:

  1. According to Husni (2003:177), outsourcing is the use of employees to carry out the work needed from other companies with labor/outsourcing providers.
  2. According to Jaehani (2008:11), outsourcing is a form of handing over certain jobs of a company to a third party which is carried out with the aim of reducing the burden on the company.
  3. According to Tunggal (2009:308), outsourcing is the transfer or delegation of several business processes to a service provider, where the service provider carries out the administration and management process based on definitions and criteria that have…