Tuesday, 31 July 2012

Top 4 Reasons RPO Companies Are Moving Offshore - Part 1

The other day, while on the phone, a business prospect griped at me, “It’s appalling; my business efficiency is kissing river-bottom…Just like the cash balances in my savings account,” she rounded off humorously. I went on to ask her if she had enough time to do all the things she wanted to do.

“Given this crummy economy, it will take me years to find my feet. I need to improve business performance and all I seem to be doing is rolling a rock relentlessly up the cliff, just to have it roll down to start anew”, she metaphorically continued at the other end of the line.

On further inquiry I understood that here was a recruitment process outsourcing (RPO) business that had ample work and was bringing in enough revenue to keep going but was not able to take off like the owner had envisioned.  As we talked more, the efficiency issues that plagued her business became clear. It was revealed to both of us that her in-house recruiters were losing focus as they labored for long hours at tedious, administrative functions like preparing job profiles, writing job adverts and descriptions, sourcing CVs, gathering names, and acknowledging & screening applicants. To add to her woes were the data administration duties that filled up her team’s time in the form of data regeneration, monitoring vacancies, managing advert responses, and bringing the ATS up-to-date.

So how could her business run faster, more efficiently?

We concluded that the reason her business wasn’t able to take off as quickly as she wanted it to was because her in-house recruiters were spending time on critical but non-core functions, when optimally she needed them to focus on high-end tasks like managing a candidate’s offer process, following up with them after placement, interacting with clients, and winning more business.

Offshoring doesn’t beget questioning faces in the Staffing industry anymore. It was picked up as early as 2003 by top RPO companies with impressive portfolios who wanted to focus on business growth. If you ever sit back and think of the reasons why staffing businesses have taken to offshoring you will find many. I, however, caught up with QX’s Chris Harrison (VP of the Recruitment Division), earlier today and he was glad enough to recount a few reasons why small and medium sized staffing enterprises  are following the path paved by the bigger ones.

#1 Offshoring Saves Time and Reduces Operating Costs

When asked how offshoring the recruitment function saves someone any time, Chris began with a statistical did-you-know, hoping it would encourage you to analyze how you are losing valuable time.  He said, “Typically recruiters spend about 60% of their time conducting admin functions, posting jobs, and searching candidates. To add to that it is not uncommon to receive large volumes of candidate applications to a vacancy response. And we now know for a fact that 70% to 90% of the CVs the recruiters find are unsuitable for the advertised vacancy. ”

He continues, “As you can imagine, finding the right talent takes up considerable time and it makes business sense to deploy a virtual service provider who will conduct activities round the clock and provide excellent quality with an added benefit of cost arbitrage. I think it makes sense to decide how much your time is worth before deciding where you spend it”.

Chris doesn’t think that cost is the primary driver behind the current offshore RPO trend.  “Time and Efficiency are the buzzwords”, he says with enthusiasm. According to him, “More and more SMEs are moving offshore because they have finally realized that they need to commit themselves to work which directly involves their clients and candidates. I agree that offshoring requires the right recruiting strategy and resources, but eventually the non-core functions are not something you want to involve yourself in.”

“I believe administering your recruitment functions offshore improves candidate quality and quantity, enhances the recruitment process and at the same time reduces the cost and time to hire. It finally allows you to push your in-house talent up the organisation into places where they are more valuable”, he says.

# 2 Offshoring Improves Business Performance As It Frees Up Internal Resources

By saving time and money, offshoring allows proper use of your in-house recruiters as they can spend more time on candidate and client management. The money saved can be devoted to the company’s core activities, i.e. things you are good at and can do most profitably. There is no reason why the money saved from offshoring the not core functions can’t be used to buy more advertisements, and fund other sales and marketing activities.

According to Chris, “Before you can hope for growth, you first have to understand what it means to you. It might mean focusing on high-end, value added tasks like building and managing client and candidate relationships.”

He continues, “However, there is a challenge here. To improve business efficiency, it is very important that you understand what to keep in-house and what to offshore. Successful offshoring relationships require a consultative approach since each company’s culture is different. Your offshore partner should work with you to decide which parts of the recruitment cycle are of strategic importance and which are not. I have personally evaluated that Staffing companies that offshored their admin work to QX saved 45% of their daily time spent on administrative duties, and witnessed a 16% increase in developing new business.”


If you have any thoughts or comments or please don't hesitate to type them out in the comment section below. Please visit us again tomorrow for Reasons # 3 & 4. Thanks for reading.

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