This employment model involves a contractual agreement between two corporate entities. One entity provides services to another through the use of its employees or contractors. In essence, Company A (the employer) contracts with Company B (the client) to provide specific expertise. Company A’s employee then works on projects for Company B. For example, a software development firm (Company A) might enter into an agreement with a financial institution (Company B) to provide a team of developers to work on a new banking application. These developers remain employees of Company A, but their day-to-day tasks are directed by Company B.
The significance of this framework lies in its flexibility and efficiency for businesses. It allows organizations to access specialized skills and augment their workforce without the overhead costs associated with direct hiring. This arrangement also provides companies with a degree of control over project scope and timelines, as the service agreement typically outlines specific deliverables and performance metrics. Historically, this method has been utilized to bridge talent gaps and manage fluctuating project demands in various industries.
