Outsourcing and joint ventures

The material in this topic covers the employment law issues that may arise in relation to an outsourcing arrangement and in a joint venture (JV).

Outsourcing is the delegation of a business activity by an organisation (the client) to an external entity (the supplier or service-provider) specialising in that activity.

A business may choose to outsource for a variety of reasons, such as to:

1. •

   reduce costs

2. •

   improve performance

3. •

   improve the quality of service

4. •

   access skills or technology

Our materials use the term 'outsourcing' broadly, to cover three types of situation:

1. •

   where a service previously undertaken by a client in-house (eg payroll/cleaning) is outsourced

2. •

   where an outsourced service is assigned to a new contractor on subsequent re-tendering (sometimes known as 're-letting' or 'second-generation' outsourcing), and

3. •

   where a contract ends and the service is brought in-house by the client (sometimes known as 'insourcing')

Financial considerations are often the main business driver behind a decision to outsource but employment-related aspects can be crucial to the success of an outsourcing project.

Practice Note: How to deal with corporate support in employment