Outsourcing Local Talent in Indonesia: Pros and How to Avoid Cons

Outsourcing Local Talent in Indonesia is considered a fairly perfect solution for companies because the burden they bear will not be too heavy. 

Data about Outsourcing Market

According to the website Statista, “the IT outsourcing market’s worldwide revenue is expected to grow at a CAGR of 10.99% from 2024 to 2028, reaching a market volume of US$777.70bn by 2028.”

This is also similar to data from different sources viz Grand View Research which says “The global business process outsourcing market was valued at USD 280.64 billion in 2023 and is projected to grow at a Compound Annual Growth Rate (CAGR) of 9.4% from 2023 to 2030.”

That the global business process outsourcing (BPO) market will have a value of USD 280.64 billion in 2023. It is estimated that this market will grow at a Compound Annual Growth Rate (CAGR) of 9.4% from 2023 to 2030.

To be more specific in Indonesia, data from Statista about Business Process Outsourcing in Indonesia will answer, he said “Revenue is expected to show an annual growth rate (CAGR 2024-2029) of 7.32%, resulting in a market volume of US$2.52bn by 2029.”

This shows that the market Business Process Outsourcing Indonesia is projected to experience a significant increase in the next few years, both in terms of growth rate and market volume. This growth shows that there are increasing opportunities in the BPO industry in Indonesia.

Business meeting with a diverse team discussing global talent outsourcing in Indonesia

Image: Freepik

However, local outsourcing is not perfect, there are risk factors that you must pay attention to.

In the context of outsourced local talent, especially in Indonesia, or more specific areas such as Jakarta, Batam, or Kalimantan, Employer of Record (EoR) could be a complementary solution to the outsourcing method.

This article will discuss the benefits and outsourcing and how to avoid Disadvantages, along with how an Employer of Record (EoR) can be the perfect complement.

➡ Immediately understand how to get talent with Empolye of Record (EoR), here.

 

Why Do People Outsource Local Talent in Indonesia?

Employer of Record (EoR) agreement being signed by a company representative and a service provider with Abhitech in Indonesia

Image: Freepik

In Indonesia, people outsource local talent because they need to gain knowledge of how to get great talent so they need help from local service providers. 

Apart from that, many people don’t know for sure how many employees they need for their new company in Indonesia. 

I liked the article from Into Great which said that “Global outsourcing and offshoring gives businesses the option of easily scaling their operations up or down, depending on demand”

Ossisto “Companies can delegate tasks such as customer support, software development, data entry, and more to offshore partners. While cost savings are a primary driver, outsourcing globally also enables organizations to tap into a diverse talent pool, foster innovation, and gain a competitive edge”

You could say outsourcing is a fast way to get local talent with in-depth knowledge to work in Indonesia.

➡ Learn how to attract global talent in Indonesia here.

 

Pros and Cons of Outsourcing Local Talent in Indonesia

Skilled professionals working as part of an outsourced team in Indonesia with Abhitech

image: Freepik

Pros: Advantages Of Outsourcing

1. Cost Efficiency

If you ask, “What is one of the greatest benefits of local outsourcing?” Cost labor is the answer.  

Companies can also outsource to save costs on training and hiring all internal employees or to scale their business.

If you quote Forbes, By searching a global talent pool, it’s easier to find the right talent at the right price

Outsourcing will allow your company to assign certain tasks to third parties who are more powerful and efficient in managing these tasks.

 

2. Focus on the Core Business

By outsourcing, companies can focus on the core business. You can focus on increasing the value of your business competency to competitors, whether foreign companies in Indonesia or companies that originate from Indonesia.

 

3. Access to Special Skills

Many things about Indonesia are cultural and procedural in nature that will confuse you if you haven’t lived in Indonesia for long. Because our culture is very complex.

Why could this harm your business? On the start page Abhitech 38% of employees resign because it doesn’t suit their personal life.

Not only does it help you culturally, but outsourcing can also help you fulfill the skills and abilities that you don’t have internally so that if you work with outsourcing, your company will be more complete.

➡️ Get outsourcing assistance here

 

Cons: Disadvantages of Outsourcing

1. Dependence on Third Parties

If your company relies too much on third parties for certain tasks, this can be quite a risk. Especially if the service provider cannot achieve your expectations, or it could be because there was a miscommunication at the start of the performance.

Therefore, choose an outsourcing provider in Indonesia, apart from being able to provide the right manpower, they also have long experience because this can be a guarantee of the quality provided.

 

2. Losing Control

Outsourcing can cause a company to lose direct control over the process and quality of work. Of course, this is a problem, therefore before working together, you must ensure that the tasks to be carried out comply with your company’s standards.

And notify your outsourcing service provider, in full, so they will adjust.

  • They invite you to ask whether your talent time zone works according to your business working hours.
  • What is the right communication method for your business? By phone, email, or instant messaging such as WhatsApp, Telegram? or there is another method.
  • Do they have enough internet to work?

 

3. Problems with communication

If you read the Forbes article about Pro and Cons of Outsourcing One of the points discussed is communication.

However, if you read further, this is not communication with the provider but with employees.

 

How Employer of Record (EoR) Complements Outsourcing

What is an Employer of Record (EoR)? 

You can go to the Employer of Record website Abhitech for more details.

Simply, your team is employed by our local legal entities in Indonesia. We handle the entire local employment process, taking care of all the compliance, payroll, and HR admin, while the employee works for your business just like the rest of your team.

Read more about what is Employer of Record (EoR) is and how does operates in Indonesia

1. Legal and Administrative Compliance

The employer of Record (EoR) provider will be tasked with ensuring that all company legal and administrative needs. This includes work contracts, visas, work permits, taxes, salaries, payroll, and allowances according to regions in Indonesia. So your company will be free from legal problems that could occur.

2. Comprehensive HR Management

Employer of Record (EoR) will also provide HR assistance from start to finish. You will be assisted in the recruitment process, onboarding, payroll, and employee management.

So, your workforce will be more productive and happy to work with you. Why? because they are treated professionally and of course, the benefits are for you too.

➡ See How Employer of Record (EoR) provides benefits for employees

3. Risk Reduction and Certainty

With Employer of Record (EoR), companies can reduce risks associated with legal and administrative uncertainty. Employer of Record (EoR) is responsible for all matters related to labor in the country where the employee works. Is like providing operational certainty and security.

 

Conclusion

Outsourcing has many benefits, but it also comes with a number of risks and drawbacks.

Employer of Record (EoR) is here as a solution that can complement and cover these weaknesses. Abhitech provides comprehensive and legally compliant workforce management services. With Employer of Record (EoR), companies can take advantage of the benefits of outsourcing without having to face the associated risks, especially in the context of managing a local workforce in Indonesia.

If you want this service you can contact Abhitech here.

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