The outsourcing market is facing increasing pressure from government agencies and regulatory bodies. A particularly prominent issue concerns the relationship between outsourcing and the employment of foreign nationals. In practice, businesses may encounter difficulties in procedures related to work authorization, face additional questions about how services are provided, and have their chosen cooperation model called into question.
For companies that outsource, this represents a significant shift in their approach to compliance.
Today, it is not enough to have a properly drafted outsourcing contract. A company should be able to demonstrate that outsourcing exists beyond the contract —in the way the process is organized, the team is managed, responsibilities are assigned, and day-to-day collaboration takes place on the shop floor, in the warehouse, or at the production facility.
So how can we safeguard the outsourcing model, especially when the process is carried out by foreign nationals?
Outsourcing Under Increasing Scrutiny
Process outsourcing is widely used in fields such as logistics, manufacturing, warehousing, and industry. It allows companies to transfer responsibility for a specific process or part of a process to an external partner and respond more flexibly to changing demand.
The problem is that outsourcing lacks a single, comprehensive set of regulations that would provide businesses with a clear distinction between the proper outsourcing of a process and a model that could be considered de facto staffing.
When it comes to hiring foreign nationals, the issue becomes even more complex.
This is because the authorities responsible for legalization can examine not only the documents of a specific employee, but also the actual nature of the relationship between that employee’s employer and the company on whose premises the service is being performed.
As a result, the assessment is no longer limited to the question:
"Does the foreign national have a document that allows him to work legally?"
The following is also becoming increasingly important:
"Under what model is this work actually being done?"
An outsourcing agreement is just the beginning
One of the most serious mistakes is the belief that a well-drafted contract is enough to protect a business.
The document is extremely important, but it should reflect what is actually happening during the process.
If the contract specifies that an external contractor is responsible for organizing the process, but in practice the client’s managers directly supervise individual employees, a discrepancy arises.
The same will apply if the contractor formally has its own coordinators, but their role is limited solely to administrative matters, while all operational decisions are made by the client.
Therefore, the first step in the audit should be to compile a list of:
what we specified in the contract → how we actually carry out the process.
The greater the difference between these two images, the greater the potential risk.
1. Make sure you are actually initiating the process
The first question should be very simple:
What exactly is the customer buying?
If the answer is a specific number of people available for a specific number of hours, it is worth taking a closer look at the structure of the collaboration.
In process outsourcing, the subject of the service should be a specific process, scope of work, or result for which the contractor is responsible.
This could include, for example, order fulfillment, packaging, sorting, quality control, handling a specific stage of production, or another distinct aspect of operations.
It is not the term “outsourcing” as stated in the contract that determines the nature of the partnership. What matters is the actual content of the contract.
2. Determine who is actually managing the team
This is one of the most important elements of the entire model.
An outsourcing company should have a realistic ability to organize the work of its own team.
In practice, it's a good idea to check:
- who assigns tasks,
- Who is in charge of casting,
- Who determines how the process is carried out,
- who handles absences,
- Who organizes substitute teachers,
- who employees report problems to,
- who evaluates the performance of assigned tasks.
The role of coordinators takes on particular importance.
If they exist only on paper, while the client actually manages the day-to-day work of the external team, the formal structure of the outsourcing arrangement may differ from actual practice.
3. See what teamwork looks like on the court
Many problems do not arise when signing a contract.
It is produced a few months later on the production floor or in the warehouse.
An example?
The client urgently needs to reassign several people to another task. So the manager approaches the contractor's employees directly and tells them what to do.
At first glance, this may seem like a harmless solution to an operational problem. However, if this approach becomes the norm for day-to-day collaboration, reality begins to diverge from the original outsourcing model.
Therefore, the audit should cover more than just the HR department and contracts.
We need to go down to the hall.
That is where you can see who is actually organizing the work, how instructions are communicated, and where the actual line of responsibility between the client and the contractor lies.
4. You must be able to justify the use of the client's infrastructure
A situation in which employees of an outsourcing company carry out a process on the client’s premises and use the client’s infrastructure may raise particular concerns.
Meanwhile, in many industries, this is a natural consequence of the nature of the service.
The picking process cannot be moved outside the warehouse where the goods are located. A specific production step cannot be performed outside the production line to which the service applies.
The mere fact that the process is carried out on the contractor’s premises does not, therefore, determine the nature of the entire relationship.
However, the company should be able to demonstrate why the process is carried out at this specific location and how, despite using the client’s infrastructure, the contractor retains organizational responsibility for the scope of work entrusted to it.
5. Document how the service is provided
If the authorities are scrutinizing the nature of the business relationship more closely, the business owner should be prepared to provide more than just the contract itself.
A complete set of documents showing that the terms of the contract are backed by an actual service may be significant.
Depending on the nature of the process, these may include, among other things, documents specifying the scope of the service, the method of billing, the parties’ liabilities, the coordination structure, or confirmation of the completion of specific work.
The documentation should tell a coherent story:
The company commissioned the process → the contractor organized it → managed its implementation → was responsible for its execution → the service was completed and settled.
6. Combine outsourcing with the legalization of foreign workers’ employment
In the case of teams composed of foreign nationals, an outsourcing audit cannot be limited to an assessment of the relationships between the contracting parties.
The second step is legalization.
Working conditions should remain consistent with the legal basis for a person’s employment.
Therefore, companies should consider the following factors together:
outsourcing model + actual working conditions + legal documentation for the foreign national.
This is because changes to the organization of the process may have consequences that extend beyond the commercial contract itself.
This is particularly important in large international teams, where a recurring procedural error can affect many people at the same time.
7. Prepare your company not for a single audit, but for several possible areas of review
Outsourcing is currently a topic of interest for various institutions.
Various authorities examine this issue from different perspectives: the legality of hiring foreign workers, the nature of the legal relationship, social security obligations, and the accuracy of tax filings.
This means that compliance should not be designed solely for one specific scenario.
The model should simply be consistent.
If the contract says one thing, the operations department does another, the documentation for foreign nationals indicates a third, and the method of billing for the service suggests yet something else—it is precisely these discrepancies that can pose the greatest risk.
Four Levels of Outsourcing Security
A company that uses outsourcing and employs foreign workers can approach preparation for an audit by analyzing four areas.
LEVEL 1: CONTRACT
Is the subject matter of the contract actually a process or a service? Are the parties’ responsibilities clearly defined? Does the structure of the document align with the business model?
LEVEL 2: OPERATIONS
Who is actually managing the process? How do the coordinators operate? Who organizes the team’s work? Does daily practice align with the terms of the contract?
LEVEL 3: LEGALIZATION
Do the conditions under which foreign nationals perform their work correspond to their documents and the legal basis for their employment? Are operational changes also analyzed from the perspective of legal compliance?
LEVEL 4: DOCUMENTATION
Is the company able to reconstruct and demonstrate how the service was provided? Do the documents paint a consistent picture of outsourcing as an actual process?
Only by considering all four levels can one realistically assess the security of the adopted model.
The biggest risk is outsourcing that exists only on paper
Increased regulatory activity does not mean that companies should give up process outsourcing.
Instead, it means that this model requires an ever-greater degree of organizational maturity.
Properly organized outsourcing should be evident not only in the contract but also in the management structure, the way the process is carried out, the division of responsibilities, and the documentation.
This takes on particular significance when hiring foreign nationals, as challenging the established model could also have consequences in the area of work authorization.
Therefore, instead of waiting for the first questions from the agency or regulatory body, it’s a good idea to ask them yourself in advance.
Who manages the team?
What is the contractor actually responsible for?
What exactly is the customer buying?
Does the situation on the factory floor match what's in our contract?
Can we document this?
If the answers are clear and consistent, the company is in a much better position than one that only begins to analyze its model after an audit has begun.
Secure outsourcing begins before the audit
At the NJOB Group, we view process outsourcing as a comprehensive undertaking and a responsibility for the entrusted process—not simply as the provision of a specific number of employees.
In the case of teams composed of foreign nationals, it is also particularly important to ensure that employment is properly legalized and that documentation is regularly checked for compliance with the actual conditions under which the work is performed.
In today's market environment, it is precisely this combination of operations, coordination, legal compliance, and regulatory compliance that is becoming one of the most important elements of secure collaboration with an external partner.
Because the best time to review your outsourcing arrangements isn't the day the authorities ask for the documents.
It's best to do this when everything is working—and we still have time to fix what isn't working as it should.