The ins and outs of outsourcing
Recruitment Process Outsourcing is a rapidly growing industry that is polarising the sector. Some believe it will be a good thing, while others are as adamant it is a new form of competition which should have recruiters scared. We look at what it all means.
There is no doubt most Australian and New Zealand businesses are feeling the pinch of a market where margins are lower and quality candidates are becoming harder to find. So is the solution outsourcing recruitment offshore, or does the outsourcing of recruitment represent another level of competition in what is already a fiercely competitive sector?
Beepo, an Australian-owned outsourcing company operating out of the Philippines, added recruitment to its list of services four years ago, which also include outsourcing professional services, manufacturing, software and IT as well as retail.
“There is no endless supply of people and capital to run a business successfully, so some companies look to outsource some functions as a way of saving money and ensuring the processes are done professionally,” Beepo’s founder Aimee Englemann says.
“Recruitment is a reasonably new addition to services which can be and are being outsourced. It is a way of saving a company time, money and other resources which allows their recruitment processes to be professional and ensure the best outcomes.
“All businesses face constraints, whether it be time, money or resources. Outsourcing recruitment processes allows them to focus on the goods and services they deliver, while professional recruiters manage the recruitment process for them. When it is done properly, it becomes a win-win situation for everyone.”
Aimee said Beepo now works with a number of Australian firms who have made the decision to outsource recruitment tasks. Despite this, she insists outsourcing recruitment is not a threat to the sector.
“I don’t see outsourcing recruitment as a path to redundancies for those working in recruitment,” she says. “By combining the resources of recruitment companies with outsourcing companies, there is an opportunity to fuel businesses with the best staff for them.
“It allows organisations to let their in-house staff focus on what they do best, to be as effective as possible while providing an extended level of service allowing for a quicker turnaround in the employment process.” Englemann says she had one client who began outsourcing 20 per cent of the recruitment process before building that up to 80 per cent within 18 months.
She describes that 80 per cent as “the grunt work” of recruitment, with the final hiring decision left to a company’s HR, recruitment or senior manager.
“That is critical to what we do,” she says. “The final decision is not up to us. We simply provide all the lead-in work by managing the process from listing job ads, profiling candidates, doing due diligence on resumes including background and social media checks and even the onboarding process.”
The biggest roadblock for companies outsourcing recruitment is pre-conceived perceptions, which Englemann insists are usually based on call centre experiences with telcos, insurance companies or banks.
“But that’s not what the whole outsourcing industry is all about,” she insists. “The quality of the staff is very different to those call centre type of experiences which simply would not be effective for recruitment
. “We recognise that and have staff dedicated to working on recruitment. My challenge to businesses is don’t let perception hold you back because this could be something that will really help and be transformative for clients and candidates.”
Englemann explained that successful outsourcing of recruitment tasks came down to the level of training offshore staff receive and how engaged the local team is in communicating their needs, culture and expectations.
“It does take a long time to train some staff offshore if you want the job done properly,” she says. “If you don’t invest in the initial training and set-up, it can go pear-shaped very quickly. That’s why it’s so important to communicate with your onshore and offshore teams.
“You want the Australian team and Philippines team to be one team. You want them talking to each other; they can’t be faceless team members. Getting integration right is essential to the success.”
Englemann says advances in technology have assisted the outsourcing sector, with heavy use of cloud-based technologies in offshoring outfits.
“The combination of people and technology is very powerful and you don’t need those people to be sitting next to you to get the most out of it,” she says. “When used well, it can improve the candidate experience and efficiencies, which is of benefit to everyone involved in the process.”
Manzur-Ul Alam, Australian Director of Tardis Group, said there had been a steady and rapid increase in the demand for recruitment outsourcing services from Australian companies since the early 2000s. Tardis Group, an international executive search and recruitment consultancy, operating out of Sydney, London, New York, Hong Kong and Tokyo, recently opened an office in Perth.
“There are many factors contributing to increased demand for RPOs [recruitment process outsourcer] including inadequate resources allocated in HR for recruitment,” Alam says. “For some companies, having an RPO may be practical due to their low staff turnover or due to the cyclical or seasonal demand for recruitment.
“For high-volume recruitment or database management-type tasks, outsourcing can be a cost-effective solution which also helps to reduce the administrative work around recruitment for the manager and staff involved.”
Alam is quick to point out that for outsourcing to be a cost- and time-effective solution for some businesses, time and effort must be taken to put in place the structures, platforms and training needed, including both the RPO and client having clear expectations of each other and maintaining open lines of communication.
“If you can put all that in place, I would say go for it,” he says. “The most challenging part is finding the right partner to outsource recruitment to and ensuring they clearly understand what the Australian business needs as well as their general work ethic.”
Alam, who has worked in recruitment for more than 15 years, says some of the biggest challenges his clients have faced were language barriers, time zone differences and a lack of understanding of what is required by the business that has outsourced its recruitment offshore.
“Once we can find the right person, it becomes easy to train and manage them in the role of recruitment outsourcing,” he says. “I can say that we have found some offshore employees doing better jobs than local employees, and this becomes an obvious cost saving.
“That said, we have on occasion found differences in the expectation of offshore staff and the reality. It can be difficult to train someone via Skype or phone – especially on soft skills.” Alam says a number of clients initially have concerns about the safety and protection of their data with offshoring, but this has been addressed by finding an in-house solution clients and staff are comfortable with.
Amit Somaiya (pictured left), CEO and Founder of Indian-based IMS People, an offshore recruitment services provider supplying outsourced recruitment services for the recruitment sector itself, acting as an intermediary rather than competition.
“Our services tend to help local companies grow by addressing productivity issues for the onshore team, and our communication with clients and candidates is the same as if the onshore team was undertaking that task,” he says.
“The number one concern for local recruitment agencies is being able to hire experienced staff and we can assist by supplementing the existing team. For all progressive and growing recruitment agencies, offshoring should be a part of the strategy mix.
“With the costs of managing the process in-house going up and the margins shrinking, we saw an excellent opportunity of establishing a process-oriented and cost-effective solution that would help recruitment agencies to improve margins, increase productivity and profitability.”
Since being founded in 2006, IMS People has proven the effectiveness and value of outsourcing recruitment recently named on the IAOP Global Outsourcing Top 100 list for the second consecutive year and in 2014 the company was honoured with the Outsourced Solutions Provider award in Australia by Recruitment International.
Somaiya says the company works with recruitment agencies across all sectors, including finance and accounting, supporting them by finding the right candidates for jobs as well as providing other administrative services.
The company also provides offshore accounting services for recruitment agencies, managing all their accounting tasks from invoicing, payroll to management accounts. Somaiya, who says IMS People has worked with Australian and New Zealand companies for the past 10 years, acknowledges there is a reluctance from some people to outsource services offshore but says this could be countered by spending the time to develop the right partnerships.
“This reluctance of people is understandable since they need to protect their brand value and image,” he says. “However, with the level of skills available through outsourcing partners, I think each company can benefit from engaging with them provided they fully understand their own role in the partnership.
“There is no reason why their outsourced teams can’t deliver up to their expectations and above if they put in the same effort in building offshore teams as they do their own onshore teams.
“Outsourcing works well and is very unlikely to fail when it is fully integrated and embedded as a core business function than it being deployed simply as another vendor type scenario.”
Somaiya says the greatest benefits to outsourcing recruitment are:
Cost savings as much as 50 per cent of in-house recruitment
Flexible operations where team sizes can be increased or decreased quickly
Allows onshore partners to focus on what they do best including Business Development.
“For companies who may be nervous about outsourcing recruitment offshore, I would say they should be comfortable knowing this is a mature service which is used by recruitment agencies extensively around the world,” Somaiya says. “It may be a new concept to them, but there is plenty of experience, evidence and support to make it successful.”
There seems little doubt that the outsourcing of recruitment, by both businesses and recruitment agencies, will continue to grow as companies seek to find cost and time savings. How much of a threat it will be to the recruitment sector may well come down to attitudes to it and whether leaders are willing to embrace it.