Study of recruitment process outsourcing

Is the process where an employer outsources or transfers all or part of its recruitment activities to expert services of a third party (generally professional consultants).

The Recruitment Process Outsourcing Association defines RPO as follows: “when a provider acts as a company’s internal recruitment function for a portion or all of its jobs. RPO providers manage the entire recruitment/hiring process from job profiling through the on-boarding of the new hire, including staff, technology, method and reporting.”

RPO and other types of occasional recruitment support, contingency and executive search services differ majorly in the “Process”. The service provider assumes ownership of the process in RPO, while in other types of staffing services the service provider is only a part of the process controlled by the organization buying their services.

History of RPO

Temporary, contingency and executive search firms have provided staffing services for many decades, but the concept of an employer outsourcing the management and ownership of part or whole of the recruitment process was first realized during the 1970s in the highly competitive high tech labour market of Silicon Valley. Being hard-pressed to find and hire technical specialists these companies had to pay large fees to specialized external recruiters for staffing their projects. In order to reduce the growing expenses of recruitment fees these companies began examining the various stages in the recruitment process that could be outsourced. The initial RPO programs typically consisted of purchasing lists of potential candidates from RPO vendors.

Over the years, the concept of outsourcing was accepted by businesses more and more. RPO too gained favour among Human Resource management. RPO reduced overhead costs from their budgets and also helped improve the company’s competitive advantage in the labour market. With labour markets becoming more and more competitive, RPO became more of an acceptable option. In the early 2000’s more companies began considering the outsourcing of recruitment for major portions of their recruiting need.

The fundamental changes in the World labour market have reinforced the use of RPO. The labour market today is highly dynamic: workers are changing employers more often than in the previous generations. De-regulation of labour markets has created a shift towards contract and part-time labour and shorter work tenures. These trends have increased the recruitment activity and encouraged the use of RPO. Even in slower economic times or higher unemployment, RPO is considered by companies to assist in an increasing need to screen through a larger pool of candidates

Benefits

Recruitment is seen as a cost incurring process in an organization. RPO has helped the HR professionals of an organisation to concentrate on the strategic functions and processes of human resource management instead of wasting their efforts, time and money on the routine work.

Outsourcing of the recruitment process helps cut the recruitment costs to around 20 % and provides economies of scale to a large sized organization.

Outsourcing has become beneficial for both the corporate organisations that use outsourcing services as well as the consultancies that provide the service. Apart from increasing their revenues, outsourcing Process also provides business opportunities to the service providers, enhances the skill set of the service providers and exposure to different corporate experiences thereby increasing their expertise.

Time/Speed: Hiring of a recruitment company to do the recruitment process for a new project saves precious time. The recruitment agency already has the database of prospects classified according to their skills, knowledge and experience. Once the requirements are provided by the organisation and the service provider provides the organisation with a list of candidates that would be ready to be interviewed.

Money/Costs: In traditional recruitment process the HR professionals have to stop their current work and concentrate on the recruitment process. This is a problem for the small and middle sized companies, the big corporations have their own recruitment departments. By outsourcing the whole of the recruitment process these companies save costs incurred in the recruitment process. The HR professionals can focus on their current work without worrying about recruitment process. These days even the big companies are outsourcing their recruitment processes to reduce costs.

Quality: It is considered that the recruitment needs of a company are better realised by the owner or someone working for it. But while recruiting new personnel for a specific job or project this can be very challenging. Specialised recruitment agencies have an extensive database of resumes and the networking to source the right type of candidate.

Risks

Though RPO has benefits, it has its own sets of limitations/risks. RPO will be successful in the context of a well-defined corporate and staffing strategy. A company must manage its RPO activities, providing initial direction and continued monitoring to get the desired results.

Loose Definition of RPO: As RPO is a commercial concept rather than a specific definition, there is little regulation to RPO providers. As such, a recruitment agency can brand their services as RPO without actually structuring them in a way that will provide the most benefit to their clients.

Cost: Though RPO engagement is considered as cost saving method, the cost of engaging an RPO provider can be more than the cost of the internal recruitment department, as an RPO provider is likely to have higher business overheads.

Effectiveness: If an RPO provider does not understand or seek to understand the recruitment solution that they will be providing, it will lead to an improperly implemented RPO. This would reduce the effectiveness of recruitment.

Failure to Deliver: When finding candidates in industry sectors where there are staff shortages, RPO service providers may fail to provide the quality or volume of staff required by their clients.

Pre-Existing Issues: If the company’s existing recruitment processes are not effective or if the service provider lacks appropriate recruitment processes/procedures to work with the client the RPO solution may not work. In such a situation, it is better for the company to undergo a recruitment optimisation programme.

Engagement: Many RPO organisations perform their staffing functions and service offsite or offshore. This disconnects the provider from the client company’s growth and recruiting strategy. Though this effect can be mitigated by strong relationship management, some of the momentum and energy associated with the rapid up scaling of a workforce through recruitment may dissipate.

Social Media/Networking in Recruitment

Social media recruitment is the next big thing on the cards. A lot of companies have started using Web 2.0 application for recruitment purposes. Web 2.0 is the second generation Internet-based services which is different from the first generation static Web sites with little interaction.

Popular Web 2.0 applications include the social media/networking sites (Facebook, Twitter, Orkut, LinkedIn, MySpace), blogs, podcasts (Podcast Alley, iTunes), video sharing sites (YouTube, FlickR), mobile apps, etc. Today LinkedIn and Facebook has become a powerful tool in recruitment. LinkedIn is a social networking website meant specifically for networking amongst working professionals.

Social media recruitment widens reach and helps segmentation, targeting and positioning of potential jobseekers. They also increase the accuracy of profile searches. Instead of simply recruiting the person with the best-looking CV, social media can ensure that that person is also the best fit for the company.

Companies like Accenture, Cognizant, Mindtree, HP-Mphasis and Wipro are planning to hire workers from social networking sites such as LinkedIn. Linkedln is becoming a hot spot for Companies looking out to hire workers. Recruitment done through the social networking site Linkedln comes with references and are cost effective as they are free. Companies go through the relevant profiles, and can take a look at the recommendations provided by acquaintances of potential candidates before hiring workers. Mphasis used Facebook along with LinkedIn to recruit new workers by creating a page on Facebook.

Benefits

Recruitment through Social media/networking websites has its own benefits which are not available in other methods of recruitment.

Higher accuracy: As social media/networking websites have no physical boundaries job candidates can be searched geographically and found with higher accuracy than before, narrowing the number of candidates and adding to recruiting effectiveness.

Fast: As more and more people today use these websites, the available jobs can get filled quicker, lowering vacancy rates because of social media’s high usage rate and immediate response time. This helps in a company’s ability to attract talent versus competitors.

Cost: Social media recruitment has a low cost with high ROI. In most of the cases it is almost free as most websites are free to register and use.

Attracting fresh talent: A large number of social media users are college students, and they are fresh talent for entry level positions. Using social media an organization can easily attract this talent pool.

Brand visibility: Using social media/networking for recruitment Increases the employer’s brand visibility online and establishes a leading-edge image for the brand.

Risks

Social media/networking offers benefits vis-a-vis other methods of recruitment, but it also has its own share of risks.

Effectiveness yet to be proven: While social networks are undoubtedly here to stay, whether they become a more central part to the hiring process or not is yet to proved. The amount of recruitment done through this mode is still very low as it is in initial stages.

Demographics of representation: Social media as the labour pool does not fully represent the demographics of the general public. There could be more race and age claims over the coming years due to sourcing through social networking sites.

Discrimination: There could be discrimination in recruitment due to a person’s country of origin, religious preference, disability, age or sexual orientation etc.

Lack of clear recruitment standards and process: Recruitment through social media does not involve clear standards of recruitment. Hence any rejections based on softer criteria can lead to discrimination lawsuits being filed by the rejected candidates.