Outsourcing Workers: Who Is Responsible for What?

Outsourcing has become an increasingly common workforce strategy for companies looking to stay flexible, control operational costs, and access talent without managing every employment function internally. In Jakarta, where businesses operate in a highly competitive labour market, outsourcing is used across various functions, from customer service and sales support to administration, logistics, security, and other operational roles.

However, one question often comes up when companies work with an outsourcing provider: Who is actually responsible for the outsourced worker?

Is it the client company? Is it the outsourcing company? Or are responsibilities shared between both?

The answer depends on the nature of the responsibility. While the outsourcing company generally has responsibilities as the worker’s employer, the user company still has important obligations regarding the work environment, operational management, and compliance.

Understanding the distinction is essential for companies considering an outsourcing arrangement and for outsourced workers themselves.

What Is Outsourcing?

Outsourcing, or alih daya, refers to the arrangement where a company engages another company to carry out certain work or provide workers for specific functions.

Under Indonesia’s current framework, outsourcing is regulated by Government Regulation (PP) No. 35 of 2021, which covers fixed-term employment, outsourcing, working hours and rest periods, and termination of employment. As of 2026, the government has also issued Minister of Manpower Regulation No. 7 of 2026 on Outsourced Work (Pekerjaan Alih Daya), which is currently in force.

This means outsourcing is not simply a matter of a company “renting” workers from another business. There are defined employment and operational responsibilities that need to be managed by the parties involved.

So, who is responsible for what?

1. The Outsourcing Company: The Employment Relationship

One of the most important distinctions is the employment relationship.

An outsourced worker is generally employed by the outsourcing company, rather than directly by the company where the worker performs their daily duties.

This means the outsourcing company is responsible for key employment-related matters, including the administration of the employment relationship, employment agreements, payroll administration, and other obligations associated with being the worker’s employer.

The outsourcing company also needs to ensure that the employment arrangement complies with applicable labour regulations.

For companies using outsourced workers, this distinction is important because outsourcing should not mean transferring all employment responsibilities without proper documentation and governance.

2. Salary and Employee Benefits

Salary is another area where responsibilities need to be clearly defined.

The outsourcing company is generally responsible for managing the worker’s employment-related payments and benefits in accordance with the applicable employment agreement and regulations.

However, the client company also has an important role.

Before signing an outsourcing agreement, the client should conduct appropriate due diligence to ensure that the outsourcing provider has a reliable payroll and HR system.

This is particularly important because a problem with salary payments, employee benefits, or other employment obligations can quickly affect worker morale and the client’s reputation.

In other words, outsourcing the employment function does not mean outsourcing accountability for choosing the right partner.

3. Working Conditions and Workplace Safety

What happens when an outsourced worker enters the client’s workplace?

This is where responsibilities can overlap.

The outsourcing company remains responsible for its employment relationship with the worker. However, the company where the worker actually performs their duties also needs to provide an appropriate and safe working environment.

For example, if an outsourced employee works at a warehouse, factory, retail outlet, or corporate office, the client company needs to ensure that the workplace follows applicable safety procedures and that workers understand relevant operational rules.

The two companies should therefore establish clear responsibilities regarding occupational safety, workplace facilities, working procedures, and incident reporting.

4. Daily Work and Performance Management

Another common source of confusion is who manages the worker’s day-to-day activities.

An outsourced employee may work inside the client’s organisation and report operationally to a supervisor from the client company. However, the outsourcing company remains an important employment partner.

This means both parties need to establish clear lines of communication.

For example, the client company may be responsible for:

• Setting daily operational targets
• Explaining job responsibilities
• Monitoring work performance
• Providing operational instructions
• Coordinating schedules

Meanwhile, the outsourcing company may handle:

• Employment administration
• Employee relations
• Payroll
• Attendance administration
• HR-related concerns
• Employment documentation

Without a clear division of responsibilities, workers may receive conflicting instructions or be unsure about where to raise a particular concern.

5. Leave, Attendance, and HR Issues

Leave and attendance can also become complicated when the worker has two different points of contact: the client company and the outsourcing provider.

For example, a worker may need to notify their operational supervisor when they cannot attend work, while the formal HR process may need to be handled through the outsourcing company.

This is why a well-designed outsourcing arrangement should establish a clear process from the beginning.

Workers should know:

Who approves my leave?
Who handles my payroll question?
Who do I contact about my employment contract?
Who should I inform if there is a workplace issue?

The answers should not depend on guesswork.

6. What Happens If There Is a Dispute?

Employment disputes are another area where responsibility needs to be clearly understood.

Because the outsourcing company is the employer, employment-related disputes may involve the outsourcing company directly. However, the client company cannot simply assume that it has no responsibility for issues arising within its workplace.

For this reason, the outsourcing agreement should clearly define escalation procedures, responsibilities, and communication channels.

The legal framework is particularly important here. PP No. 35 of 2021 remains listed by the Ministry of Manpower as a regulation that is in force, while Permenaker No. 7 of 2026 specifically regulates outsourced work.

Companies should therefore avoid relying solely on informal arrangements or verbal agreements.

7. What About Termination?

Termination can be one of the most sensitive areas in an outsourcing relationship.

If the client company no longer requires a worker, the process should not simply be handled as though the worker were a direct employee of the client.

Instead, the client and outsourcing company need to follow the agreed contractual and employment procedures.

This is why companies should carefully review their outsourcing agreements before the engagement begins. A good agreement should anticipate scenarios such as changes in workforce requirements, performance issues, project completion, replacement requests, and termination.

The objective is not only to protect the company but also to ensure that workers are treated consistently with applicable labour regulations.

Read more: Skill Shortage: Is Outsourcing the Answer?

Why This Matters for Companies in Jakarta

For companies using outsourcing in Jakarta, the distinction between the responsibilities of the client company and the outsourcing provider becomes particularly important.

Jakarta’s business environment involves companies across industries such as financial services, retail, FMCG, technology, logistics, healthcare, manufacturing, and professional services. Many of these businesses require workforce flexibility while maintaining operational efficiency.

A reputable outsourcing company can help businesses manage recruitment, workforce administration, and employee management more efficiently.

But outsourcing works best when both parties understand that it is a partnership, rather than simply a transfer of workers.

The client company remains responsible for selecting an appropriate outsourcing provider, establishing clear operational requirements, and maintaining a safe and professional workplace. Meanwhile, the outsourcing company needs to properly manage the employment relationship and fulfil its responsibilities as the worker’s employer.

The Bottom Line: Responsibility Should Be Clear

So, who is responsible for an outsourced worker?

The simplest answer is: it depends on the responsibility.

The outsourcing company generally manages the employment relationship, while the client company manages the operational environment in which the worker performs their role. Some areas require cooperation between both parties.

A successful outsourcing arrangement therefore requires more than finding workers quickly. It requires:

• Clear employment agreements
• Transparent division of responsibilities
• Reliable payroll and HR administration
• Clear reporting and escalation channels
• Proper workplace standards
• Compliance with applicable labour regulations
• Regular communication between the client and outsourcing provider

For businesses considering outsourcing in Jakarta, choosing the right partner can make a significant difference.

RecruitFirst Indonesia helps businesses access workforce solutions designed around their operational and talent requirements. By combining recruitment expertise with workforce management support, companies can focus on their core business while having greater confidence that their outsourced workforce is properly managed.

If your company is considering outsourcing, needs support managing an outsourced workforce, or wants to understand which workforce solution is right for your business, contact RecruitFirst Indonesia today to discuss your requirements.