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Legal Support to Documenting Personnel Leasing in IT Industry

What is outstaffing? 

Outstaffing presumes that employees working for a company are on the staff of another company which is called the provider. For example, of a recruiting agency, or, which is more preferable, of a company which proudly calls itself a “professional employer”. In such case, the provider company assume obligations to pay salary, to work with all staff-related documentation, to deduct taxes, make temporary disability leaves, etc. Herewith, the provider does not care at all which functions are performed by “their” employees, and some times even how they look. Because a real employer simply “document” its own employees with the provider, and they continue working for their previous company, although they are not listed there.

What are the benefits of outstaffing?

        · Decreasing the load on HR and Accounting

Having a large staff of employees at an enterprise requires a large amount of time and efforts for maintaining relevant staff procedures and large amount of documentation. With the help of outstaffing, these obligations are delegated to a contractor.   

        ·  Cutting down taxes

The personnel working outside of the official staff does not influence the official number of employees of an enterprise. The ordering company has the possibility to hire needed professionals, herewith not losing the necessary tax category and the status of small enterprise. Taxes on salary, in turn, are paid by the outstaffer as the official employer.   

        · Cutting down costs

When preparing documents for employees being in the staff of the contractor, a company frees itself from a large part of financial expenses. On the average, outstaffing helps to reduce costs by 30% on main items of maintaining the staff. Also, there is a possibility to cut down the number of HR employees, because with the decrease of the staff they are not needed anymore.   

        · Delegation of responsibility

In case of any disagreements with employees, the contractor is responsible for settlement thereof as the official employer. In the same way, the ordering company frees itself from potential problems related to inspections by government agencies.

What is leasing of personnel? 

Leasing of personnel presumes that employees of a company are engaged in the project of another company. That is, they are temporarily “leased out”. The duration in such case may be from two-three months to several years. This principle is sometimes used by collectives of design engineers and architects. Also, this form of cooperation is very widespread in the IT industry, because many foreign and domestic companies who are software developers, working on huge but one-time projects, prefer to engage “creative collectives” of outside programmers for such projects. Advertisement agencies also actively use the personnel leasing, providing, for example, promoters and stand attendants for working at exhibitions.

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