Outsourcing can bring many advantages to a company. These include lower operating costs, access to new resources and technology, and the ability for the organization to focus on its most important activities. However, there are some unintended consequences of outsourcing that can affect permanent employees of companies. We will explain these in the following article.

Consequences of outsourcing: How can outsourcing affect permanent employees? – table of contents:

  1. Consequences of outsourcing: potential risks for employees
  2. How to prevent fear among staff?
  3. Impact of outsourcing on employees of outsourced companies
  4. How can a company prevent such a situation?

Consequences of outsourcing: potential risks for employees

The use of outsourcing services by companies may raise some concerns among their employees. These include, first and foremost, threats to their job security. Many employees perceive the decision of a company to outsource as a possibility of losing their jobs to people from the company providing such services. This fear may be justified – both labor costs and wages may be lower. That anxiety may become the basis for dissatisfaction and/or reduced quality of work.

Another risk associated with turning to an outside firm for services is the feeling among regular employees that they are not good enough at what they do. Knowing that their qualifications may be lower than those of outside workers, they can lose motivation to continue working. This, in turn, results in deterioration in their productivity and may even lead them to quit the job.

How to prevent fear among staff?

Company executives and managers should not allow the situations described above to occur. In order to prevent fear and insecurity among the company’s employees, you should talk to them first. Having the intention to use outsourcing services, the organization’s management should at the outset inform the staff about the motives that are involved in implementing this business model. Communicating the intentions that prompted the management to make such a decision should calm the mood among the regular employees.

Presenting the real reason for outsourcing will make the staff feel more confident. By doing so, the company will avoid a number of adverse events ranging from a deterioration in the quality of work to even professional burnout or layoffs among staff.

Impact of outsourcing on employees of outsourced companies

As we mentioned at the beginning, outsourcing also affects the staff of companies that provide this type of service. This impact can be both positive and negative. The positive aspects include the wider choice of job offers on the market. The owners of external companies, wanting to perform the envisaged services, will need the right people to do so. In this way they give additional workplaces and their greater number influences the fact that employees can apply for better conditions of employment.

The negative aspects include mainly the lack of identification of the staff with the company that employs them. People working in outsourcing companies usually provide their services to external companies. These may be, for example, security guards, delegated to protect a given facility, or persons working for a company offering cleaning services. Such employees may feel a greater sense of belonging to the company they work for than to the one with which they have an employment contract.

How can a company prevent such a situation?

Periodic staff rotation may be a good idea. We do not mean, of course, firing employees. However, you can work on their mobility. For example, the employees of a security company can move from time to time to various other sites for which the company provides its services. Just as in the case of permanent employees of outsourcing companies, managers of outsourcing companies should inform the staff of the reasons for their actions.

Consequences of outsourcing


The consequences of outsourcing are inevitable. As we can see from the examples given above, the impact of outsourcing on regular employees, can be both positive and negative. This depends largely on whether they work for companies that use or offer outsourcing services. Another aspect that affects permanent staff is the attitude of bosses and managers towards their work. They should always let their employees know why they make the decisions so that their subordinates feel confident in the organizations they work for.

Want to know what are the advantages of outsourcing in business? Read our article.

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Author: Andy Nichols

A problem solver with 5 different degrees and endless reserves of motivation. This makes him a perfect Business Owner & Manager. When searching for employees and partners, openness and curiosity of the world are qualities he values the most.