Who could use this article?

First of all this article will provide useful information for top-managers and directors, HR-managers and head of departments as well as all employees who see themselves in senior positions in future and are accustomed to delving in business-processes of the company. With the help of this article you will be able to get acquainted with the absolute hit of HR-services market that is outstaffing and to find out what kind of a profit outstaffing can bring to your company.

What is the outstaffing and how can it help business?

By outstaffing is implied situation when personnel is being recruited, replaced, trained, managed etc. by efforts of Customer company and is simultaneously given for outstaffing (employed out of staff) to outstaffing company. Therewith performing company provides HR and accounting support of outstaffing personnel according to employment contract or civil-law agreement.

The main advantages of outstaffing are the following:

• Employment cost reduction
• Passing legal responsibility to outstaffing company
• Focus on core business of the company
• Increasing motivation and work efficiency of outstaffed personnel
• Increasing the value of the company by increasing one of the key indicators of any company – the company's revenue per full-time employee.

If to interpret benefits in figures, then resorting to outstaffing company will be able to save up to 36% on direct labor costs and achieve significant reduction of indirect costs by reducing the number of people required to service outstaffing personnel.

Outstaffing services demand in Ukraine

HR-services in Ukraine and outstaffing in particular is a relatively new area in comparison with the traditional sectors of the economy. In this regard, the outstaffing market has not yet been evaluated and analyzed enough by research companies. Promotion Staff Group of companies leading in the market of outstaffing services was willing to become a pioneer and to organize by its own efforts  the first researches and evaluations of outstaffing services market.

To determine the demand for the outstaffing services in 2013 and forecast demand for 2014 there was undertaken an extensive study, which surveyed persons responsible for the control and implementation of HR-processes in leading national and international companies in Ukraine (heads of HR, HR-Directors, HR-managers and others).

More than 1000 of leading national and international companies working in Ukraine were selected for research. The main research method was telephone interviewing, while respondents were asked to answer two key questions:

• Does your company use the outstaffing service?
• Is your company interested in outstaffing personnel? (actualness of the service as for present day)

The results of research made by Promotion Staff Group of companies show that 60% of large international and national companies in Ukraine use or used some time in the past the services of outstaffing, 30% of companies have never used outstaffing and have no intention to use this service in future and 10% of companies have never used such services before but have intntion to use the employment of personnel by the outstaffing model.

60% of companies makes the core of target users of outstaffing services and give assurance of the continued long term stability of this market. 10 % of companies, which showed their interest, are the source of growth driver of the market in 2014-2015 years. 30% of companies that do not use outstaffing services are a strong potential for market growth in the long term prospect.

For the second phase of the study Promotion Staff Group of companies choose method of personal interviews with representatives of companies to get expert estimate of the market and its development trends. 43 private meetings with major players of such fields as telecommunication, IT, banking, logistics, oil and gas, agro business, retail, FMCG, pharmaceuticals etc. were held within of this phase.

Historically, international companies demonstrate higher level of trust and interest in outstaffing services than national companies do. Consequently representatives of international companies in second phase selection of research were about 72%.

Most often outstaffing approach is implemented to business processes in the FMCG, pharmaceutical and banking sectors. Participants in the second phase of the study fully confirmed these statistics.

Based on the results of the second phase of the study, it is a fair assumption to say that outstaffing is the fastest developing line of business in Ukraine, profitable both for customer companies, and for Ukraine's economy, as it creates additional revenue to local budgets as VAT on services provided by outstaffing companies .

According to the statements of representatives of the largest companies in Ukraine, the level of awareness of the concept of outstaffing is quite high, especially in an environment of international businesses.

According to Promotion Staff Group of companies’s estimates, total number of outstaffing personnel in Ukraine is more than 25000 employees that is invulnerable argument of timeliness of outstaffing service in Ukraine.

The analysis of timeliness of services among leading companies operating on territory of Ukraine suggests the positive dynamics of growth of interest to outstaffing services. More than 70% of polled companies in Ukraine are ready to consider outstaffing of personnel that is a high familiarity score for subject and components of the services of outstaffing companies.  More than 8% of respondent companies which had not previously worked with this direction are ready to implement outstaffing.