Some do’s & dont’s for 3rd party employees

How organisations are dealing with the dearth in talent and coping with internal demand for talent by outsourcing to third-party services.


Numerous organisations have laid off this year, creating a gulf in the way talent is spread out within these organisations. The dearth of talent has paved the way for corporate trends such as ‘quiet hiring’ to weave themselves into the corporate landscape of 2023.

One way in which organisations have coped with their internal demand for talent is by hiring from third-party services, in other words, ‘external’ quiet hiring.

Cost is one of the key reasons behind hiring employees from a third party. Organisations can save between 15 to 20 per cent of the hiring costs by utilising third-party services. At a time when organisations cannot bear the cost of retaining employees, this seems to be the best solution for them.

Even though organisations may benefit monetarily while hiring from a third party, they also have to deal with the questions that arise — in terms of employee loyalty, initiation and culture among others — while outsourcing talent.

Onboarding process

For an organisation, one of the most important stages in an employee’s life in its workforce is the onboarding process. This is the first official stage of initiation for new recruits during which they are briefed about the company’s vision, workplace culture, corporate ethics, dress codes, hierarchy and so on.

The onboarding drive usually takes between two to four months for a permanent / full time employee. It is a specially-crafted programme that gives the employees a complete overview of the company culture and what is expected of them in their role, allowing them to warm up to their new workplace in a smooth manner.

Employees who are taken in by an organisation in the short term have to be briefed in a quick and efficient way. It is not feasible for an organisation to spend four months initiating employees appointed on a six-month contract and assimilating them into the workplace.

An onboarding strategy for new, short-term contract employees has to prioritise what’s important for their tenure at the organisation and their role. Conducting a day-long session on their roles and responsibilities, workplace ethics and basic rules and regulations should be the focus rather than giving these employees the ‘big picture’.

It has to be understood that these employees are here in the short term to fulfil a purpose, be it filling in the gaps of talent or a specialised expertise the organisation or a team requires at that point in time. The organisation must prioritise its tasks to take lesser time for what may seem to be unnecessary corporate processes for those hired in the short term.

“We go into the contracts with a stipulation that allows us to relieve the short-term employees of their third-party contracts with payment to the contractor, once mutually agreed on by all parties.”

Bhuvaneswar Naik, CHRO, Lentra

In some cases, there may be a few employees hired from third-party services who could actually be seen as members of a team that actually adds value to the organisation. In such cases, an organisation must delve into their contracts to understand whether there are long-term ambitions to the deal or whether stipulations can be added to allow the third-party service to release such employees from their payroll and into the organisation’s permanent workforce. It is quite similar to a ‘sell-on fee or release’ clause in football.

Contracts and clauses

Bhuvaneswar Naik, CHRO, Lentra, describes the way his organisation structures contracts with third-party contractors in lieu of this situation.

“We go into the contracts with a stipulation that allows us to relieve the short-term employees of their third-party contracts with payment to the contractor, once mutually agreed on by all parties.”

“This creates a win-win-win situation for all the parties involved. While our organisation gets an employee that adds value to the organisation, the employee’s wish to become a permanent member of the company is met and the contractor is appropriately compensated for the services,” adds Naik.

Future proofing the contracts signed by these employees is a great way of encouraging short- term employees who seem unsure of their long-term ambitions to hone their skills and produce results for the organisation.

Even though it is understood that these employees are contracted in the short term, they must not feel as though they are not an important part of the organisation.

Organisations must ensure that the contracted employees are not made to feel left out in the workplace, or ‘othered’. If employees feel disconnected from the workplace it could foster feelings of anxiety that could have been easily nipped in the bud by the organisation.

One way organisations can provide support to their employees is by drafting contracts that are fair and in accordance with the arrangement and role the short-term employee agreed upon.

“It is essential that organisations draft contracts customised to the different nature of employment and ensure that employee benefits and welfare are provided in a fair manner. In addition they should be able to access all perks available to FTE and be integrally involved in all employee engagement initiatives,” points out Maneesha Jha Thakur, ex – group HR, Emami.

While signing agreements and contracts, the organisations must not lose focus on the duration of employment, reason behind their appointment and the corresponding benefits they should avail. Short-term employees must avail the same benefits as permanent employees enjoy to ensure they do not feel side-lined at the workplace.

“Organisations must define clear goals and the expected results to ensure that the non FTE employees are effective.”

Maneesha Jha Thakur, ex – group HR, Emami

That being said, the organisations must understand the utility behind their appointment and stipulate them accordingly. For instance, short-term employees cannot avail the same number of leaves as permanent employees every month. Their paid leaves must be in accordance with the duration of their employment.

Expectations and responsibilities

Similarly, the information that these employees must be exposed to, in order to ensure they are able to complete their tasks must be monitored and signed off on before engaging with the same. It should be understood that some roles may need access to more information than others. Accordingly, their contracts must reflect that and the appropriate non-disclosure agreements must be signed.

Expanding on the same, Thakur suggests, “organisations must define clear goals and the expected results to ensure that the non FTE employees are effective. The organisation must define linkages and interrelationships with others and enable these proactively. Since the time period of such employment may be varied, we cannot expect new hires to build relationships and network to be productive. Organisational memory needs to be documented effectively and be available for continuity and referencing.”

In the end, ensuring that the contracted employees are treated in the same way as pre-existing employees are treated is essential. This will make them feel like they are a part of the organisation for the time they spend at the organisation. This, in turn, will give better results in every which way.

It should be understood that contract workers work for themselves. Hoping that they will go beyond their defined role to help the organisation is too much to expect. However, it is not impossible if the environment is made conducive for them.

Having an established organisational culture as well as a clearly-defined mode of action while hiring from third-party sources is essential to create a smooth transition into the workplace for both the employee and the employer.

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