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.”

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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.

Friday, 20 July 2012

Offshoring - The Tug of War Between Economics And Politics

In an interview with the Press Trust of India Mr. Obama talked of concerns about the "deteriorating investment climate".  The US president said India "continues to grow at an impressive rate", but "there appears to be a growing consensus in India that the time may be right for another wave of economic reforms to make India more competitive in the global economy". They tell us it is still too hard to invest in India. In too many sectors, such as retail, India limits or prohibits the foreign investment that is necessary to create jobs in both our countries, and which is necessary for India to continue to grow," he said

President Barack Obama may have a point there- that if India looks at opening its Retail sector for FDI investment, it will create jobs in both the countries. But at the same time, I am sure he is well aware that such a step will also result in the profits of the Indian company being siphoned off to the USA. So in effect, the FDI consortium will be earning its income in India, from Indians and will be repatriating a major part of these profits back to America.

Let us talk about outsourcing for a minute- Obama has always maintained that the US companies which outsource their jobs or processes to another country should not be provided with tax breaks while the companies which generate jobs within the country should be. He believes this curtailing will encourage more companies not to outsource their jobs- and he is right. But this curtailing will also ensure that these same companies bleed to death while doling out high wages to their workers. If nothing else, they will definitely post some negative results and the market sentiments will be low.

Also, if Obama in fact believes that investing in India is worthwhile, why does he not invest in a sector which is Labor Intensive and not Capital Intensive?  When he invests in Capital Intensive sectors, he does not create as many jobs- either in USA or in India. The eventual outcome of such FDI investment is only the repatriation of profits back to USA (as I had mentioned earlier). On the other hand, if such investment is made in a Labor Intensive Sector, the generation of jobs will be of a significant magnitude- especially in India.     

There is no easy solution to the above issue- there is no line separating black from white. I believe the only ‘workable’ solution in this matter would be to try and revaluate the economic indicators of each country- determine the growth rate and the flow and source of such growth. And then ‘reverse-work’ towards a compromise which lets both countries achieve significant growth while still maintaining and hopefully enhancing the employment ratios of each country.

Tuesday, 10 July 2012

7 Things to Consider Before Choosing Your Outsourcing Partner

If outsourcing still doesn’t conjure up images of success and savings, it might definitely be a daunting task for you. Rightfully so. After all, finding an outsourcing vendor who knows your business is no easy task. And believe me, getting stuck with an outsourcing partner who doesn’t understand your business can easily turn your cost-saving strategy into a nightmare. However, help is at hand - I have listed a few questions you need to ask yourself before choosing your outsourcing partner. Here goes:


1- Do they have the expertise & credible references?

A little research will go a long way in finding the right outsourcing partner. This is the first thing you would want to do. Find out how long the company has been in business? Whether they have worked on a project similar to yours in the past? How many offices do they deliver and operate from? Search them on Google and other Social Media platforms to understand their brand image. Find out their history and business experience.

Importantly, ask for references,  know their staff retention rates, learn about their work culture, get to know how many contracts they are able to renew at the end of their contract periods, and ask if they have UK-based support staff.

As far as references go, check how long their clients have been with them and if they have referred them in the past. Contact the referees and find out their levels of satisfaction. It will also be helpful if you ask for the providers' strengths and how they deal with work issues and problems.

QX Advantage: QX has the seasoned hand’s touch. We have been in the business for over 8 years now and can easily be called a trendsetter in the Indian F&A Outsourcing market. We have a foundational expertise in providing outsourced solutions to the the UK Accounting Industry and can provide references upon request. At 97%, the highest employee retention rate in the region, we ensure successful retention and transfer of your process knowledge amongst your team members in India.

2- Do they have Quality & Information Security Measures in Place?

I perfectly understand that Quality compliances are only a good general measure and the best outsourcing vendors should have Quality built into their genetic codes.  However, it doesn’t hurt to find outsourcing partners that follow globally-accepted standard models like ISO. Find companies which are certified by the latest, revised ISO standards as these adopt a process oriented approach and emphasize on measuring process performance and effectiveness. Other than helping measure and improve quality standards, it also ensures that the company follows defined processes and abides by quality parameters set by the regulating body.

In terms of quality, ensure that your outsourcing vendor delivers similar or better output than your own internal resources. Don’t settle for anything less.

QX Advantage: We are accredited by ISO and hold the following certifications to carry out work. ISO 9001-2008, Certificate # FS 557506, for High-end Delivery; and ISO: 20071-2005, Certificate # IS 585119, for excellence in Information Security. We have in place appropriate safety controls to securely protect information and intellectual property. As an ISO 27001:2005 compliant organization, we treat information as the most valuable asset and continually assess our systems to ensure the highest level of information security.

3- Do they speak the same language as you? Are they on the same page?

Many an outsourcing deal has been marred by poor communication. There is research based evidence which says that 38% of outsourcing deals fail because of a lack of cultural congruity between the vendor and client.
We suggest you spend at least a fortnight with your outsourcing vendor to get a first-hand experience of their work ethos and culture.  Get involved with them; attend the staff meetings; interact with your extended team. This is the best way to experience their work culture.

QX Advantage: 25-30% of our staff has lived and worked in the UK. Another 30% regularly travel to the UK for business. We also run an internal staff training academy which chalks and conducts communication programs for all employees.  Our training programs include but aren’t limited to Process Training, English Language Classes, Cultural Acclimatization & Soft Skill Training.

4- Do they have the best IT infrastructure and latest technologies?

ISO 27001:2005 is a legit proof for an outsourcing company’s IT capabilities. However, the next best bet would be to visit to your outsourcing partner's workplace and finding out if they use the best IT Infrastructure and high-end technology. A personal visit helps you understand if they have the proper technology to handle your project. It will also help you analyze and understand their processes, methodologies and workforce employed to run your business process.

QX Advantage: We know everything relies on quality infrastructure. To that end, we use a highly secure FTP server and a 5 MBPS internet connection for the transfer and exchange of all data. To ensure continuous operational delivery we back up your data everyday on remote servers.
For a next-room telephony experience we use an IPLC (dedicated point-to-point connectivity) communications system to speak with you. Also, virtual communication in the form of face-to-face meetings is possible through a video conference facility.

5- How do they report?


Look for a company with a proven track record; companies which provide reports on a daily, weekly or bi-weekly basis. These reports help you monitor performances of people who work on your process and take action as the work happens. The only thing that should change when you outsource is the location the work is being processed at.

QX Advantage: QX can also work on your servers and as per your reporting tools. We help you set up job responsibilities, methods to monitor our performance and measure the defined goals. You will also get a single-point-of-contact who sends digital reports to you on a daily and weekly basis. And since QX is known for its quick turnaround times, all your issues are dealt with swiftly.

6- Have they won any rewards and recognition for their work? Are they affiliated with any regulating bodies? 

Awards and industry recognition is a good general measure to learn about the reputation of your outsourcing vendor. Research says that companies just like employees perform better if they are recognized for their accomplishments. Also, awards say a lot about the quality of an organisation and the strength of the management team.

QX Advantage: We have been honored for excellence in outsourcing by Gesia (Gujarat Electronics & Software Industries Association) for 2 years in a row.  QX achieved the recognition for its excellence and "the significant progress it has made in the areas of operation which include: revenue generated in the financial year, attrition Rate, number of verticals, (Telecom, BFSI, F&A, Retail), Number of clients, average duration of clients with the company and Government Compliances & Regulation Adherence".

7- Are they a UK-registered company?

Last but no less important than the first, before choosing your provider, take some time and learn about the owners of the company and which laws does it operate under. It is important that you choose a UK-registered outsourcing partner since it makes things easy and you don’t end up chasing people in a foreign land, if needs be. 

QX Advantage: Founded and led by a KPMG-trained, UK Chartered Accountant- Chris Robinson, QX has its headquarters in Skipton, North Yorkshire. Therefore, you enter into contract with a British company. Since QX is regulated by UK laws, a part of the profit is repatriated to the UK economy in the form of taxes. 

Last words - I hope the foregoing information helps you find the right outsourcing partner. If you have any thoughts, comments or even arguments please don't hesitate to type them out in the comment section below. Thanks for reading.

Wednesday, 4 July 2012

Caught Between The Devil And The Deep Blue Sea

Brittania Between Scylla and Charybdis
Recent developments in the field of outsourcing have brought forward many strategic repercussions. The developed countries of the world, already reeling under heavy inflationary pressures as well as a huge fiscal deficit are under immense pressure to cut down on their expenditures and maintain their bottom line. In these times of cut-throat competition, it is imperative for companies to realize that in these tough times just plain old vanilla survival is akin to a huge battle won.

Various governmental institutions and reports have been highlighting the problems the outsourcing industry has created for these developing countries. By outsourcing their operations to developing countries, they are paying out valuable foreign exchange and arresting their own growth. While I do economically see a line of logic in the situation they are trying to portray- the basic problem with this reasoning is that these countries may not be able to live to see another day. While in the short term, outsourcing will certainly decline the rate of their growth and pump out their currency to other countries, thus increasing the fiscal deficit in their already problematic balance sheet, the long term advantages of outsourcing will need to be considered.

Even countries fail to take notice of the fact that when you outsource your operations to a developing country- you are in effect carrying out your operations at a far lesser cost than you would have done it in-house. So the basic trade-off between the two options is expending more money but keeping valuable foreign exchange in your own economy versus expending less money and letting such foreign exchange move to another country. In essence, it is a matter of whether you want to make your balance sheet look good or your P&L. What companies forget is, it is eventually the same balance of your P&L which flows into the B/s. Hence they are both interconnected. So while a company may think that if they do not outsource their operations, they will be taking care of their fiscal deficit and will have a presentable balance sheet, they forget that the losses sustained by not outsourcing such operations will eventually make their way into the balance sheet and will destroy the rosy picture they were trying to portray.

So it may be the correct time to dare I say it, choose the lesser of the two evils- In this case though, one of the devils may actually be an angel in disguise