• 3,000 firms
  • Independent
  • Trusted
Save up to 70% on staff

Home » Articles » Advantages and disadvantages of staff leasing for your business

Advantages and disadvantages of staff leasing for your business

Staff leasing for your business

Remote employment is becoming increasingly popular, there might still be a time when small businesses need a team they can interact with physically. Businesses turn to employee leasing when they want to strategically expand their team.

A third party can help them provide staffing that will do in-house tasks for them on a fraction of direct employment.

Whether it’s small jobs like maintaining the office space, coordinating with the courier to deliver their products, or safeguarding their place.

Staff leasing for your business

Staff leasing is the process of hiring employees through a third-party company. This works the same as seat leasing where the third party provides the office space complete with equipment and connection needed for their work. Only, they will provide the manpower and cover the administrative duties for them.

The company and the business owner share employment responsibilities for the staff. Their work duties will come from the employer while the third party will take care of the salaries, benefits, and tax payment, all paid by the employer.

Employers decide to do staff leasing for a few reasons:

Get 3 free quotes 2,300+ BPO SUPPLIERS
  • Ease the burden on administrative services. Hiring additional employees mean additional paperwork required for compliance. It also means additional tasks needed such as payroll management.
  • With staff leasing, the PEO can handle the administrative services needed for staff employment, including tax payment, benefits application, etc.
  • Save on recruiting costs. Since PEOs do the recruitment for the business, the costs of hiring and onboarding an employee is now decreased.
  • It is also an advantage for their HR team since they can focus on core activities for the company.
  • Hire for maintenance and other services. To focus on the main tasks, employers lease staff to do maintenance work. Most PEOs provide blue-collar employees, usually janitors, lobby receptionists, security guards, etc.
Advantages of staff leasing
Advantages of staff leasing

Relationship with the company 

Leased staff feels that they belong to the company. They have the chance to absorb their culture, work ethics, values, and morals.

They also have the chance to get to know other employees and bond with them through team-building activities and other social events.

Employer benefits

  • Access to local top talents. There’s no need for employers to have expertise in finding high-quality talents needed for their roles. The PEO or the leasing agency will do it for them.
  • Expertise in compliance. PEOs are trained to coordinate with tax agencies and other offices and comply with their required paperwork needed for new staff.
  • With this, employers can assure that they will file these documents with minimal errors on their part.
  • Legal protection. In case an employee sues them for alleged discrimination or wrongful termination, a PEO can help them provide the legal requirements for the trial.

Disadvantages of staff leasing

Less control over employees

Though leased staff renders work for a business, they are still under the employment of a PEO or staffing agency. Therefore, the company still has to communicate with their agency if they want to hire or fire certain staff.

Lack of direct communication

Employees won’t have direct communication with the company HR or authorities once they request or demand for a salary increase or raise a concern in their workplace. They would have to go to their staffing agency to raise their concerns properly.

This goes the same with the company they render work to.

Increased dependency on staff leasing

Companies might also grow dependent on staff leasing, which could have a negative impact on their business. In turn, work and product quality might be sacrificed, and they might end up with both unsatisfied customers and employees.

Lack of motivation and commitment

Lastly, leased staff are only committed to a company for a certain period. This demotivates them in planning long-term commitment with their employees and investing in their growth as a part of the company.

Get the complete toolkit, free

This also demotivates employees in return, since they are aware of their definite time with the business.

Advantages of staff leasing
Advantages of staff leasing

What to consider when leasing employees

In order to avoid this, business owners must consider a few things before hiring their first leased staff.

Find the best staff leasing provider

The internet is the easiest place to start when it comes to researching. Review sites like Manta list different agencies including their address, contact number, pricing, and ratings. Some even include reviews and rankings n their website.

A referral is also a good way to start researching. Ask a few friends and local businessmen who already tried staff leasing if they have a company to refer to.

Determine the need for staff leasing

Leased employees also work full-time, though they should be hired for the short term. Check their tasks.

If it requires a long-term employee commitment, then better to hire an in-house employee or outsource it.

While staff leasing comes with a number of drawbacks, such as a lack of involvement in the employee hiring process, many of these disadvantages can be negligible if you’ve partnered with an established and well-trusted staffing agency like Booth and Partners.

Consider outsourcing

Consider outsourcing processes that don’t need physical interaction. Outsourcing processes help to save big on costs and resources. Hiring an offshore BPO company is also a good strategy when it comes to expanding a business.

Get Inside Outsourcing

An insider's view on why remote and offshore staffing is radically changing the future of work.

Order now

Start your
journey today

  • Independent
  • Secure
  • Transparent

About OA

Outsource Accelerator is the trusted source of independent information, advisory and expert implementation of Business Process Outsourcing (BPO).

The #1 outsourcing authority

Outsource Accelerator offers the world’s leading aggregator marketplace for outsourcing. It specifically provides the conduit between world-leading outsourcing suppliers and the businesses – clients – across the globe.

The Outsource Accelerator website has over 5,000 articles, 350+ podcast episodes, and a comprehensive directory with 2,300+ BPO companies… all designed to make it easier for clients to learn about – and engage with – outsourcing.

About Derek Gallimore

Derek Gallimore has been in business for 20 years, outsourcing for over eight years, and has been living in Manila (the heart of global outsourcing) since 2014. Derek is the founder and CEO of Outsource Accelerator, and is regarded as a leading expert on all things outsourcing.

“Excellent service for outsourcing advice and expertise for my business.”

Learn more
Banner Image
Get 3 Free Quotes Verified Outsourcing Suppliers
3,000 firms.Just 2 minutes to complete.
Learn more

Connect with over 3,000 outsourcing services providers.

Banner Image

Transform your business with skilled offshore talent.

  • 3,000 firms
  • Simple
  • Transparent
Banner Image