The move toward companies outsourcing human resources (HR) processes has been accelerating. Today, there is a vendor for every component of HR and even vendors that will manage the entire department. The decision to outsource usually starts with a problem to solve. A company may not be able to scale fast enough, costs may be an issue or they may be lacking the right talent. While outsourcing can resolve these challenges and many more, it’s important to research the right approach for your business. One of the best ways to start is with the question “is the company better off if we perform this process in-house or by outsourcing?”
Essentially, this question is prompting a ‘make or buy’ decision. Should we do this ourselves or have someone else do it for us? According to PwC strategic consulting group, Strategy&, there are three factors to consider when determining whether or not to outsource: strategy, risk and cost. To determine if outsourcing recruitment is right for your company, consider each of these factors as follows:
Is the recruiting process a core competency for your company? A core competency is a unique set of skills or techniques that provide added value to your customer. For most companies, the candidate being recruited may have those skills or techniques to provide the added value. That candidate enables the company’s core competency. The key here is determining if the recruiting process, not just the candidate’s skill, is also a core competency.
The most important risk to consider for recruitment is uncoupling. This relates to the handoff points between the recruitment process outsourcing (RPO) vendor and the company. For example, when a hiring manager gains approval to hire a replacement and sends that request to the RPO provider to create a requisition, a handoff in responsibility has occurred. Your level of confidence in finding an RPO vendor with high quality service will influence your decision to outsource. They should provide assurances that they can reduce that risk.
Cost is not just a simple comparison of current costs to vendor costs, though that is a consideration. Instead it is a comparison of service value. In other words, a company must determine if an RPO vendor can provide services that are higher quality such as lower time to fill or broader in scope like providing talent communities, market analysis, business intelligence and mobile platforms. They may have capabilities that your company does not have such as being able to augment the recruiting team immediately for a sudden spike in requisitions or operating in a country where you have no experience. An RPO provider should be able to meet your cost requirements and improve quality or capability at the same time.
So to determine if outsourcing is right for your business, first take the time to understand your company’s core competencies. If recruiting isn’t one of them, evaluate vendors to see if they can provide high quality services that enhance your current capabilities at a reasonable cost. When you find that vendor, you’ll know you made the right decision to outsource.