The Evolving Outsourcing Regulatory Framework in Indonesia: Legal Implications of the Job Creation Law

Indonesia’s outsourcing regulatory framework has evolved substantially following the introduction of the Job Creation Law. Notably, one of the key developments is the removal of the regulatory limitation that previously distinguished between core and supporting business activities, resulting in the broadening of the scope of permissible outsourcing arrangements.

This expanded flexibility enables companies to redesign workforce structure and delegate a wider range of functions to third-party service providers. However, these changes resulting from the evolving framework raises critical legal considerations, particularly regarding the allocation of liabilities, the continuity of employment relations, and the protection of outsourced workers’ rights.

Understanding these developments is essential for businesses when designing outsourcing arrangements and ensuring compliance with the current employment regulatory framework in Indonesia.

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