The concepts of labour broking and outsourcing are often misinterpreted and are used interchangeable however, there are a number of differences between the two. The key differences are the type of employment generated, job security, treatment of workers and the required skill sets. Labour broking is more inclined towards temporary or casual employment. Outsourcing creates fixed-term or permanent employment, and employees are entitled to the benefits, and in some countries, employees have full protection under the Labour Acts.

Labour broking also known as temporary employment is a practice in which companies employ a casual workforce through labour brokers. Labour broking may also be defined as a form of subcontracting, where definite services are procured from an outside.

One of the advantages of labour broking is that it enables you to cover temporary gaps in labour quickly and without having to go through the entire recruitment process for employees who are only needed for a brief period. Recruitment takes a lot of time and effort, from advertising the position to screening, interviews and contracts. This is where labor broking provides value. Brokers will handle every step for you and, in some circumstances, will already have a database of qualified applicants, making it easy to deploy them where they are required and drastically reducing the time it takes to have more staff on the ground.

According to South African Journal of Labour Relations, labour brokers are variously referred to across the globe as temporary agencies, consultants and temporary contractors. In the United Kingdom (UK), labour broking refers to practices such as outsourcing, which is mainly used to outsource public sector services for the purpose of improving the efficiency and effectiveness of public bureaucracies. Sweden uses labour brokers as human resource consultants within both the public and the private sectors and refers to them as human resource intermediaries. In Australia, the labour brokers equate to temporary agencies, which are similar to temporary employment services in Namibia.

Outsourcing mostly creates permanent or longer-term, fixed contract employment based on the outsourcing period (usually three or five years), and hired workers are put on the outsourcing service provider’s payroll in most cases. The service provider is bound by the labour legislation and is liable for terminating such employment in any unforeseen circumstances. Outsourcing service providers offer services that the end user would most likely be unable to perform themselves or would not be able to perform effectively due to a lack of skills. As these functions require specific skill sets, those hired by outsourcing service providers cannot be easily replaced. Companies use outsourcing to cut labor costs and business expenses. Outsourcing leads to faster turnaround times, increased competitiveness within an industry, and the cutting of overall operational costs.

The outsourcing sector has become a key player in generating employment in countries like South Africa. According to Business Process Enabling South Africa– the national association for companies operating in the Business Process Services sector employed approximately 215 000 workers in 2015. More than half (59.9%) of these jobs have been created in the last five years. The number of jobs catering to the international market increased by 23% in 2015, from 21 700 in 2014 to 26 700 in 2015. Jobs in Cape Town alone accounted for 87% of this growth.

Visit the Precise Management and Research Consultancy website at info@precisemrc.co.zw or contact us at +263719225464 to access the labour broking and outsourcing expertise you deserve.