Contractor Management Outsourcing in The Legal Market: An Essential Guide

Business Insights

Hiring foreign lawyers and dealing with contracts and other obligations is difficult in a foreign market such as China. Many specifics are unique to the individual marketplace, and the same applies to recruitment, employment practices and ongoing requirements, whether coping on-site or from a great distance.

Here is a short guide covering some of the basics about dealing with contractors and handing this responsibility off to a third-party in the legal market.

What is Contractor Management Outsourcing?

Contractor Management Outsourcing (CMO)is not common practice in Western countries where there are fewer potential difficulties or differences involved. The (CMO) company has the responsibility of dealing with the employees of the business. They meet with potential employees, handle all negotiations, discuss contractual specifics, and eventually create a workforce abroad. Essentially, they act as a go-between for the workers, the contractors, and the business itself.

Contractor Management Services may include payment to partners or other entities in the conduct of the business (or it may not). For companies trying to get a business started in China, these contractor management services provide an ideal system for employing local people. New Horizons Global Partners provides CMO and other related services for global clients to support their contractor management needs. They ensure that the most appropriate people are tasked to work on their clients’ projects to bring them to a successful conclusion.

Why Are There Employees and Contractors?

In China, employees sometimes wish to be an employee if the salary package and benefits are adequate for their needs. However, they may choose instead to work as a contractor. Employees may work remotely or at an office or other business premises. They rely on the position and usually work hard for the company. By contrast, contractors prefer flexible hours, a choice of assignments, and greater independence.

For companies, contractors are becoming increasingly common in China where many of them prefer to work from home over the internet. There is less risk associated with contractors because they’re not direct employees. Also, the costs are often lower because they don’t require a part of the office space, use of company utilities, equipment, and more.

What Services Does a Contractor Management Services Company Provide?

Using the services of a CMO streamlines processes for the company; efficient processes and oversight ensures that the right contractors are available to complete the necessary work at the appropriate time.

Given that different contractors prefer to work on specific tasks (and not on certain others) and at different times of the day or days of the week, juggling these various requirements while keeping the business humming along, is not something that a non-native speaker can expect to manage, especially from a distance.

Does a CMO Handle Payroll Too?

Some CMOs do offer payroll-related services bundled into or separate from their main service. With human resource management for contractors, they are responsible for recruiting, setting up contracts that include the necessary clauses to protect the company, and much more. It is up to the individual CMO whether they see payroll as part of the overall HR role, or if it’s considered a separate entity.

Many small businesses choose not to hire a dedicated payroll officer despite having a fully staffed HR department. Instead, they outsource the responsibility of paying employees and contractors to a third-party company to not distract from their focus on their core business.

What Other Considerations Might There Be?

You should have a proper sense of how many employees or contractors your business will require. If you have a preference for working with employees for greater control or contractors for a flexible workforce that should be factored into the planning.

Be sure also to factor in local employment legislation. Claims for annual leave, unfair dismissal etc. must be considered carefully when deciding between employees or contractors.

What about background checks and other necessary verifications depending on the type of industry and work that will be performed? Is a provider already selected for this? What track record do they have for this activity?

Furthermore, consider insurance requirements to cover employees and/or contractors. Certainly, the business should have the necessary cover, but it also must be protected from a contractor visiting the office and unfortunately having an accident on the premises.

A CMO in the legal market is a specific requirement. However, most other industries need to take the majority of these factors into consideration.

There are significant benefits to going the CMO route to smooth your progress and ease the management burden of working with contractors or employees in a foreign market.