Process outsourcing covers one separate fragment of the business, e.g. order picking or quality control. Function outsourcing covers a whole area, e.g. warehouse management, for whose operation the supplier is fully responsible.

Process and function outsourcing: two different scopes

In process outsourcing, the supplier takes over a separate fragment (packaging, repackaging, running one production cell) together with the organisation of the work and responsibility for its result. The client hands over the input and receives the output measured by agreed indicators, while the rest of the process stays on their side. This is the most common model in manufacturing and logistics, because process boundaries are visible there.

In function outsourcing, the whole area is the subject: cleaning at the plant, warehouse management, technical maintenance. The supplier is responsible for making sure a given function works to the standard set in the contract, and the client gains a single partner for the whole area.

Outsourcing isn't the same as BPO (business process outsourcing). BPO is a narrower concept: outsourcing of back-office processes, such as accounting or customer service. The process and function outsourcing described here mainly concerns production and warehouse operations, not administration.

What the two models have in common

The common denominator is transferring to the supplier the organisation of the work and responsibility for the agreed scope, billed under the contract. How outsourcing differs from staff leasing as a service is covered in the article on staff leasing and outsourcing.

Which model to choose

A process is suited to outsourcing when it can be cut off and measured. A function, when the area is peripheral to the core business, and keeping it in-house costs more than it's worth.

Outsourcing works best when the client wants to hand over an area together with its organisation. If what they mainly need is extra people on their own team, staff leasing or permanent recruitment fits better.

Implementation requires defining the boundaries of the process or function, the indicators and the handover method. The most common mistake is transferring a process without data on its prior performance; then neither side knows whether the cooperation is bringing improvement until the first settlement period has passed. Which model fits a specific situation can be worked out in a conversation with services for employers.

Employees transferred together with the process

If the outsourcing covers an area previously handled by the client's own staff, a transfer of the workplace or part of it to a new employer may occur under Article 23(1) of the Labour Code (Kodeks pracy): what matters is whether an organised set of tasks passes to the supplier together with the people or assets serving it. If it does, the employees become, by operation of law, a party to the employment relationship with the supplier, without signing new contracts. This provision applies to people employed under an employment contract. With a contract of mandate (umowa zlecenia), which is common in production and logistics, further cooperation is governed by the contracts concluded and the Civil Code.

The previous and the new employer are jointly and severally liable for obligations toward those employees arising before the transfer, e.g. outstanding pay or unpaid overtime.

An employee who doesn't want to move to the new employer may, within 2 months of the transfer, terminate the contract without notice, giving seven days' warning. Whether a transfer occurs in a specific case depends on the circumstances, so it's worth establishing this before signing the outsourcing contract, not after the first doubts arise.

Frequently asked questions

How many days in advance must employees be informed about a workplace transfer?

At least 30 days before the expected transfer date, in writing, stating the reasons and consequences for employees. The obligation applies to both employers, the previous and the new one.

Can an employee refuse to move to the new employer?

They can't refuse outright: the transfer happens by operation of law. They can, however, terminate the contract without notice within 2 months of the transfer, giving seven days' warning. These rules apply to an employment contract. With a contract of mandate (umowa zlecenia), ending the cooperation is governed by the contract and the Civil Code.

Is the new outsourcing supplier liable for the previous employer's arrears toward employees?

Special liability for these arrears arises only when a transfer of the workplace or part of it took place. In that case the previous and the new employer are jointly and severally liable for obligations arising before the transfer (Article 23(1) of the Labour Code). Without a workplace transfer, this special joint liability doesn't arise, and the scope of the supplier's obligations is set by the contract.