How and Why do Companies Outsource Recruitment?

Introduction

Millions of people apply for jobs every month. These mammoth numbers are a massive task for the Human Resources department of a company to hand-pick the most efficient ones. People create businesses, and businesses create the economy. Any company needs to have the right person at the right time at the right place with the right information. But, when it comes to recruiting, it is a brain-scratcher for the management team as in should the company have an in-house recruitment department or have recruitment process outsourcing.

Why do companies outsource recruitment?

Outsourcing recruitment has become part and parcel for many companies whose core functioning is nowhere related to human resource management. In the early 1990s, when countries opened their borders to other countries, the term ‘outsourcing’ flourished when companies transferred their manufacturing units, supply chain units, and R&D units to different companies. In layman’s language, outsourcing is a contract given by a company to carry out a specific set of actions for the company in exchange for fees. Nowadays, recruitment process outsourcing has become famous as many companies outsource their HR & Admin department to a company that specialises in it.

Companies had a different opinion for recruitment outsourcing companies in the past, like there is no direct control present on outsourcing activities. Many leaders thought that outsourcing might lead to misalignment of activities, and it’s a time-consuming activity. But, over the long haul, recruitment process outsourcing has some positive feedback, and companies opt for these processes for benefits that far surpass cost savings. The main reason for this transition was that companies were able to focus on core businesses activities. RPO allows the internal team to free up their time and improvise on activities that generate more profits.

Another essential benefit could be improving recruiting effectiveness. Time is the most crucial factor when it comes to staffing and recruitment. Time-to-fill is the number of days it takes to fill an open position, and it is the most important as hundreds of activities are dependent on that role. Time-to-fill is a long process that includes job board posting, background check, interviewing, and check-ups. Outsourcing recruitment helps streamline this process effectively, proving to be a strategic partnership for both parties. Many times, the process of staffing is unorganised and decentralised with the needs of the company. Outsourcing recruitment opens up this space and repairs it by matching it with the company’s needs.

Emphasising cost-cutting is now the main idea running downstream and upstream in the company. Recruitment costs include candidate shortlisting, technology involvement, assessments, recruitment programs, data analysis, and miscellaneous. The price rise may lead to hiring less-skilled employees, and the burden on the company may rise. Recruitment outsourcing guarantees the right person with the correct information as companies in the HR domain is experts in human resource processes. A business can lower the cost by almost 35% by outsourcing recruiting activities.

How do companies outsource recruitment?

Outsourced recruiting is when an outside firm is hired to manage the entire process of staffing and recruitment. Recruitment process outsourcing is a strategic process undertaken to have an expert team handling the most important part of the company, the people. The process starts when the company’s management brainstorms and decides to let their human resource department work alongside another company specialising in that department. After the decision is made internally, a list of vendors is assessed thoroughly, which would cater to the company’s needs. This assessment process might take more than six months because the company is extracting a crucial department to focus on the core business activities.

Similarly, staffing businesses may want to outsource parts of their front office activities, or complete mid- and back-office activities to recruitment suppliers with a low-cost offshore setup. This allows the onshore team to focus on revenue generating activities and elevate business growth. To drive better value in the long run through this collaboration, the staffing business and the outsourcing firm must work together to define the SLAS, laying out key metrics to gauge agency expectations and supplier performance. This offshore setup can take 15-30 days dependent on the scale of the project.

The outsourced companies may be offshore, nearshore, or/and onshore.

Offshore companies: These companies are located outside the company’s own country. We often call it the host nation and our country as the home nation. For example, a UK IT company is outsourcing its HR and Admin department to a well-known company in India.

Nearshore Companies: Here, the vendors are located in countries that neighbour the contracting company’s country. The best example would be a contracting company in India and a recruitment outsourcing company in Nepal. Nearshore contracting is commonly opted for by MNCs.

Onshore Companies: These recruitment outsourcing companies are present in the same country as the contracting company. This method is highly efficient and could help to save costs by huge margins.

Depending on the contract, methods and procedures are carried, which turns into a strategic fit for both companies. The outsourcing company also undertakes a survey that involves the type of employees, understands the past needs and current needs of the contracting company, market position, key players/employees, etc.

Outsourcing recruitment is a stringent task at the beginning because it involves huge data transfers. The contracting company has to forego its operation, and hence other related ancillary activities follow the department. The contracting company needs to state down rules and code of conduct. But over the period, recruitment process outsourcing proves to be a profit-making move as the company can expect a high turnover rate from the core business activities and rapid growth. The recruitment outsourcing company does everything right from screening applicants, shortlisting applicants, interviewing the applicants, and helping new employees to smooth settlement.

Conclusion

Recruitment outsourcing is a tedious job for many companies, but any company should keep a long-term vision and look for its benefits after 5 -10 years. Companies should not wait until any recruitment problem occurs; they should forecast way before the loss associated with it and take action accordingly.

QX Global Group, one of the top recruitment outsourcing companies,  provides top-notch offshore recruitment suppport to staffing companies in the UK, US, Canada and other EU geographies. For more information on how we help staffing agencies scale with offshore, agile workforce, give us a call on +44 208 146 0808 / +1 551 307 5522 or send an email to [email protected].

Originally published Oct 04, 2021 11:10:18, updated Jul 31 2024

Topics: Outsourced Staffing Services, Recruitment Process Outsourcing, staffing outsourcing