Personnel business: outstaffing company

Reducing costs in modern business is an important and complex process. Modern techniques involve savings where, it would seem, this is impossible by definition. One of these areas is saving on staff, which is taken over from a third-party company for a certain time, but is not registered as a staff. This practice is called outstaffing (outstaffing) – “outside staff”, “out of state” and involves working in a company of people registered in another, which is a provider – outstaffing.

Outstaffing activity is close to the work of a recruitment agency. But if the latter is just looking for people who are ready to work, and then brings potential employees to a potential employer, then the outstaffer acts a little differently and more cunningly.

There are three areas that can be pursued in this area. These are personnel outsourcing, personnel leasing and outstaffing itself. At first glance, there is no difference between these activities, but each of them has its own subtleties. To some extent, we can say that they differ radically, having just a common idea – to provide staff. Depending on this, in the process of registering a business entity, codes may be indicated (OKPD 2) 78.20 Services provided by temporary employment agencies, (OKPD 2) 78.30 Services in the field of labor resources for staffing other or (OKPD 2) 78.10 Services provided employment agencies.

Personnel outsourcing is the usual service of taking over the business processes of another company, only those tasks that are directly related to providing personnel on the ground outside the company are accepted for work. A good example is the trade sector, when sales staff work on paperwork for an outsourcer, but do the work of many firms in one outlet. So, for example, a sales representative may enter into transactions with many stores, while representing the interests of many firms that do not compete with each other. Here, savings are achieved due to the fact that one person performs the same type of work, but in large volumes. If each of the firms hired a sales representative, then he would, having unreasonably high wages, perform a very small amount of work. 

The situation is somewhat different with regard to staff leasing. This term cannot be called correct at all (and it’s not even about the ethical component) – a person, according to the law, cannot be the subject of a lease relationship. But staff leasing is the practice when a company takes employees from a provider to perform seasonal, temporary or unforeseen work. At the same time, employees, as a rule, either live off randomly dropping “orders”, or work in the main company in their position, and work for third-party companies when the main employer can afford the temporary absence of the employee. There are, however, those companies that provide staff leasing as their main activity, simply having a staff of specialists who, if necessary, work for many companies. 

Finally, outstaffing itself is the maintenance of a staff and the maintenance of legal, accounting, personnel and other issues related to this, while the employees themselves are actually employed on a permanent basis in the personnel borrowing company. This practice is often used in the event that it is unprofitable for any reason to keep these employees according to the documents. This is primarily due to the possibility of working on a simplified taxation system, because if you have a staff of more than 100 people, this system becomes impossible to apply (for trade and the service sector, the restrictions are even more stringent). 

The personnel borrowing company continues to work without the abolition of the simplified tax system, transferring part of its employees to the staff of a third-party organization. She, in turn, also assumes the entire burden associated with the maintenance of the personnel service, and the costs of maintaining employees. The consumer company also gets rid of liability in case of any questions from the labor inspectorate or the migration service. It turns out that outstaffing is a legal way out of solving many “uncomfortable” issues for the company.

Of course, when registering an outstaffing company, a sane entrepreneur does not report to the tax office the true activity that he will be engaged in. Usually such companies are registered as recruitment agencies. The concept of outstaffing is not found in Russian legislation, but its essence falls under the definition of the provision of contingent labor. From 2016, agency work in the Russian Federation will be prohibited, which greatly complicates the process of doing business for outstaffers. If even now you have to disguise yourself as a recruitment agency, then in the future there will probably be more checks and difficulties in registration, but such services are still very much in demand, and the support of a competent lawyer will allow you to engage in such activities legally – the main thing is to teach everything correctly to people from regulatory authorities.

But still, in order to avoid problems, outstaffing companies will have to reconsider their principles of work in a year and retrain into a company with a slightly different scheme of activity. The easiest way is to become an ordinary outsourcer who is ready to carry out the management of business processes of firms of various directions with the hands of their own specialists. 

One way or another, businessmen have a whole year at their disposal, during which they can fully study all the features of such activities, starting from January 1, 2016, starting to do something similar, but still legal. The prospects in this direction are serious enough to start considering outstaffing as a kind of occupation, even in the face of the upcoming restrictions.

So, in order to open your company, which provides staff to other companies, you need to search for premises after registration. It may be small, but in order to maintain the image of the company, it is best to be located in the business district of the city. Future partners will still be more accustomed to contacting an organization that is located in the center, and not somewhere on the outskirts. Being a kind of recruitment agency, you can rent a room from 30 m2, paying for it from 30 thousand rubles a month. This space will become a workplace for the staff who conducts all the work of the organization. Office equipment will also not require significant investments, furniture and simple office equipment will be needed. Together with possible repairs, all this will cost no more than 100 thousand rubles. When this important issue is resolved, you can start looking for the right people.

In this type of activity, it is optimal if the entrepreneur himself is an experienced specialist in the field of accounting, tax consulting, law or personnel management. It’s even better if all these responsibilities can be distributed among partners who open such a business together, because it is much safer to have a reliable team than to recruit people from the street. But still the most important and determining factor in admission to all these positions is a high level of professionalism.

Tax consultant. Must know everything related to taxation, regardless of what form of business it is used for – from a peasant farm to a non-applicable de facto company with additional liability. It is he who will decide all issues related to the taxation of both the outstaffing company and partner companies, for which he will become a consultant. It will help not only to conduct legal activities, but also to select optimal taxation schemes – to reduce costs.

Accountant. Working with many companies, with people of various professions and large volumes of reporting – all this must be done with high quality, any mistake can be very expensive. Here we are talking even more likely not about one chief accountant, but about a whole team of specialist accountants. It is best to find an outsourcer who will perform accounting, but it must be a trusted partner.

Lawyer. A lifeline for the entire organization, because you will have to work with people of different contingents, and here it is especially important to know the letter of the law not just well, but perfectly. All disputes and claims from the regulatory authorities should be resolved in their favor, and finding a mistake or violation can be very easy. Outstaffing is indispensable without the support of a competent expert in the field of law.

Human Resources Manager. People must also be selected very carefully, because the human resources planned for leasing must not only meet the requirements of the customer, but also be loyal to both companies between which the outstaffing agreement is concluded. For a person, working in one company and being hired by another is more of a minus than a plus compared to conventional employment (reduced security and guarantee of benefits and rights).

In essence, this will be the entire staff of employees working directly for the outstaffing company. In the future, they will probably need helpers, but at first they can cope on their own. There will not be a lot of work in the first months, although it is not known how lucky you will be with clients – sometimes the need for such a service can be very large. A certain percentage of companies do not even think about such an opportunity at all, and offering it to them means getting a client who will be happy to solve many of their problems by transferring their solution to the wrong hands. 

This type of activity involves the active involvement of the founders, who act both as directors, as employees, and as sales managers for their own services. First you need to evaluate potential customers, check all firms and start negotiations with all promising organizations. Sole proprietors are unlikely to become partners, positive responses will come mainly from emerging and rising firms, although those who simply need to cut their costs just because of the high losses in the personnel sphere cannot be excluded. With competent work, there should be no shortage of consumers, because outstaffing is a cost savings that no entrepreneur will refuse. 

In the process of work, it will become clear which positions are better not to offer through outstaffing (due to it, staff turnover and general dissatisfaction of employees may increase), and which, on the contrary, are very suitable for this. Difficulties may arise, for example, with “white collars”, because office employees are best given to work precisely in the case of registration with a direct employer. 

But in the case of immigrants, it turns out that the customer company is also satisfied – there is no need to resolve legal issues with the migration service; and the employee – for him the main thing is work, regardless of the labor legislation of a foreign country; and the outstaffer himself – for him it is money. It is impossible to work with only one company, because the tax authorities will most likely be interested in this and may recognize the outstaffer and the customer as affiliated companies, and therefore incriminate the fictitious transaction to both legal entities. The situation is completely different if cooperation has been established with many companies – here the outstaffer is already a legitimate organization that helps others in solving personnel issues.

The scheme of work of an outstaffing company is extremely simple. It is approached (or outstaffer finds) by a company – a future borrower of personnel. There are two options here – either the customer is looking for staff, or he wants to transfer his employees to the provider’s staff. This does not greatly affect further work, the outstaffer hires employees, draws up employment contracts that spell out all the conditions determined by the customer, and transfers the personal files of each of the employees to the customer. 

People go to work for a direct employer, and the outstaffer takes on the responsibilities of personnel administration, payroll and bonuses, communication with trade unions, tax and accounting reporting, and everything else. The provider performs all this work, and at the end of the month provides reporting to the customer and an invoice, where, in addition to social contributions, the amounts for direct services are also indicated. 

Payment is made in most cases depending on the salary of each individual employee or the general payroll. The percentage is set within five percent, but it can be less, the determining factor is the complexity of administration. So with guests from other countries there are much more bureaucratic difficulties, and the rate for them is higher, but in the case of common positions in non-hazardous industries, it will not be so large.

In addition to solving important legal issues and ensuring the legality of your activities, you must not forget about your reputation with partners. It will be difficult for a newcomer to gain confidence; at first, it is precisely those companies whose personnel issue has become a serious problem that will contact the outstaffer. In the future, having received a good name, you can expect that other organizations will begin to seriously think about contacting the provider. 

It is not difficult to provide for oneself at the very beginning, it is unlikely that more than 200 thousand rubles will be needed to open, and if we take into account the reserve funds for the first time, then in the most unfavorable scenario, more than half a million will not be required. Otherwise, it’s not worth it to engage in such activities. 

If the company is managed and all the main positions are occupied by partners, then the salary for their employees can go only if they have their own accounting department or hired assistants. If you do the work on your own, then you can share all the profits between the founders. 

Profitability grows with each employee transferred to the customer, in general it is absolutely not advisable to have less than 100 people, and serious profits can be expected when several hundred people are transferred to organizations (not to one, of course, but to different ones). 

Large outstaffing companies have more than a thousand employees in their staff who work in customer organizations. So, if we take the average salary of an employee of 20 thousand rubles, then from a hundred people the income for an outstaffer (calculated as 3% of each salary) will be 60 thousand rubles. With five hundred people, this figure will already reach three hundred thousand rubles. At the same time, even with a progressive increase in staff, the costs do not increase significantly, and the increased reporting volumes are easily transferred to one or two additional people. But in this business, it will not be possible to use the simplified taxation system, and you will have to give 20% of your income according to the corporate income tax rate.

insurance company,progressive insurance,farmers insurance,travel insurance,geico insurance,insurance,nationwide insurance,allstate insurance,cheap car insurance,health insurance,home owners insurance,state farm insurance,american family insurance,erie insurance,insurance quote,renters insurance,usaa insurance,aaa insurance,auto insurance,car insurance quotes,dental insurance,insurance quotes,life insurance,mercury insurance,pet insurance,progressive auto insurance,freeway insurance,homeowners insurance,insurance companies,root insurance,safeco insurance,auto insurance quotes,cheap auto insurance,infinity insurance,life insurance policies,national general insurance,nationwide pet insurance,the general insurance,auto owners insurance,cheap insurance,elephant insurance,geico car insurance,general insurance,home insurance,life insurance company,progressive insurance login,aetna insurance,dairyland insurance,delta dental insurance,farm bureau insurance,gap insurance,globe life insurance,hartford insurance,health insurance marketplace,liberty mutual insurance,life insurance quote,marketplace insurance,the general car insurance,usaa car insurance,acceptance insurance,amica insurance,car insurance companies,car insurance near me,cobra insurance,farmers insurance open,foremost insurance,insure vs ensure,lemonade insurance,medical insurance,progressive car insurance,shelter insurance,usaa auto insurance,aaa auto insurance,allianz travel insurance,business insurance,car insurance company,certification of insurance,combined insurance,direct auto insurance,geico auto insurance,geico insurance quote,geico renters insurance,gerber life insurance,insurance agency,insurance near me,kemper insurance,long term care insurance,medical insurances,progressive insurance quote,term life insurance,whole life insurance,aaa car insurance,alfa insurance,auto insurance company,cigna insurance,direct insurance,farmers insurance login,fred loya insurance,geico home insurance,grange insurance,hanover insurance,insurance companies near me,life insurance companies,life insurance quotes,mapfre insurance,motorcycle insurance,new york life insurance,progressive insurance phone number,pronto insurance,safety insurance,state farm auto insurance,statefarm insurance,the general auto insurance,adriana's insurance,affordable health insurance,aflac insurance,american national insurance,ameriprise insurance,assurant insurance,auto insurance companies,best car insurance,best pet insurance,california department of insurance,cheap health insurance,chubb insurance,commerce insurance,disability insurance,dog insurance,embrace pet insurance,geico insurance phone number,guardian dental insurance,hagerty insurance,health insurance companies,health insurance for individual,insurance agents near me,insurance auto auction,insurance marketplace,la insurance,liability insurance,life insurance for seniors,life insurance policy,metlife insurance,njm insurance,safeway insurance,