About Manpower Outsourcing - An Essential Need Merits And Demerits Of Manpower Outsourcing


Today many Indian and overseas companies have realized the importance of manpower outsourcing. Outsourcing means subcontracting a third party company for the completion of a task or an assigned project. Manpower outsourcing is required when a firm needs to complete a task in which they don’t want to hire new employees. Outsourcing is one of the most efficient ways to save cost. Currently many information technology (IT) firms and call centers rely on outsourcing.

Concept of Manpower Outsourcing

In outsourcing, an external firm or company carries on management or development of a product on behalf of another firm. The concept started when companies were reluctant to hire new employees for short-term jobs. Hiring new employees means more work for HR people, security checks, and other overheads, which was not a worthy undertaking for a small project. Manpower outsourcing answered this problem, as in this case the primary company doesn’t hire the worker directly. The external firms who supply the skilled workers are called manpower-outsourcing firms. Lack of skilled workers is another scenario when manpower outsourcing is required. Many IT firms, at times, require people well- versed in specific technology, which they might not, otherwise, have in their resource pool. In such cases, they can hire skilled professionals also called consultants to complete their tasks.

Manpower Outsourcing Procedure

Once a company decides upon outsourcing, they look for an appropriate supplier and ask for Request for Proposal (RFP). Sometimes RFPs from multiple vendors are requested. In RFP, vendors cover the process that they will follow to complete the project, current financial position of the company, technical ability of its employees, and all the information, which can help win over the confidence of the company. Then the company negotiates with companies and decides on their “best and final offer” (BAFO). Both the parties finalize the contract and sign it. Next step is the transition of knowledge and information from the source company to the company providing manpower. Delivery schedule is decided for the delivery of the product. Once the project is finished, the source company can decide to terminate the contract or may renew the contract.

Why Outsource

Some of the benefits of outsourcing are listed below:

o First and by far the most important aspect is cost reduction of development of overall project.

o Hiring manpower from an outsource company who has good and knowledgeable skilled professionals in the field, can improve quality of the product.

o Lowering pressure on HR department of hiring and maintaining skilled professionals.

o Companies can put more emphasis on designing and research of a product rather than putting effort on meeting deadlines.

Demerits Along with benefits people also see some demerits of outsourcing. Some of the disadvantages of outsourcing are:

o Manpower outsourcing can impact workers or employees of the company. Sometime companies cut jobs in their companies and outsource the work to a third party.

o Most often outsourcing companies are not able to meet the standards and timelines.

o There are also concerns related to fraud and security, as there is always a chance of identity theft or misuse of sensitive information.


Companies today compete to sustain their clients and yet provide a quality service. The only way they can survive is by reducing their running cost. IT is one of the best and most efficient ways to reduce the cost of development of a project.


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