• risks of unforeseeable absence for sickness, accidents, maternity
• risks for internal time inefficiencies, as employees are usually paid on a time base and not on a variable compensation per service unit
• risk of social contribution and Labour National Collective Agreement which are difficult to foresee
• risk of resignation and training investment loss
• additional cost for benefits or incentives to decrease turnover and increase average duration of employment relationship
• legal difficulties to prove employee responsibility and possible negligence
• legal difficulties and possible high and uncertain cost in order to resolve employment contracts in case of negligence, redundancy, end of service need
• replacing employees means additional indirect cost for recruitment and selection

Out-sourcing on the contrary allows to avoid most of the risks above and have in addition the following advantages :

• grants higher cost flexibility (per service unit and negotiability)
• grants easier benchmarking research for best market conditions re-negotiable from time to time
• grants usually growing volume discounts
• grants usually higher specialization skills
• allows to turn all organization cost and responsibilities on the supplier
• allows to focus on results control.

The key question is often therefore:

Hiring a new employee or searching for a service agreement?

Work on contract agreements can be customized with hundreds of clauses which can legally grant the best protection to the customer, and as a general rule can rely on a higher efficiency level if results and quality are compared. This is of course not true in 100% of cases, but can be a relevant information to take decisions.

Quickly one example: international accounting needs.

Multinational companies, usually appreciated to be able to centralize accounting control and expect to find software solutions allowing multicountry management.

SAP, Navision, JD Edwards, Peoplesoft, Oracle are only some of the leading software which are allowing this, but customizing, maintaining assistance, managing the same is often requiring a high quantity of time and money.

Unfortunately very often it is not possible to avoid to produce local bookkeeping documents in local language, needing therefore a local software, which is often available at cheaper conditions, that those which would be necessary to customize one of the International packages above.

Outsourcing in this case is allowing also to externalize responsibility of checks, updates and is granting professional insurance coverage included in the sale prices, mostly avoiding the risk of operators absences and turnover.

An alternative to be considered might instead be to evaluate the possible convenience of import and export of data between an International existing system, and a local one, which might mean a higher set up effort but an efficient performance and management cost thereafter.

HTLC can offer any solution tailored to each client needs, with 35 years of experience working with multinational small and medium size companies.

"This note was compiled on the basis of information available to HTLC Network A.G. at the time of writing (24.10.2010). It reflects our understanding of the principal issues arising from the new legislation for member companies, and any errors might be those of HTLC Network A.G.; however, this note is not intended to constitute legal advice and no business or legal decision should be taken based solely on its content. Companies concerned about the impact of legislative changes on their business should seek expert legal / specialists assistance by HTLC Network or elsewhere.

HTLC Network is available to supply specialized consulting on demand for all the items treated in this document.".