Home Blog 5 Compelling Reasons to Outsource HR in Indonesia Human Resource | Indonesia | Recruitment 5 Compelling Reasons to Outsource HR in Indonesia InCorp Editorial Team 27 December 2023 4 minutes reading time Table of Contents 5 Reasons for HR Outsourcing in Indonesia 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. Read Full Bio Verified by Daris Salam COO Indonesia at InCorp Indonesia With more than 10 years of expertise in accounting and finance, Daris Salam dedicates his knowledge to consistently improving the performance of InCorp Indonesia and maintaining clients and partnerships. Frequently Asked Questions How does the HR outsourcing mechanism work? As your HR outsourcing provider, InCorp signs a standard employment agreement with an outsourced employee. After this, we take care of the employee’s payroll in coordination with your company. InCorp is also responsible for paying the salary to the employee. How many employment and hiring options exist in Indonesia? According to Indonesia’s Manpower Law, employers can hire Indonesian talents under temporary or permanent employment. What is the Indonesian employment status in PMA company? In Indonesia, employment arrangements are categorized into temporary employment agreements (PKWT) and permanent employment agreements (PKWTT). Temporary contracts are for short-term, seasonal, or experimental work, while permanent contracts are for continuous employment. What are the obligations related to payroll? Health Insurance and Social Security Insurance (BPJS) are mandatory. The company and the employee will bear a certain percentage, respectively. Another obligation is tax withholding. The percentage and type of taxes vary from case to case. Contact us to get information on your specific field. Get in touch with us. 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Cekindo Business International (“InCorp Indonesia/ we”) for general purpose only and we make no representations or warranties of any kind. We do not act as an authorized government or non-government provider for official documents and services, which is issued by the Government of the Republic of Indonesia or its appointed officials. We do not promote any official government document or services of the Government of the Republic of Indonesia, including but not limited to, business identifiers, health and welfare assistance programs and benefits, unclaimed tax rebate, electronic travel visa and authorization, passports in this website. More on Human Resource Top UAE Investment Opportunities in Indonesia: Sectors to Watch and Profit From Read more How the Waste-to-Energy Sector in Indonesia Presents a Lucrative Opportunity for Japanese Investors? Read more The Role of Digital Economy in HR Development Read more