Outsourcing of activities by means of contracting out
Along with the introduction of market
economy principles and the withdrawal of the state from the industry and
services sector, together with the entry of foreign investors in these sectors,
outsourcing has established itself in practice as a commonly used tool for
reorganization and optimization of the business activities of enterprises.
Outsourcing is regarded as a contract between a company – assignor and a
company-contractor by virtue of which an activity presently performed by the
assignor is assigned to a contracting company through sale-purchase, lease or
rent arrangements.
Herein below the process shall be referred to as “outsourcing”, the
person initiating the outsourcing shall be referred to as “outsourcing company”
or “assignor” and the person undertaking the activity - “new contractor’ or
“contracting company”.
There is no legal definition of outsourcing in our legislation. Therefore
the definition of outsourcing should be taken out from its specifics, as they
appear in practice.
Outsourcing is: management strategy in which outside resources are used
for the performance of activities usually carried out by the assignor and its
personnel. This method of restructuring is used for additional, non – core or
ancillary activities of the assignor. It is implemented so that the outsourcing
company can focus on the activities that are basic and substantial for its
business.
Differences should be drawn between outsourcing and subcontracting. In
the latter case, the assigner assigns to the subcontractor the production,
processing or delivery only of a part (parts) or product (products) of the
production of a whole product or service. The delivery of the final service and
the production of the final product are carried out and managed by the assignor.
In the case of outsourcing to new contractor, the latter is assigned the
performance and management of the whole activity related to the delivery of a
certain service or the production of a certain product. Although the outsourcing
company acts as an assignor, the contractor does not act as subcontractor.
Although outsourcing is often done for activities necessary for the
outsourcing company itself and not for the activities that company does for
third persons.
In principle, depending on the outsourcing method, the outsourcing may
have different specifics, but generally two groups can be outlined on the basis
of whether a transfer of assets takes place or not.
It should be noted as an outstanding characteristic of the outsourcing
process that it involves not simply transfer of factual relations or solely
rights and obligations or assets but it is actually transfer of a working
activity or part of an enterprise together with all its integral elements.
Another specific is that the restructuring, commonly being an
inter-company issue, is effected through the involvement of a person being an
outsider to the company – the new contractor. Last but not least – important
specific is the fact that with regard to third persons with whom the assignor
was engaged prior to the outsourcing, the outsourcing itself does not bring any
change.
²². The methods for taking out certain activity or part of an enterprise and transfer of performance to a contractor are briefly provided by and can be drawn out from article 123 of the Labor Code. Outsourcing is effected by means of a contract signed by the person who has performed the activity until that moment, and the new contractor. On the grounds of this contract the activity is transferred from the first entity to the second through:
Distribution of the activity of one enterprise to several
others;
Transfer of separate part of an enterprise to another
enterprise;
Change in ownership of a separate part of an enterprise;
Rent, lease or concession of a separate part of an enterprise.
It should be stressed that using the above methods is not in itself
outsourcing. In order to have outsourcing it is necessary that the transfer of
the activity to the new contractor is accompanied by arrangements for the
subsequent use of the activity outsourced by the assignor.