Outsourcing practices in state-owned enterprises: Evidence from Indonesia

Abstract

This study is subject to find the factors that cause the inability of the Government in determining the type of work in the job chartering (outsourcing) by the Business Sector Association to create a flow of work activities. The authority of the Business Sector Association in making the flow of activities that determine itself the type of core work (core business) and supporting work (non-core business) when violations occur so it needs to be limited by the Government through agencies that are experts in their fields. This research method used a socio legal approach since it involved a reciprocal relationship between law and related social institutions. This research is considered as a descriptive study that described the object studied in several companies of State-Owned Enterprises (SOEs) that applied outsourcing practices in the city of Semarang. The results of the study found that the practice of outsourcing in the city of Semarang has identified several violations namely the existence of the Business Sector Association in determining the type of core work (core business) to be a supporting work (non-core business) so that it violated Article 65 paragraph (3) of Law Number 13 Year 2003 concerning The Employment. The inability of the Government in outsourcing practices is dominated by corporate strategy factors through the Business Sector Association in making the flow of activities that should use the outsourcing system for types of supporting work (non core business) to become core work (core business) by using outsourcing and supporting systems (non core business) by the Business Sector Association in creating the flow of activities to determine for themselves the type of core work (core business) so that there would be an efficiency and optimization of the core business activities of a company.