The Wall Street Journal has a thought provoking Feb. 1, 2017 peace entitled The End of Employees. It is about how business are contracting out more and more. Why? Because it is cheaper of course. As the article states:
Steven Berkenfeld, an investment banker who has spent his career evaluating corporate strategies, says companies of all shapes and sizes are increasingly thinking like this: “Can I automate it? If not, can I outsource it? If not, can I give it to an independent contractor or freelancer?”
Hiring an employee is a last resort, Mr. Berkenfeld adds, and “very few jobs make it through that obstacle course.”
Visitors arriving at SAP, based in Walldorf, Germany, likely don’t notice that about 30 receptionists at its U.S. facilities work for contractor Eurest Services, part of Compass Group PLC. It happened in 2014 after SAP executives concluded during a review of potential outsourcing opportunities that some managers were paying their receptionists above-market wages.
SAP handed over hiring, training and oversight of receptionists to an outside firm. They were told they could leave SAP or keep their jobs through Eurest, which pays the receptionists in line with the overall market.
This is of course, nothing new. There is a ton of law concerning the issue of who is an employee which myself and others have written about. This article focuses on cost, but employers also contract out to avoid potential liability as an employer under our labor and employment laws. This article also leaves out one important fact. While many of the contracted out employees may not be employees of the firm, they may, under certain circumstances become employees of the contractor.
Mitchell H. Rubinstein