Critical Checks Before Hiring an Outsourcing - Timely angle around Permenaker No. 7/2026

Hiring an Outsourcing Company in 2026? 10 Things Businesses Should Check First

Outsourcing can help businesses access specialized support, manage operational needs, and scale teams efficiently. But in Indonesia, choosing an outsourcing provider is no longer simply a procurement decision. Permenaker No. 7/2026, effective since 30 April 2026, specifically regulates outsourced work and places responsibilities on both outsourcing companies and companies that use their services.

For businesses across Indonesia, Permenaker No. 7/2026 makes due diligence before signing an outsourcing agreement particularly important. Here are ten checks businesses should complete first.

1. Confirm the Work Can Be Outsourced

The first question is not which provider offers the lowest price. It is whether the work falls within the categories permitted for outsourcing.

Permenaker No. 7/2026 limits outsourced work to supporting activities: cleaning services; food and beverage provision; security; drivers and worker transportation, operational support services; and supporting work in mining, oil, gas, and electricity.

Businesses should map the actual duties against these categories. Review what workers will actually do, not only their job titles.

2. Verify the Provider Is a Legal Entity

Under Permenaker No. 7/2026, an outsourcing company is a legal-entity business that meets the requirements to perform specified work under an agreement with the client company.

Before appointing a provider, verify its corporate identity, business licensing, registered activities, and authority to provide the service.

3. Check Its Outsourcing Business License

Permenaker No. 7/2026 requires outsourcing companies to meet obligations as holders of business licensing in the outsourcing field. These include implementing occupational safety, health, and environmental standards, recording outsourcing agreements, and commencing business activities within one year after the business license is issued.

Request current licensing evidence and check whether it corresponds with the services being offered before workers are deployed onsite.

4. Put the Outsourcing Arrangement in Writing

Informal manpower arrangements are not enough. Permenaker No. 7/2026 requires the client company to transfer part of the work through a written outsourcing agreement.

The agreement should reflect the actual arrangement. Check whether its scope, location, headcount, responsibilities, and worker protections match the engagement.

5. Review the Mandatory Contract Contents

The written agreement must contain minimum information. Under Permenaker No. 7/2026, this includes the outsourced work, agreement period, work location, number of outsourced workers, worker protections and rights, and the rights and obligations of both companies.

Worker protections addressed in the agreement include wages, overtime pay, working and rest periods, annual leave, occupational safety and health, social security, religious holiday allowance, and rights related to termination or the end of employment.

6. Ask Who Is Responsible for Worker Rights

The outsourcing provider is responsible for implementing worker protections and rights at least in accordance with applicable legislation. However, the client company is not expected to ignore what happens after workers arrive onsite.

Permenaker No. 7/2026 expressly makes the client company responsible for ensuring that the outsourcing company fulfills those protections and rights. Due diligence should therefore examine payroll, working arrangements, social security, overtime, leave, and other employment protections.

7. Check Agreement Registration

Permenaker No. 7/2026 requires the outsourcing company to possess proof that the outsourcing agreement has been recorded.

The provider must apply for recording with the manpower office where the work is performed no later than three working days after the agreement is signed, attaching the outsourcing agreement. Businesses should request evidence of completion.

8. Consider Where the Workers Will Work

Location matters because agreement recording is submitted to the manpower office where the work is performed. A provider working across several properties, projects, or regions should therefore be reviewed carefully.

For businesses operating across multiple locations, Permenaker No. 7/2026 should be considered when structuring each deployment.

9. Review Existing Outsourcing Arrangements

Companies with outsourcing contracts signed before 30 April 2026 should not assume their existing arrangements can be ignored.

Permenaker No. 7/2026 states that existing outsourcing agreements remain valid until their contractual term ends. However, existing types and fields of outsourced work at outsourcing companies and client companies must be adjusted to the regulation no later than two years from its promulgation.

This transition period should be used for a structured compliance review, not postponed until the deadline approaches.

10. Understand the Compliance Consequences

Permenaker No. 7/2026 is subject to supervision by labour inspectors. A client company that violates the permitted categories of outsourced work can face administrative sanctions consisting of a written warning and restriction of business activities, applied progressively.

Business restrictions may include temporary limits on production capacity or services and postponement of business licensing at one or more locations for companies with projects in multiple locations.

Outsourcing companies that violate their licensing obligations can face administrative sanctions under Indonesia’s risk-based business licensing rules.

Before Hiring an Outsourcing Provider, What Have You Verified?

Is your potential provider properly licensed, is the work legally suitable for outsourcing, and does the agreement protect workers while clearly allocating responsibilities?

Before signing, Synergy Pro can help businesses review Permenaker No. 7/2026 requirements, outsourcing structures, provider documentation, employment considerations, and compliance gaps.