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Recruitment Process Outsourcing
RecruitmentRecruitment refers to the process of screening, and selecting qualified people for a job at
an organization or firm, or for a vacancy in a volunteer-based some components of the
recruitment process, mid- and large-size organizations and companies often retain
professional recruiters or outsource some of the process to recruitment agencies.
Eternal recruitment is the process of attracting and selecting employees from outside
the organization.
!he recruitment industry has four main types of agencies" employment agencies,
recruitment #ebsites and job search engines, $headhunters$ for eecutive and
professional recruitment, and in-house recruitment. !he stages in recruitment include
sourcing candidates by advertising or other methods, and screening and selecting
potential candidates using tests or intervie#s.
Difference between recruitment and selection
%. Recruitment is the process of searching the candidates for employment and
stimulating them to apply for jobs in the organisation &'ERE() selection involves
the series of steps by #hich the candidates are screened for choosing the most suitable
persons for vacant posts.
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*. !he basic purpose of recruitments is to create a talent pool of candidates to enable
the
selection of best candidates for the organisation, by attracting more and more
employees to apply in the organisation &'ERE() the basic purpose of selection
process is to choose the right candidate to fill the various positions in the organisation.
+. Recruitment is a positive process i.e. encouraging more and more employees to
apply &'ERE() selection is a negative process as it involves rejection of the
unsuitable candidates.
. Recruitment is concerned #ith tapping the sources of human resources &'ERE()
selection is concerned #ith selecting the most suitable candidate through various
intervie#s and tests.
. !here is no contract of recruitment established in recruitment &'ERE() selection
results in a contract of service bet#een the employer and the selected employee.
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Some regular methods of
Recruitment are
1) Head Hunting:
any organizations have active formal employee referral programs, particularly
in tight job mar/ets or #here the employer has difficult-to-fill or high-turnover positions.
!hese programs re#ard employees for referring applicants to the organization. Other
organizations have less formal programs and encourage employees to refer potential
applicants, but do not provide an incentive for doing so.
Eperience and research sho# considerable benefit to the employee referral type of
recruitment. 0irst, employees are not li/ely to refer applicants that #ould not be good
employees. !hey do not #ant to be embarrassed by the performance or conduct of their
referral. (lso, candidates that are referred by employees typically already have begun the
orientation process and have some#hat of a realistic job previe# via their relationship
#ith the current employee. 0inally, there is a positive correlation bet#een employee
referral and employee retention of those hired as a result.
!here is, ho#ever, one potential problem that can associated #ith employee referrals.
Employees tend to refer their relative and friends, #ho most li/ely are of the same
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ethnicity or se as themselves. !herefore, this type of recruitment does not normally
facilitate the achievement of diversity and affirmative action plan goals and can create
adverse impact. !his is particularly true if the organization has a past practice of
discrimination.
2) Job posting on job sites (au!ri" monster" timesjobs etc):
Job postingis the process of advertising and publicizing job openings to
employees. !his might be accomplished by physically posting the opening on bulletin
boards or by electronically posting them on the company1s intranet or 2nternet. 2t is then
up to the employee to actually apply for the position.
#) $mplo%ment &gencies:
(s mentioned earlier in the discussion of outsourced recruitment, employment
agencies and job search firms often are good sources of job candidates. 0irst, all states
have unemployment offices, displaced #or/er units, or similar agencies performing the
same function. !hese are often sources of applicants.
Private employment agencies can be viable sources of applicants. !hese firms most
frequently charge the organization a fee for referral of candidates, either on a
contingency or retainer basis. 3ontingency-based firms receive the fee only if the
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applicant is hired, #hereas retainer-based firms receive a fee for engaging in the search
even if no one is hired. Employment agencies normally prescreen the applicants for the
organization and refer only those that are qualified. !he agencies often have contacts and
relationships that
the organization does not, and might be able to locate ecellent candidates for higher-
level managerial and hard-to-fill technical and professional positions. (lthough using
employment agencies and search firms might be cost-effective and yield results that the
organization could not achieve on its o#n, doing so can be etremely epensive. 3osts
for using these types of firms often run *4+56 of the yearly salary for the position
being recruited.
') &dvertisements on nes papers li!e *+" Hindu etc,
-) .ontract staffing
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*utsourcingOutsourcing is subcontracting a process, such as product design or manufacturing, to a
third-party company. !he decision to outsource is often made in the interest of lo#ering
cost or ma/ing better use of time and energy costs, redirecting or conserving energy
directed at the competencies of a particular business, or to ma/e more efficient use of
land, labor, capital, 7information8 technology and resources. Outsourcing became part of
the business leicon during the %9:5s. 2t is essentially a division of labour.
*vervie
Outsourcing involves the transfer of the management and;or day-to-day eecution of an
entire business function to an eternal service provider. !he client organization and the
supplier enter into a contractual agreement that defines the transferred services.
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services from the supplier for the term of the contract. =usiness segments typically
outsourced include information technology, human resources, facilities, real estate
management, and accounting. any companies also outsource customer support and call
center functions li/e telemar/eting, 3(> drafting, customer service, mar/et research,
manufacturing, designing, #eb development, print-to-mail, content #riting, ghost#riting
and engineering. Offshoring is the type of outsourcing in #hich the buyer organization
belongs to another country.
Outsourcing and off shoring are used interchangeably in public discourse despite
important technical differences. Outsourcing involves contracting #ith a supplier, #hich
may or may not involve some degree of offshoring. Offshoring is the transfer of an
organizational function to another country, regardless of #hether the #or/ is outsourced
or stays #ithin the same corporation;company.
&ith increasing globalization of outsourcing companies, the distinction bet#een
outsourcing and offshoring #ill become less clear over time. !his is evident in the
increasing presence of 2ndian outsourcing companies in the
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ultisourcing refers to large outsourcing agreements 7predominantly 2!8. ultisourcing
is a frame#or/ to enable different parts of the client business to be sourced from
different suppliers. !his requires a governance model that communicates strategy,
clearly defines responsibility and has end-to-end integration.
)trategic outsourcing is the organizing arrangement that emerges #hen firms rely on
intermediate mar/ets to provide specialized capabilities that supplement eisting
capabilities deployed along a firm1s value chain 7see 'olcomb @ 'itt, *55A8. )uch an
arrangement produces value #ithin firms1 supply chains beyond those benefits achieved
through cost economies. 2ntermediate mar/ets that provide specialized capabilities
emerge as different industry conditions intensify the partitioning of production. (s a
result of greater information standardization and simplified coordination, clear
administrative demarcations emerge along a value chain. Partitioning of intermediate
mar/ets occurs as the coordination of production across a value chain is simplified and
as information becomes standardized, ma/ing it easier to transfer activities across
boundaries.
>ue to the compleity of #or/ definition, codifying requirements, pricing, and legal
terms and conditions, clients often utilize the advisory services of outsourcing
consultants 7see sourcing advisory8 or outsourcing intermediaries to assist in scoping,
decision ma/ing, and vendor evaluation.
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Reasons for outsourcing
Organizations that outsource are see/ing to realize benefits or address the follo#ing
issues"
.ost savings. !he lo#ering of the overall cost of the service to the business. !his
#ill involve reducing the scope, defining quality levels, re-pricing, re-
negotiation, cost re-structuring. (ccess to lo#er cost economies through
offshoring called $labor arbitrage$ generated by the #age gap bet#een
industrialized and developing nations.
/ocus on .ore 0usiness. Resources 7for eample investment, people,
infrastructure8 are focused on developing the core business. 0or eample often
organizations outsource their 2! support to specilaised 2! services companies.
.ost restructuring. Operating leverage is a measure that compares fied costs to
variable costs. Outsourcing changes the balance of this ratio by offering a move
from fied to variable cost and also by ma/ing variable costs more predictable.
+mprove ualit%. (chieve a step change in quality through contracting out the
service #ith a ne# service level agreement.
noledge. (ccess to intellectual property and #ider eperience and
/no#ledge.
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.ontract. )ervices #ill be provided to a legally binding contract #ith financial
penalties and legal redress. !his is not the case #ith internal services.
*perational e3pertise. (ccess to operational best practice that #ould be too
difficult or time consuming to develop in-house.
&ccess to talent. (ccess to a larger talent pool and a sustainable source of s/ills,
in particular in science and engineering.
.apacit% management. (n improved method of capacity management of
services and technology #here the ris/ in providing the ecess capacity is borne
by the supplier.
.atal%st for change. (n organization can use an outsourcing agreement as a
catalyst for major step change that can not be achieved alone. !he outsourcer
becomes a 3hange agent in the process.
$nhance capacit% for innovation. 3ompanies increasingly use eternal
/no#ledge service providers to supplement limited in-house capacity for product
innovation.
Reduce time to mar!et. !he acceleration of the development or production of a
product through the additional capability brought by the supplier.
.ommodification. !he trend of standardizing business processes, 2! )ervices
and application services enabling businesses to intelligently buy at the right price.
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(llo#s a #ide range of businesses access to services previously only available to
large corporations.
Ris! management. (n approach to ris/ management for some types of ris/s is
to partner #ith an outsourcer #ho is better able to provide the mitigation.
4enture .apital. )ome countries match government funds venture capital #ith
private venture capital for startups that start businesses in their country.
a3 0enefit. 3ountries offer ta incentives to move manufacturing operations to
counter high corporate taes #ithin another country.
&ctivities for outsourcing
Research 5 6evelopment
!he competitive pressures on firms to bring out ne# products at an ever rapid pace to
meet mar/et needs are increasing. (s such, the pressures on the R@> department are
increasing. 2n order to alleviate the pressure, firms have to either increase R@> budgets
or find #ays to utilize the resources in a more productive #ay. !here are situations #hen
a firm may consider outsourcing some of its R@> #or/ to a contract research
organizations or universities. Reasons #hy a firm could consider outsourcing are"
ne# product design does not #or/
project time and cost overruns
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loss of /ey staff
competitive response
problems of quality;yield.
!he /ey drivers for R@> outsourcing are emerging mass mar/ets and availability of
epertise in the field. 2n this contet, the t#o most populous countries in the #orld,
3hina and 2ndia, provide huge pools from #hich to find talent. =oth countries produce
over *55,555 engineers and science graduates each year. oreover both countries are
lo# cost sourcing countries. Other strategic drivers for outsourcing R@> are access to
epertise and intellectual property, filling gaps in the capabilities of the R@> function,
managing ris/ better, reducing the time to mar/et, and focusing on the core competence
or activities of the firm.
.riticisms of outsourcing
7ualit% Ris!s
Buality Ris/ is the propensity for a product or service to be defective, due to operations-
related issues. Buality ris/ in outsourcing is driven by a list of factors. One such factor is
opportunism by suppliers due to misaligned incentives bet#een buyer and supplier,
information asymmetry, high asset specificity, or high supplier s#itching costs. Other
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factors contributing to quality ris/ in outsourcing are poor buyer-supplier
communication, lac/ of supplier capabilities;resources;capacity, or buyer-supplier
contract enforceability. !#o main concepts must be considered #hen considering
observability as it related to quality ris/s in outsourcing" the concepts of testability and
criticality.
!estability, in the contet of quality ris/ in outsourcing a product or service, refers to a
product1s or service1s coverage, or the ease of inspecting every single unit. !estability
also refers to a product1s or service1s thoroughness, or the ease of inspecting for single
possible defect. !hus, the testability of a product or service is measured by #here it lies
on the coverage and thoroughness aes"
Co# !horoughness D Co# 3overage Products or )ervices #ith Co# !estability
'igh !horoughness D Co# 3overage 3omplete 2nspections of 0e# Products or
)ervices
Co# !horoughness D 'igh 3overage 2ncomplete 2nspections of ost Products
or )ervices
'igh !horoughness D 'igh 3overage Products or )ervices #ith 'igh
!estability
3riticality, in the contet of quality ris/ in outsourcing a product or service, refers to the
potential negative impact of a quality defect - the higher the criticality of a product or
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service the higher the potential negative impact. !he quality ris/ in outsourcing a
product or service can thus be summed as a function of its testability and criticality"
Co# !estability D Co# 3riticality 'igh probability of minor defects
'igh !estability D Co# 3riticality Co#est Buality Ris/
'igh !estability D 'igh 3riticality Co# Probability of 3ritical >efects
Co# !estability D 'igh 3riticality 'ighest Buality Ris/
Buality fade is the deliberate and secretive reduction in the quality of labor in order to
#iden profit margins. !he do#n#ard changes in human capital are subtle but
progressive, and usually unnoticeable by the out sourcer;customer. !he initial intervie#
meets requirements, ho#ever, #ith subsequent support, more and more of the support
team are replaced #ith novice or less eperienced #or/ers. 2ndia 2! shops #ill continue
to reduce the quality of human capital, under the pressure of drying up labor supply and
up#ard trend of salary, pushing the quality limits. )uch practices are hard to detect, as
customers may just simply give up see/ing help from the help des/. 'o#ever, the
overall customer satisfaction #ill be reduced greatly over time.
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staff are no# trained in the process and the original staff made redundant. 2n the end, the
company that outsources is #orse off than before it outsourced its #or/force to 2ndia.
Public opinion
!here is a strong public opinion regarding outsourcing 7especially #hen combined #ith
off shoring8 that outsourcing damages a local labor mar/et. Outsourcing is the transfer of
the delivery of services #hich affects both jobs and individuals. 2t is difficult to dispute
that outsourcing has a detrimental effect on individuals #ho face job disruption and
employment insecurityF ho#ever, its supporters believe that outsourcing should bring
do#n prices, providing greater economic benefit to all. !here are legal protections in the
European
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particularly evident #hen call centers that service the public are outsourced and off
shored.
!here are a numberof the public #ho find the linguisticfeatures such as accents, #ord
use and phraseology different #hich may ma/e call centeragents difficult to understand.
!he visual clues that are present in face-to-faceencounters are missing from the call
center interactions and this also may lead to misunderstandings and difficulties.
Social responsibilit%
Outsourcing sends jobs to the lo#er-income areas #here #or/ is being outsourced to,
#hich provides jobs in these areas and has a net equalizing effect on the overall
distribution of #ealth. )ome argue that the outsourcing of jobs 7particularly off-shore8
eploits the lo#er paid #or/ers. ( contrary vie# is that more people are employed and
benefit from paid #or/.
On the issue of high-s/illed labor, such as computer programming, some argue that it is
unfair to both the local and off-shore programmers to outsource the #or/ simply because
the foreign pay rate is lo#er. On the other hand, one can argue that paying the higher-
rate for local programmers is #asteful, or charity, or simply overpayment. 2f the end goal
of buyers is to pay less for #hat they buy, and for sellers it is to get a higher price for
#hat they sell, there is nothing automatically unethical about choosing the cheaper of
t#o products, services, or employees.
http://en.wikipedia.org/wiki/Linguisticshttp://en.wikipedia.org/wiki/Accentshttp://en.wikipedia.org/wiki/Call_centerhttp://en.wikipedia.org/wiki/Face-to-facehttp://en.wikipedia.org/wiki/Linguisticshttp://en.wikipedia.org/wiki/Accentshttp://en.wikipedia.org/wiki/Call_centerhttp://en.wikipedia.org/wiki/Face-to-face8/13/2019 28204385 Recruitment Process Outsourcing
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7ualit% of service
Buality of service is measured through a service level agreement7)C(8 in the
outsourcing contract. 2n poorly defined contracts there is no measure of quality or )C(
defined. Even #hen an )C( eists it may not be to the same level as previously enjoyed.
!his may be due to the process of implementing proper objective measurement and
reporting #hich is being done for the first time. 2t may also be lo#er quality through
design to match the lo#er price.
!here are a number of sta/eholders#ho are affected and there is no single vie# of
quality. !he3EOmay vie# the lo#er quality acceptable to meet the business needs at
the right price. !he retained management team may vie# quality as slipping compared to
#hat they previously achieved. !he end consumer of the service may also receive a
change in service that is #ithin agreed )C(s but is still perceived as inadequate. !he
supplier may vie# quality in purely meeting the defined )C(s regardless of perception
or ability to do better.
Buality in terms of end-user-eperience is best measured through customer satisfaction
questionnaires#hich are professionally designed to capture an unbiased vie# of quality.
)urveys can be one of research. !his allo#s quality to be trac/ed over time and also for
corrective action to be identified and ta/en.
Staff turnover
http://en.wikipedia.org/wiki/Service_level_agreementhttp://en.wikipedia.org/wiki/Stakeholder_(corporate)http://en.wikipedia.org/wiki/CEOhttp://en.wikipedia.org/wiki/Customer_satisfaction_questionnaireshttp://en.wikipedia.org/wiki/Customer_satisfaction_questionnaireshttp://en.wikipedia.org/wiki/Service_level_agreementhttp://en.wikipedia.org/wiki/Stakeholder_(corporate)http://en.wikipedia.org/wiki/CEOhttp://en.wikipedia.org/wiki/Customer_satisfaction_questionnaireshttp://en.wikipedia.org/wiki/Customer_satisfaction_questionnaires8/13/2019 28204385 Recruitment Process Outsourcing
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!he staff turnover of employee #ho originally transferred to the outsourcer is a concern
for many companies. !urnover is higher under an outsourcer and /ey company s/ills
may be lost #ith retention outside of the control of the company.
2n outsourcing offshore there is an issue of staff turnover in the outsourcer companies
call centers. 2t is quite normal for such companies to replace its entire #or/force each
year in a call center. !his inhibits the build-up of employee /no#ledge and /eeps quality
at a lo# level.
.ompan% !noledge
Outsourcing could lead to communication problems #ith transferred employees. 0or
eample, before transfer staff have access to broadcast company e-mailinforming them
of ne# products, procedures etc. Once in the outsourcing organization the same access
may not be available. (lso to reduce costs, some outsource employees may not have
access to e-mail, but any information #hich is ne# is delivered in team meetings.
7ualifications of outsourcers
!he outsourcer may replace staff #ith less qualified people or #ith people #ith different
non-equivalent qualifications.
2n the engineeringdiscipline there has been a debate about the number of engineers
being produced by the major economies of the
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argument centers around the definition of an engineering graduate and also disputed
numbers. !he
closest comparable numbers of annual graduates of four-year degrees are
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Offshore outsourcing for the purpose of saving cost can often have a negative influence
on the real productivity of a company. Rather than investing in technology to improve
productivity, companies gain non-real productivity by hiring fe#er people locally and
outsourcing #or/ to less productive facilities offshore that appear to be more productive
simply because the #or/ers are paid less. )ometimes, this can lead to strange
contradictions #here #or/ers in a developing country using hand tools can appear to be
more productive than a
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less developed countries or global society as a #hole, in some form and to some degree -
include rising #ages or increasing standards of living - these benefits are not secure.
0urther, the term outsourcing is also used to describe a process by #hich an internal
department, equipment as #ell as personnel, is sold to a service provider, #ho may retain
the #or/force on #orse conditions or discharge them in the short term. !he affected
#or/ers thus often feel they are being $sold do#n the river.$
he ,S,
Outsourcing became a popular political issue in the
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rationale is the etremely high corporate income ta rate in the nations, and the peculiar practice of taing revenues earned outside of
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outsourcers are involved, for eample credit card theft #hen there is scope for fraud by
credit card cloning. 2n (pril *55, a high-profile case involving the theft of Q+5,555
from four 3itiban/ customers occurred #hen call center #or/ers acquired the pass#ords
to customer accounts and transferred the money to their o#n accounts opened under
fictitious names. 3itiban/ did not find out about the problem until the (merican
customers noticed discrepancies #ith their accounts and notified the ban/.
$valuating Recruitment
$ffectiveness!he )P'R provides leadership in evaluating the efficiency and effectiveness of
recruitment activities. Efficiency evaluation is largely operational in nature, #hereas
effectiveness evaluation is strategic.
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the more li/ely it is to fill its openings #ith highly qualified individuals.
Buantities can be evaluated by source, giving a gross estimate of the cost-
effectiveness of television versus ne#spaper advertising, for eample.
7ualit% of applicationsOrganizations might #ant to evaluate the percentage of
applications that #ere considered qualified for the job or that #ere actually
offered an intervie#. (gain, this is a gross measure of the impact of the
recruitment program and can be analyzed by the source of the application.
ime to fillost organizations evaluate the time it ta/es to fill a position,
typically in terms of the number of days from the date the request is received in
the 'R department until ne# employee actually reports onboard. !hese data are
then compared against goals, historical averages, and benchmar/s to evaluate
recruitment efficiency.
;ield ratesield rates #ere discussed earlier in this chapter. Recruitment is
often evaluated in terms of yield rates from one stage of the process to another.
0or eample, the organization needs to /no# #hat percentage of applicants #ere
actually considered to be qualified for the job, #hat percentage that #ere
qualified passed the initial screening, #hat percentage passing the initial
screening also passed the pre-employment tests, #hat percentage passing the pre-
employment test #ere offered in-person intervie#s, and so forth. !his provides
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&cceptance rates)ome organizations trac/ selection rates, #hich are typically
evaluated as the number of applicants that accept the position divided by the
number of applicants that #ere offered the position. !he higher the ratio, the
more efficient the recruitment program is considered to be. 'o#ever, acceptance
rates can be significantly affected by outside influences that have nothing to do
#ith the quality of recruitment efforts. 0or eample, acceptance rates could be
epected to be appreciably higher during periods of high unemployment.
!his metric is frequently used to evaluate both individual recruiter and
recruitment sources. &hen evaluating individual recruiters, the interest is in ho#
effective the recruiter is in actually convincing the applicant to accept the job.
!his might be a critical issue, especially #ith higher-level jobs #here the costs of
recruiting are substantial. !he organization is also interested in /no#ing #hether
the acceptance rate differs among the various recruitment methods so that it can
adjust its strategies.
Effectiveness measures are those that evaluate the long-term strategic impact of the
recruitment program.$'uman Resource >evelopment,$ in the contet of evaluation of
training and development there is often an inverse relationship bet#een the value of data
and analysis and its difficulty. 'o#ever, this is the value added by the )P'R. !he )P'R
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must develop metrics that strategically evaluate recruitment efforts in terms of their
impact on organizational effectiveness and strategic success.
(n effectiveness measure frequently overloo/ed is that of customer satisfaction #ith the
recruitment process and results. 2n this case, customers can be defined in a number of
#ays. 0irst, management satisfaction should be evaluated. anagers should be
questioned as to their overall satisfaction #ith the recruitment process and the timeliness
of actions and the quality of recruits in particular. =ecause managers at different levels
often have different epectations, satisfaction should be surveyed at multiple levels in
the organization. !he second, and probably more important, customer group is the actual
recruits themselves. !his includes both those #ho #ere hired and those #ho #ere
rejected for employment. !hey should be questioned about their perspectives regarding
the various stages of the recruitment and selection process. !hese data often provide
valuable information regarding recruitment effectiveness and identify areas that might
need improvement.
!he effectiveness of recruitment efforts should be evaluated in terms of eventual
employee performance and retention. !herefore, the )P'R should lead the 'R function
in engaging in longitudinal studies in these areas. 2n the press of current requirements
historical research is often ignored. et these data are the ones that allo# the
organization to fine-tune current operations. Organizations that have effective
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recruitment evaluation programs periodically 7usually yearly8 evaluate a sample of hires
from previous years, correlating retention, promotion rates, and performance data #ith
recruitment sources, selection tests, and other employment practices. Evaluation of
individual recruiters can also be done using the same process. !hese data provide rich
information as to the long-term effectiveness of recruitment programs. !he potential
value of these types of evaluations is, ho#ever, moderated by the nature of the
organizational environment and the organizational strategies. !hese data have the
greatest impact in planning and engaging in activities to improve the recruitment
program #hen the environment is relatively stable.
Recruitment Process *utsourcingRecruitment Process *utsourcing7RPO8is a form of business process outsourcing
7=PO8 #here an employer outsourcers or transfers all or part of its recruitment activities
to an eternal service provider.
!he Recruitment Process Outsourcing (ssociation defines RPO as follo#s" $#hen a
provider acts as a companys internal recruitment function for a portion or all of its jobs.
RPO providers manage the entire recruiting;hiring process from job profiling through the
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on-boarding of the ne# hire, including staff, technology, method and reporting. (
properly managed RPO #ill improve a companys time to hire, increase the quality of the
candidate pool, provide verifiable metrics, reduce cost and improve governmental
compliance.L
!he RPO (lliance, a group of the 'uman Resources Outsourcing (ssociation 7'RO(8,
approved this definition in 0ebruary *559" $Recruitment Process Outsourcing 7RPO8 is a
form of business process outsourcing 7=PO8 #here an employer transfers all or part of
its recruitment processes to an eternal service provider. (n RPO provider can provide
its o#n or may assume the companys staff, technology, methodologies and reporting. 2n
all cases, RPO differs greatly from providers such as staffing companies and
contingent;retained search providers in that it assumes o#nership of the design and
management of the recruitment process and the responsibility of results.$
Occasional recruitment support, for eample temporary, contingency and eecutive
search services is more analogous to out-tas/ing, co-sourcing or just sourcing. 2n this
eample the service provider is $a$ source for certain types of recruitment activity.!he
biggest distinction bet#een RPO and other types of staffing isProcess. 2n RPO the
service provider assumes o#nership of the process, #hile in other types of staffing the
service provider is part of a process controlled by the organization buying their services.
Histor%
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&hile temporary, contingency and eecutive search firms have provided staffing
services for many decades, the concept of an employer outsourcing the management and
o#nership of part or all of their recruiting process #asnt first realized on a consistent
basis until the %9A5s in )ilicon Jalleys highly competitive high tech labor mar/et. 0ast-
gro#ing high tech companies #ere hard-pressed to locate and hire the technical
specialists they required, and so had little choice but to pay large fees to highly
specialized eternal recruiters in order to staff their projects. Over time, companies
began to eamine ho# they might reduce the gro#ing epenses of recruitment fees #hile
still hiring hard-to-find technical specialists. !o#ard this end, companies began to
eamine the various steps in the recruiting process #ith an eye to#ard outsourcing only
those portions that they had the greatest difficulty #ith and that added the greatest value
to them. 2nitial RPO programs typically consisted of companies purchasing lists of
potential candidates from RPO vendors. !his $search;research$ function, as it #as called,
generated names of competitors employees for a company and served to augment the
pool of potential candidates from #hich that company could hire.
Over time, as business in general embraced the concept of outsourcing more and more,
RPO gained favor among 'uman Resource management" not only did RPO reduce
overhead costs from their budgets but it also helped improve the companys competitive
advantage in the labor mar/et. (s labor mar/ets became more and more competitive,
RPO became more of an acceptable option. 0urthermore, through the advent in the
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%9:5s and %995s of human resources outsourcing 7'RO8 companies that began ta/ing
on the processes associated #ith benefits, taes, and payroll, companies began
recognizing that recruiting--a significant cost of 'R--should also be considered for
outsourcing. 2n the early *555s more companies began considering the outsourcing of
recruitment for major portions of their recruiting need.
!here have been fundamental changes in the
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Placing all recruitment in the hands of a single outside provider may discourage the
competition that #ould arise if multiple recruitment agencies #ere used.
(n RPO solution may not #or/ if the companys eisting recruitment processes are
performing poorly. (n RPO solution may not #or/ if the service provider has
inadequate recruitment processes or procedures to #or/ #ith the client.
RPO may not resolve difficulties that organizations have hiring staff #hen the
organization is perceived negatively by potential employees. !his #ill instead require
improved branding and an adjustment of image. !he perception is that very fe# RPOs
can successfully integrate their clients brand and therefore do not represent their clients
brand as #ell as a retained search or internal recruiting resource may drive brand
representation and or mar/eting.
0urther, most RPOs perform their staffing functions and service offsite, further
disconnecting the clients gro#th @ recruiting strategy from the actual #or/force #ithin
the client company. !his is important because during a period of rapid recruitment
gro#th, one of the many positive effects that a company typically enjoys is an increase
in the #or/force #ellness or an overall #or/force positivity of sentiment of optimism
that comes #ith personnel additions... this may be lessened #ith an offsite recruiting
function.
Organizations #ith efficient hiring process that are vie#ed as employers of choice by
potential staff may stand to gain negligible benefits from RPO.