Outsourcing is a topic that has been in the news lately because it is one way for companies to save money by hiring people outside their W-2 workforce.
For some industries, outsourcing is a viable solution. For example, According to Forbes, many companies are making a lot of money by sending their manufacturing business to Mexico, where it is easy to ship goods for free across the North American borders of Canada, the U.S. and Mexico. However, some people have found that hiring for IT is different from hiring manufacturers. Staffing Talk reported that when the new Target CIO came into power, he replaced the outsourced IT workers with local employees who could be watched over in order to avoid data breaches. Additionally, there is far less turnover when hiring people for a decent salary and there is also less distance between the employees and the employer.
Successful cases of outsourcing
Even while this may be true, IBM outsources much of its IT to Mexico, and has done well in this process. The company sees Mexico's future option as a place for IT outsourcing as a "triple play of collaboration between the government, private businesses and universities Guadalajara is becoming the Silicon Valley of Mexico," according to Forbes. Often the more experienced and professional workers are outside the U.S. By using cloud-based computing, businesses will be able to expand their hiring pool beyond the geographic boundaries, as employees will be able to stay connected with the business from any location.
Independent contractors
Hiring independent contractors is a common practice and one that The Department of Labor has been paying closer attention to from a regulatory standpoint, according to HR Morning. Some companies try to avoid the Affordable Care Act laws by hiring independent contractors, but these people must certify properly. Additionally, the IRS wants the cash it gets from employees for unemployment insurance, plus tax revenue. Those interested in avoiding the law can look at the IRS website to see if they meet the three-prong test. Generally, the penalties for hiring employees and knowingly listing them as independent contractors grow in severity, and the first offense might be only a misdemeanor, but the second offense could be much worse. Although it varies depending on the state, violators would face heavy fines, according to Forbes.