The Challenges of Recruitment and Termination of Outsourcing
Worker
The Islamic Perspective
Pritama Priatama, Nurcahyanti Nurcahyanti and Anita Rachmawati
Universitas Pendidikan Indonesia, Jl. Dr. Setiabudhi 229, Bandung, Indonesia
Keywords: recruitment, separation, outsourced employee, Islam.
Abstract: Competition in the business and industry is getting tighter, so a company or organization seeks to improve
efficiency and cut costs for its employees by recruiting outsourced employees through a third party that is an
outsourcing service company. This study aims to analyze the way or model of recruitment and termination of
employment on outsourced employees in companies or organizations in Indonesia. Then test it from the
perspective of Islam and its influence on job satisfaction or employee performance. This study uses literature
analysis of previous studies and conceptual approaches from various sources. Based on the results of the study
and facts analysis in the field, the practice of recruitment and dismissal of outsourced employees is generally
contrary to the basic Islamic principles. Sometimes even contrary to the rules of labour legislation. There is
no difference between the concept of outsourcing in general or conventional with the concept of outsourcing
in the Islam, but, implementation in the field which is sometimes done by a company that makes it not allowed
in Islam. We argue that one of the gaps between outsourced employees and the companies (both outsourcers
and accepting companies) is the absence of Indonesian cultural values and norms and the principles of Islam.
Muslim HRD managers in practice apply more literature from the West. It is therefore important for Muslim
HRD managers and Muslim outsourcing employees to apply the Islamic approach to work.
1 INTRODUCTION
According to Abbas J. Ali (2010), there are three
major challenges that arise in the application of
outsourcing labor. First, in HR practice treats the
interests of the workforce as a complement of an
organization. It is found in Western even in Muslim
countries more broadly the problem (Ali, 2010). It is
not even shocked that Muslims work in Muslim
countries by not implementing Islamic HR (Junaidah
Hashim, 2012). The second challenge, in Muslim
societies, in which various forms of capitalism are
adopted in HR practice, often even exceeds the limits
of good business (Ali, 2010). Western behavioral and
performance management theories are widely applied
in Arab and Muslim countries, the theory of
motivation and the value of Western theoretical work
may also be inappropriate for Islamic countries
(Branine and Pollard, 2010). Finally, as a spiritual
guiding principle, that Islam should uphold justice,
hate exploitation, and underscore the importance of
social relationships in human relations behaviors (for
example, employers should consider dismissal or
dismissal beyond economic considerations) (Ali,
2010).
In practice outsourced workers (ie contractual
employment relationships) are often harmed and
aggravated by exploitation of labor workers in
contemporary capitalism labor systems in Indonesia
(Mebang, 2015). It is estimated that outsourced
workers in Indonesia, both working in national and
multinational companies, account for 80% of the total
workforce (Mebang, 2015). Based on the Statistical
Yearbook of Indonesia (BPS report) 2016 the number
of permanent workers / employees are 44,434,390
people out of the total population working in various
sectors of 114,819,199 people. Thus the permanent
workers are 38.7% of the remaining 61.3% are non-
permanent workers including outsourced employees.
Thus, outsourcing employees in Indonesia are very
large. However, in the implementation of the workers
/ employees, especially those working as outsourced
workers do not get the guarantee and legal protection
both from the company and the government. In
practice, outsourced workers (i.e. contractual
Priatama, P., Nurcahyanti, N. and Rachmawati, A.
The Challenges of Recruitment and Termination of Outsourcing Worker - The Islamic Perspective.
In Proceedings of the 1st International Conference on Islamic Economics, Business, and Philanthropy (ICIEBP 2017) - Transforming Islamic Economy and Societies, pages 621-626
ISBN: 978-989-758-315-5
Copyright © 2018 by SCITEPRESS – Science and Technology Publications, Lda. All rights reserved
621

employment relationships) are often harmed and
aggravated by exploitation of labor workers in
contemporary capitalist labor systems in Indonesia
(Mebang, 2015).
Besides the increasingly high global competition
and high unemployment in Indonesia and the
absorption of the industrial sector towards the low
workers, the outsourced workers are often the ones
who are sacrificed due to low competitiveness and
bargaining with the company. Based on Central
Bureau of Statistics (BPS) report 2016, the number of
registered job seekers by 2015 are 1,410,428 while
registered enrolment is 833. 555 people but the
employment placement is only 742.177 so only 52,
6% of acceptable job seekers. (BPS, 2016).
According to Istibanat AS (2009), The
consideration of the implementation of cooperation
agreement with outsourcing mechanism is based on
the basis to improve the competitiveness and
effectiveness, and to concentrate on the development
of the company's business in the future, it is deemed
necessary to submit part of certain job to another
company, however, the status of outsourced workers
is not guaranteed because the employment
relationship is contractual with an average term of 1
year contract, only earns a minimum wage and
receives some unfeasible benefits (Mebang, 2015).
2 LITERATURE REVIEW
2.1 Outsourced Workers
The definition of outsourcing is not entirely
acceptable and approved in research and practice
(Sharda and Chatterjee, 2011). Outsourcing
companies can be call centers, vendors, suppliers,
service providers, offshoring companies, outsourcers,
outsourcing companies, outsourcing business firms,
and so on (Sharda and Chatterjee, 2011). According
to Alexander and Young, (1996), another major
reason for HR outsourcing is to cut administrative and
high transaction costs, minimize the workload of
regular workers, reduce costs, reap economies of
scale, improve quality and efficiency, and gain
expertise from outside vendors (Edwin and Ohaegbu,
2015).
Outsourcing is the hired labor of other companies
for a certain period of time (Kasmir, 2016).
According to Maurice E. Greaver II, there are 7 basic
steps that must be done for outsourcing can run
smoothly.
Figure 1: Outsourcing stages.
According to Ernesta Stasiulytė (2011) that
almost all motives found in scientific literature are
expressed by case studies. Only one motive - access
to the latest technology - is not found in the case
study. It can be argued that most of the outsourcing
motives of human resource management are related
to better corporate competence and through this - for
greater competitiveness as shown in the table below.
Table 1: Motives of human resource management
outsourcing.
Scientific literature
review
Case study
Concentration on
main activities
Better concentrate on
marketin
g
and sales.
Lack of competence
in human resource
management
External specialists have better
competence in change
management and problem
solvin
g
.
Work quality Employees competence at
work. Better services quality.
Staff problems always have
influence on clients. Clearness
a work.
Cost saving Saving expenses.
Decrease of risk Reduce possible risk, while
having less experience in
human resource mana
g
ement.
Lack of time and
resource
Not to waste time on not core
questions that might be solved
b
y external services providers.
Gain competitiveness High competence employees
help company become more
com
p
etitive.
Access to the newest
technolo
g
ies
–
2.2 Workers According to Islam
Islam requires a people to work and earn his income
through a halal way. Islam not only encourages
people to "do good deeds (103-2)" but also requires
them to do their work in the field of work, which is
beneficial to mankind (Ahmad, 2011). Labor
relations with labor laws in terms of Islamic
employment can be seen as part of Islamic economic
law that has developed through the development of
Islamic law that is Sharia. The Arabic word Shari‘a is
literally defined as "the place of watering, a flow that
ICIEBP 2017 - 1st International Conference on Islamic Economics, Business and Philanthropy
622

flows, where both animals and humans come to drink
water (Ahmad, 2011). Whereas the source of the law
of the Shariah is the Qur'an, Hadith, Ijma and Qiyas
(Ahmad, 2011).
If workers are required to work longer or work
beyond their capacity, the employer must provide the
necessary assistance. We find the basis for both in
Quran and Hadith. Then the Quran says that and when
telling the story of Moses and Shu'ayb, the master
(Shu'ayb) told Moses that:
"I do not want to be hard on you (by putting more
work on you) and you will find me a gentleman,
if God wills it "(28:27) (Ahmad, 2011).
The work ethic or ideology of Islam comes from
the Quran, Sunnah (sayings and deeds of the
Prophet), as well as say and deeds of Companions of
the Prophet (Sahabah). The Qur'an reveals its work
ethic with the following words: "And there is nothing
for a man save what he tries" (53:39). In another
verse, the Quran treats the work as a source of honor
(Say: Job and God will see your work [09: 106]
(Ahmad, 2011).
2.3 Recruitment
Recruitment is an activity to attract a number of
applicants to be interested and ask the company in
accordance with the desired qualifications (Kasmir,
2016). One of the ways in recruiting is from contract
or outsourcing employees who are considered to have
good performance and experience. Outsourcing is
hired labor from other companies for a certain period
of time (Kasmir, 2016). This outsourced workforce is
derived from a labor agency that has a number of
labor reserves with various qualifications.
In addition, recruitment can also be said as part of
the process to get a number of qualified employees to
occupy a position or work within a company (Rivai
zainal, Basalamah, and Muhammad, 2014).
In the Second World War era the human resources
were practically more around war and fighting and
most of the recruitment was done for military
purposes, and pursued a purely military-related
policy. However, today many verses of the Qur'an
and Hadith are relevant to modern employee and
company relations (Ahmad, 2011). Islam restrain
employee to recruit, select, and promote workers
based on merit (Ahmad, 2011). Islam calls for
recruitment as offering job vacancies in the way of
God with trust and responsibility. Islam requires the
person in charge of recruitment to be pious and just.
2.4 Work Termination
In essence, there must be a moral constraint on the
employer's right to dismiss the employee and the
employer's treatment of the employee in the
workplace. It is basically in the workplace that there
is no limit between business and moral obligations,
thus requiring HR policies to build transparency,
accountability, fairness and sincerity (Ali, 2010).
A pension or retirement plan is a safety net or
"nest egg" that provides a person with financial
resources (ie cash flow in the form of monthly
payments or lump sum amounts) to pay all expenses
when active labor is retired and has no income or
salary. These plans are sponsored by employers (eg
private and public institutions such as profit and non-
profit corporations or state, municipal and local
government units) or the federal government, or they
are offered by investment brokers as an independent
plan fueled by tax incentives. This plan is funded by
periodic donations (monthly, quarterly, yearly or
once) of the plan sponsor or employer and / or
beneficiary during his active life. Another major
difference between the two is in terms of control (ie
whether the sponsor or beneficiary is responsible for
the investment risk and portfolio management
associated with the funds invested in generating
future cash flow flows on retirement) and portability
(ie the ability to take a retirement plan for a new job).
3 RESEARCH METHOD
A scoping review of the literature has been prepared
to identify studies on recruitment and termination of
employment in outsourced workers. Then we
examine human resource outsourcing from an Islamic
point of view. the main sources of data from Emerald
and Google Scholar. We used search engine to look
the keyword that may be found in tittle, abstract, and
full text The selected papers were choose based on the
similarity of the problem in this paper. We also in this
paper present a conceptual approach regarding
outsourcing, recruitment and termination of
employment.
4 RESULTS AND DISCUSSION
In Islamic law has not found a theory that specifically
explains about outsourcing. Theoretically the system
of outsourcing in Islam can be analogous to the
concept of Ijarah. This concept involves
The Challenges of Recruitment and Termination of Outsourcing Worker - The Islamic Perspective
623

participation between 3 parties (experts / laborers,
service providers and users suits). Working,
according to Islam is a moral obligation that requires
a worker not to earn a living through prohibited types
of work such as prostitution, taking flowers etc. Islam
also teaches to always be earnest and work. Although
no one explains specifically about outsourcing in
Islam, In Islam, matters relating to the fulfillment of
workers' rights are essential. Islam holds that workers
should not be burdened with work like the word of
God in the Holy Quran ((2:286) :
"God does not burden a person but according to
his ability. He has the reward (of virtue) he
endeavoured and he is tormented (from evil) that
he does. “(Abdul Azis Ahmad, 2012)
From the quotation, illustrates how Islam protects
workers. Junaidah Hashim (2012) in his research also
said that applicants should not be tasked with tasks
that are too difficult to handle, and also they should
be ordered beyond their means.
To create a conducive relationship between workers
and employers, working relationships must be
mutually beneficial partnerships.
There should be no one party to waste and feel
tyranny by the other side of the opponent. but the facts
on the ground The complexity of outsourcing is like
a dilemma, on the one hand the painful side of the
worker (labor) because there is no guarantee of the
future, for example the possibility of the contract is
not continued, start thinking about the career and the
future is not clear and so on but on the other hand it
spur the growth of form- new business forms
it certainly makes it difficult for outsourced workers.
In this case, the application of work with
outsourcing system needs to be implemented with the
concept of maqashid sharia. Maqashid Shari'ah is
Maqasid al-shariah which is regarded as a goal or goal
to be achieved in Islamic law. In other words the
intended meaning and purpose is beneficial to all
mankind. Maqashid shariah in the field of mu'amalah
always focuses on aspects of justice and security of
property (property). The judicial system and the
maintenance of this property should also be placed on
the interests of two groups, either workers (workers)
or service users (companies / individuals).
Maqashid Syari'ah is one important aspect in terms of
working concepts in Islam
A Manager of a company selects outsourced
employees from a work supplier in the field of human
resource management, as it tends to outsource
services that external suppliers only for a limited
project period. This means companies do not sign
long-term partnerships with external service suppliers
and only hire them when there is a need (Stasiulyte,
2011). In addition For entrepreneurs, the existence of
this outsourcing work system gives a positive impact,
because to gain competitive advantage over its
competitors, then a company must be able to carry out
its activities by spending a low cost. Although in
practice, outsourcing systems are sometimes
detrimental to workers, in fact, as a business concept,
according to Shaista Arshad (2012) in his research,
outsourcing has proven to be an effective model for
many companies globally. Currently, many Islamic
financial institutions are increasingly trying to do
business activities through outsourcing recruitment.
The recruitment process in islam should be done
fairly and all hiring decisions should be made and
made wisely, to ensure that the employee is best
suited for the work required. In connection with this,
Islam requires that the person responsible for
recruitment is a righteous and just man (Junaidah
Hashim, 2012). Allah say in Holy Qur’an (4:58):
“Surely Allah commands you to fulfil the rights
of man to the rightful to receive it and if you set
the law among you, you should set the law justly.
Lo! Allah is the best adviser, and Allah is all-
seeing and all-hearing”
Create a work contract outsourcing worker, a
company must also avoid Gharar (uncertainty). the
services description would have to be drafted with
suitable clarity (Wilkinson, 2011). Wilkinson further
encourages that an outsourced services supplier will
probably that the outsourcing contract it is not
appointed on a Wakala (i.e., agency) basis.
Actually there is no difference between the
concept of outsourcing in general or conventional
with the concept of outsourcing in the Islamic view
called ijarah, but if in the implementation of
outsourcing system loaded with extortion such as the
necessity of workers who resigned to redeem ijazah
deposited as collateral at a very high price, in addition
to wage cuts in the first month to 50%, then Islamic
Jurisprudence firmly says that outsourcing is not
allowed. So from the description can be concluded
that the occurrence of losses on outsourced workers
generally occur because the implementation of the
system is not in accordance with the rules.
The interesting problem is that getting the
required good staff means decreasing overall
standards as well as decreasing qualifications and
competencies (May and Askham, 2005). Separating
internal and external problems is one of the means to
handle recruitment and retention. Such as May and
ICIEBP 2017 - 1st International Conference on Islamic Economics, Business and Philanthropy
624

Askham (2005) say in his research, Another way to
get to knowing and understanding the complexity of
the problem is to see it not as a problem but as a set
of problems that affect staff differences in different
ways. On a more positive note one of the things that
emerged from the study, in terms of examples of good
initiatives on recruitment and retention, is the need to
draw out the complexity of the problem and identify
internal and external factors. External factors are
factors where managers can only control little or no
control at all (May and Askham, 2005)
According to May and Askham (2005), the
recruitment and retention of a company's managing
staff is a complex problem involving on various
issues. It is also important to know that many factors
affect the recruitment and retention of these
outsourced employees. There are four distinct major
factors emerging from the data as significant factors
regarding recruitment and retention problems; social,
financial, political and environmental issues.
Ali (2010) further highlighted the uses of Islamic
philosophy such as Ihsan in the workplace will
provide a useful framework for protecting the
interests of society. Such models offer a useful way
for HR practitioners about how to handle HR issues
in a meaningful way in Islamic societies and if
practiced can help in protecting against human rights
violations and achieving a balance between the
interests of the organization and society (Mellahi and
Budhwar, 2010). Branine and Pollard, in the second
paper further explores the Islamic implications of
HRM management practices. They acknowledge the
apparent gap between management theory and
Islamic practice, they highlight that management in
Arab countries is strongly influenced by a
combination of traditional non-Islam and national
cultural values, the norms of different countries and
western management think not the Islamic principles
(Mellahi and Budhwar, 2010).
The principles of Islamic sharia related to
compensation filed by Salleh and Mohamad (2012)
include payments decided upon in advance under a
well-defined agreement, parallel to the applicable
market standard, based on employee experience and
qualifications, commensurate with performance, fair,
fair, sufficient to meet basic needs, and immediately
awarded after the completion of work (Muhammad
Habib Rana Muhammad Shaukat Malik, 2016).
As we have tried to show out, it is not a religion
that oppresses individual and collective rights, but
instead Islam provides direction to do justice and
goodness (Ahmad, 2011)
Based on study by Junaidah Hashim (2010),
several organizations where respondents work, often
practice Islamic approach in carrying out human
resources but the performance appraisal, recruitment
and dismissal functions are lacking the Islamic
approach. According to Mebang (2015) that,
"workers have no job certainty, and comfort work.
Because it can be anytime and anywhere can be
dismissed. There is no guarantee that the company
will extend the contract period, there is no chance of
increased status and a very small career ".
The management of human resources in a
company must be carried out properly. Where human
beings as employees should be treated as human
beings who have rights such as health, careers, and
occupational safety. But employees also have the
duty and responsibilities responsibly so as to produce
the desired product company (Kasmir, 2016).
According to Hussain and Rehman (2013), many
organizations today increase employee salaries and
benefits to avoid employee retention (Gumbus and
Johnson, 2003). Previous research was conducted by
Arthur (1994) and Shaw et al. (1998) Employee
retention can be avoided through the application of
high-involvement work practices and giving more
wages to employees (Rehman and Ur, 2013).
In Islamic human resource management theory,
matters related to the fulfillment of workers' rights are
crucial, in order to establish a conducive relationship
between workers and employers. Islam sees, in the
relationship of labor should be a mutually beneficial
partnership relationship. Should not one party
tyrannize and feel tyrannical by the other party.
5 CONCLUSIONS
Outsourcing for HR functions should be viewed as a
business imperative, not a luxury. Approaches and
their applications should be tailored to fit perfectly.
This partnership should be nurtured and closely
monitored. According to Islam, the whole function of
life is the process of coordinating a set of activities
that must be in accordance with principles derived
from the Qur'an and Sunnah. Therefore, outsourcing
in an Islamic perspective should be carried out fairly
between workers and companies.
The basics of religious human resource strategy
especially on outsourced employees is important but
rarely highlighted in the literature. There is no
difference between the concept of outsourcing in
general or conventional with the concept of
outsourcing in the Islam, but, implementation in the
field which is sometimes done by a company that
makes it not allowed in Islam. Such as injustices
The Challenges of Recruitment and Termination of Outsourcing Worker - The Islamic Perspective
625

received by workers, cuts in salaries of more than
50% and so forth.
REFERENCES
Abdul Azis Ahmad, M. S. A. 2012. Rabbani Al-Quran Per
Kata.
Ahmad, I. 2011. Religion and Labor: Perspective in Islam.
Working USA: The Journal of Labor and Society,
14(4), 589–620.
Ali, A. J. 2010. Islamic challenges to HR in modern
organizations. Emerald Group Publishing Limited, 39,
692–711.
Alexander, M., Young, D. 1996. Outsourcing: Where’s the
Value?. Long Range Planning 29, 728 – 730.
Arshad S, Rizvi S. A. R., Wardhany, N. 2012.
“Outsourcing The Islamic Way: A Look Into The
Challenges Faced By Financial Institutions, Isra
Colloquim.
Arthur, J.B. 1994. Effects of Human Resource System on
Manufacturing Performance and Turnover. Academy of
Management Journal, 37: 670 – 687.
BPS. 2016. Statistical Yearbook of Indonesia (BPS) 2016.
Branine, M., Pollard, D. 2010. Human resource
management with Islamic management principles.
Personnel Review, 39(6), 712–727.
Edwin, A., Ohaegbu, V. A. 2015. Strategic Management of
the Benefits and Challenges of HR Outsourcing in
Effective Organizational Management. Journal of
Business Studies Quarterly, 7(2), 85–108.
Gumbus, F. L., Johnson, C. R. 2003. Employee Friendly
Initiatives at Futura. Leadership Survey, Certification
and a Training Matrix, and an Annual Performance and
Personal Development Review.
Hashim, J. 2010. Human resource management practices on
organisational commitment The Islamic perspective.
https://doi.org/10.1108/00483481011075611
Istibanat. 2009. Pelaksanaan Perjanjian Melalui
Mekanisme Outsourcing Antara PT. Telekomunikasi
Indonesia, Tbk dengan PT. Infomedia Nusantara dalam
Pengelolaan Contact Center Telkom. Tesis: Universitas
Diponegoro.
Junaidah Hashim. 2012. Islamic revival in human resource
management practices among selected Islamic
organisations in Malaysia. International Journal of
Islamic and Middle Eastern Finance and Management,
2(3), 251–267.
Kasmir. 2016. Human Resources Management (Theoretical
and Practice).pdf. PT Raja Grafindo Persada Jakarta.
May, D., Askham, P. 2005. Recruitment and retention of
estates and facilities staff in the NHS : Discovery for
University of Southampton. Facilities, 426–437.
Mebang, Desi N. 2015. Penerapan PerjanjianKerja Bagi
Pekerja Alihdaya (Outsourcing) pada PT. PLN
(Persero) Area Samarinda. E-Journal Administrasi
Publik. 3(5), 1397 – 1408.
Mellahi, K., Budhwar, P. S. 2010. Introduction: Islam and
human resource management. Personnel Review, 39(6),
685–691.
Muhammad Habib Rana Muhammad Shaukat Malik. 2016.
"Human resource management from an Islamic
perspective: a contemporary literature review.
International Journal of Islamic and Middle Eastern
Finance and Management, 9(1).
Rehman, T. H., Ur, S. S. 2013. Do Human Resource
Management Practices Inspire Employees’ Retention ?
Research Journal of Applied Sciences, Engineering and
Technology 6(19), 3625–3633.
Rivai, Z., Veithzal, Basalamah, S., Muhammad, N. 2014.
Islamic Human Capital Management. Jakarta: PT. Raja
Grafindo.
Salleh, M.J., Mohamad, N.A. 2012. Islamic Principles of
Administration: Implications on Practices in
Organization. Technology, Science, Social Sciences
and Humanities International Conference. Universiti
Teknologi MARA Kedah: TeSSHI 2012 Organizer.
Sharda, K., Chatterjee, L. 2011. Configurations of
outsourcing firms and organizational performance: A
study of outsourcing industry in India. Strategic
Outsourcing: An International Journal, 4(2), 152–178.
Shaw, J.D., J.E., Jenkins, G.D., Gupta, N. 1998. An
Organization – Level Analysis of Voluntary and
Involuntary Turnover. Academy of Management
Journal, 41: 511 – 525.
Stasiulyte, E. 2011. Motives of human resource
management outsourcing: A case study from Lithuania.
Economics and Sociology, 4(1), 116–125.
Wilkinson, D. 2011. Islamic Outsourcing, Norton Rose
Publications, (February, 2011).
ICIEBP 2017 - 1st International Conference on Islamic Economics, Business and Philanthropy
626