The trend of recruitment outsourcing is catching up fast. Large companies like Vodafone and Wipro are also outsourcing their recruitment activities to RPO service providers. Yes bank too has outsourced 50 percent of their recruitment services. In recent years, it has been observed that a number of large and mid-sized companies are opting for outsourced human resource services. In fact, it has become the latest trend across all the Indian industries. But before discussing more about this latest practice, it is essential to understand what human resource outsourcing is.
What is human resource outsourcing?
Human resource outsourcing is a process where an organization hires the knowledge and expert service of a third party to manage its human resource services. This allows the internal HR management to focus on the organization’s strategic dimension. In general, organizations outsource human resource services that require relevant experience, special knowledge and expertise about the best methods and practices. Companies are outsourcing either the entire HR management process or various aspects of human resource services including job recruitment, HR training, performance management, and appraisal. HR BPO or human resource business-process-outsourcing is becoming one of the major components of the global BPO market.
The new trend of recruitment process outsourcing
Many organizations are outsourcing job recruitment process, in order to take off the burden of their headhunting business. They are transferring the responsibilities of recruitment process to recruitment consultants or HR outsourcing firms. Recruitment process outsourcing or RPO comes with various prospects to bridge the gap between demand and supply. The war for talent hunting has intensified in the recent years. India’s hiring estimation is also increasing at an alarming state. As a result, organizations are demanding candidates with higher quality and increased efficiency.
It has been observed that organizations tend to spend a lot of time and money to deal with the job recruitment process when it is done by the internal HR management system. The total cost of recruitment becomes higher for an organization as it combines the cost of in-house recruiters, job portal, occasional and adhoc consultation fees, and additional maintenance expenses. Besides, job recruitment process is a non-core function of the organization. As a result, recruitment process outsourcing is becoming the ideal option, where competent HR outsourcing firms deal with the company’s internal recruitment function. These HR outsourcing firms have required knowledge and expertise in managing end-to-end job recruitment process.
Recruitment process outsourcing is generally practiced in two models. The first one is based on pure sourcing. It provides support services to on-shore recruiters enhancing their productivity and organizational effectiveness. Second model of RPO is a complete cycle recruiting. It involves sourcing, screening as well as on boarding for temporary and permanent positions. The second form of recruitment process outsourcing helps in reducing the organization’s overall cost of recruiting process. Besides, it enhances the company’s core competence.
The growth of RPO market in India
The concept of recruitment process outsourcing originated in Western countries. Though the RPO sector is at its infancy in India, it is expected to grow in the near future. At present, there are quite a few Indian HR outsourcing firms offering recruitment process outsourcing services to various domestic and multi-nationals organizations. In fact, the present value of RPO industry in India is around $2.5 billion, and the expected annual growth rate is 30-40 percent for the next few years. In India, the number of organizations outsourcing their job recruitment processes is gradually increasing. The total percentage of recruitment processes that are being outsourced to human resource service providers is also increasing at a fast rate. A recent survey confirmed that in India, just 8-10 percent of the companies are internally managing complete recruitment processes.
There are several benefits of recruitment process outsourcing. HR outsourcing firms provide cost saving benefits to the organizations. In fact, studies say organizations can save up to 40 percent of the cost of their job recruitment process by opting for RPO services. Moreover, HR outsourcing firms have the right kind of experience and expertise to help organizations to improve the speed of the job recruitment process as well as the quality of recruits. These third party HR management service providers also offer economies of scale. This, in turn, allows the internal HR management department to focus on the core business strategic issues and other aspects of human resource services.
Recruitment process outsourcing gives a structured approach to the organization’s job recruitment process. However, the organization will still have the ultimate power of decision-making. In general, RPO involves preparing job descriptions, profile identification, initial screening, arranging interviews, and reference verification. These human resource activities consume as much as 70 percent time of the total job recruitment process.
Thus, organizations can save 70 percent of its time by outsourcing this HR process and use it for addressing core strategic issues to improve organizational efficiency and productivity.