hr outsourcing indonesia

5 Compelling Reasons to Outsource HR in Indonesia

  • InCorp Editorial Team
  • 27 December 2023
  • 4 minute reading time

The roles of HR professionals in Indonesia are of significant importance as they possess deep understanding of countless Indonesian labour laws and regulations. Poor HR performance and recruitment may even result in steep consequences, including employee dissatisfaction with an extremely high turnover rate.

Nowadays, enterprises need to acknowledge the fact that their HR functions are no longer focused on administrative tasks and personnel management. You are also required to direct your energy to employee engagement and workplace culture cultivation.

Thus, HR outsourcing in Indonesia through a professional third party allows companies to reap the benefits and ensure that employees are fully qualified and will be satisfied to stick around permanently.

Here are the top reasons you should outsource your HR operations as it has become a common trend in Indonesia.

5 Reasons for HR Outsourcing in Indonesia

1. Reducing Employee Turnover Rate

Incompetent or unqualified employees can lead to a high turnover rate in a company. Also, if a HR department is unhelpful and inexperienced, employees can become frustrated when their problems are not solved. Therefore, outsourcing HR to a professional with resources and know-how can help ensure that businesses hire the right people and satisfy employees needs, which in the long run reduce turnover, costs of hiring and other associated expenses.

When employees are happy, engaged and satisfied, they will most probably stay within the company. They won’t simply jump ship the moment when other opportunities are offered to them.

2. Obtaining Legal Assistance and Mitigating Risks

Many business owners do not really understand how complex and precise the rules and legal regulations in Indonesia for HR can be. For example, wages and salaries of employees refer to these regulations under Indonesian Labour Law. By outsourcing HR, you do not need to spend a huge amount of time and resources to navigate these rules. You can now trust the professional HR consultants and are consistently informed of changes in rules and regulations to minimise potential legal risks related to HR practices and employment law.

It may be worth noting that many provinces and cities in Indonesia have their own set of HR rules and regulations, which makes it even harder for employers to keep up. Thereby, HR outsourcing becomes more critical in the country.

3. Recruiting More Competent Employees

Employee recruitment is no longer limited to just simply choose a person to fill the vacancy. A company needs people that are qualified and competent to fill every position. However, this process is always time consuming and complex, and HR should be able to tackle this carefully to avoid selecting the wrong candidates.

By engaging Cekindo as your HR professional, you are rest assured as you save your time and money without compromising the quality of your hires. Cekindo will not only manage the screening and interviewing of applicants, but also do an extensive background check.

4. Customising Company’s Efforts

Running an HR department can be expensive for companies due to wages and salaries, benefits, and taxes. In addition, it also contributes to a significant headcount that can be a problem when a company has a shortage of space.

Based on your company’s specific needs and demand, a third-party HR consultant will not only enable you to save a good amount of money as it is not necessary to set up an HR department on your own, but also minimise the internal operations.

5. Cutting Down Costs

Still related to point no. 4, when you do not have to pay for wages and salaries as well as benefits for your employees, then you can reduce costs significantly. Moreover, there is no need for you to rent a bigger office space so that everyone can fit in. This means that you will also reduce costs in terms of rental and maintenance.

Important to Read: National Holidays in Indonesia and THR: How They Affect Your Business

Talk to us online or visit our offices in Jakarta, Bali and Semarang to discuss why HR outsourcing is the perfect solution for your business in Indonesia. Increase your company’s efficiency and bottom line.

Pandu Biasramadhan

Senior Consulting Manager at InCorp Indonesia

An expert for more than 10 years, Pandu Biasramadhan, has an extensive background in providing top-quality and comprehensive business solutions for enterprises in Indonesia and managing regional partnership channels across Southeast Asia.

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According to the Indonesia’s Manpower Law employers can hire the Indonesian talents either under a temporary or a permanent contract.

  • Prohibit any form of discrimination and provide equal opportunity for Indonesians and expatriates
  • Increase the competence of the workers by giving or encouraging job training
  • Follow the procedures of termination (Terminating an employee in Indonesia can be a long, tedious, and expensive process.)
  • Observe the working hours, holidays, and overtime regulations
  • Give mandatory employee benefits including social security and health insurance
  • Withhold only the right amount of income tax on behalf of the employees
  • Follow the wages and other benefits outlined by the law
  • Process the work permits for foreign employees

As a leading recruitment outsourcing provider in Indonesia, InCorp offers comprehensive services. We will conduct an in-depth background check on candidates to verify references and qualifications.

Cost reduction, hiring time reduction, hire quality are among the most noteworthy benefits your company can enjoy.