Author Question: Why do companies that make use of a lot of contingent workers fear getting involved in a ... (Read 25 times)

Lobcity · **on:** Jun 24, 2018

Why do companies that make use of a lot of contingent workers fear getting involved in a coemployment situation? What steps should they take to avoid this situation?

Question 2

Although labor savings associated with offshore outsourcing may look attractive, what cost increases and other problems can you expect with such projects?

nathang24 · **Reply #1 on:** Jun 24, 2018

Answer to Question 1

Some of them may say that:

The actual circumstances of a working relationship, such as location of offices, supervisory and reporting structure, and length of employment, may cause the government to see leased employees as companys own employees. If this is the case, the company may be held responsible for employment law violations, incur fines for unfair labor practices, and may have to pay legal judgments, back pay, and benefits to misclassified employees.

Different ways to avoid this situation would include:

Remember that in the eyes of the government it is the degree of control exercised over a contingent employee that defines whether or not one is responsible to treat that employee as his or her own.

Compare contingent employees circumstances with company policies to ensure they do not fall under the definition of an employee.

Make contracts for projects that end on a defined date, and ensure that the contract is not longer than that defined for contingent employees.

Designate the worker as contingent in the contract.

Do not directly supervise contingent workers, but instead work through the contingent workers manager.

Require contingent workers to provide their own tools and equipment.

Do not train contingent workers.

Do not participate in the hiring process, performance feedback, or day-to-day operation of the leasing agency.

Ensure that the leasing agency provides its own benefits plan and is properly deducting payroll taxes.

Answer to Question 2

Some of them may say that:

The cost advantage for outsourcing to places such as India used to be 6:1. But increased demand has caused salaries to rise in India, so the cost advantage there has shrunk. The long-term estimate is that once the cost advantage shrinks to 1.5:1, the costs to integrate an offshore labor pool into your business would outweigh the labor savings.

Travel and communication costs will increase.

Finding a reputable vendor can be difficult. The skills of the workforce or the quality of the product may not meet expectations.

Developing a good working relationship across cultures can take years or may not be possible depending on the corporate cultures involved.

Offshore outsourcing can negatively affect the morale of domestic staff, reducing worker productivity.

Offshore outsourcing can cause negative publicity.

Additional security measures must be deployed and monitored to ensure that company data and customer data are safe while they are being distributed to other parts of the world.