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Should You Outsource Your In-house Recruiting?

by
Kevin Wheeler
Jun 8, 2005

Smith and Co.’s three recruiters are overwhelmed with requisitions. At the end of last week they had more than 150 open positions to fill, many of them requiring hard-to-find candidates. Most of these requisitions had been open for more than two weeks, and hiring managers were upset. Many hiring managers had not seen any candidates, and the few who had were not pleased with the quality of what they say. At this week’s staff meeting, Peter suggested that they outsource at least some of the requisitions to an agency. But, he said, “Let’s not just use an agency. Let’s find a firm who will want an on-going relationship with us and let them completely take over ownership for some of the really hard-to-fill positions.” The other two recruiters, and most of the HR team, had some reservations about doing this. They worried about losing their jobs over time and wondered if any outside agency could really understand what their hiring managers were looking for and could find the right people. At the end of the meeting, the team had agreed to find out a bit more about outsourcing and what it would really mean for their company. This situation is increasingly common. I find that many organizations are turning to outsourcing as a solution either to the problem of too many requisitions and too few recruiters, or to that of too many hard-to-fill positions and no talent pool or legitimate candidate sources. But many organizations are turning to recruitment process outsourcing (RPO) firms out of desperation, without a clear strategy or well-defined goals. The most successful RPO efforts involve in-depth consideration of the four issues below. Understanding RPO The first consideration is to be sure that you understand what an RPO is and what it can and cannot do for your organization. The Recruitment Process Outsourcing Association says that RPO takes place when “…a recruitment process outsourcer acts as a company’s internal recruitment function for a portion or all of its jobs. RPOs manage the entire recruiting/hiring process ó from job profiling through the on-boarding of the new hire, including staff, technology, method, and reporting.” What is unique here is that the organization you hire to do RPO for you acts as if they are you. That means the candidate thinks they are talking to an employee of your company and that they are interacting with internal staff. As a result, you must carefully choose and manage the vendors who provide this service. You need to check references and monitor their performance closely until you are comfortable that they are fairly representing your organization. You will also need to spend time educating an RPO about the company, its strategy and goals, and its overall talent philosophy. Entering into an RPO relationship is very different from hiring a contingency or retained recruiting firm. These firms are generally focused on single positions and often represent a function or a hiring manager more than they do your company. Another issue to consider is whether the RPO will hire the internal recruiters you currently employ and allow them to continue acting as your recruiters. Sometimes these individuals may not have the skills necessary to be effective, which may be one of reasons you decided to outsource the function to begin with. If that is so, you may decide to let some of your existing recruiters go and ask the RPO vendor to supply other recruiters. You will also have to give the RPO vendor access to hiring managers and internal, often confidential, information. That is why you need to be sure they have signed appropriate confidentiality agreements and are a trustworthy firm. Know Why You Are Outsourcing The second consideration is to determine the reasons why you want to outsource. Identifying what the real reasons are starts by establishing goals and success criteria. One reason for moving to an RPO may be to improve the efficiency of finding and presenting quality candidates. This is often driven by an inadequate sourcing capability or by too few recruiters. A second reason is to save money, by contracting at a lower rate than you are spending for salaries, overhead, and office space. The third driver of outsourcing is often an effort to focus the organization on doing whatever it does. Organizations frequently choose to outsource most of their human resources functions, including recruiting, just to keep themselves small and avoid anything that interferes with accomplishing the core mission of the organization. Having a set of success criteria is essential to showing that your efforts are working. If saving money is a goal, track how much you spend versus how much you used to spend and show the difference. If greater efficiency is your goal, be sure to determine your current levels and use that as a baseline for RPO improvements. If you cannot quantitatively track your success in executing RPO, it will be difficult to keep senior management support. Be Clear About What To Outsource The third consideration is to determine what gets outsourced. Are you planning to outsource everything, or just a part of the recruiting responsibilities? If only a part of the whole function, which part? You should also ask yourself why this is the part to be outsourced and examine carefully the motivations and consequences of that decision. Some organizations outsource the wrong functions ó those that either require technical or proprietary knowledge of the organization’s needs or those that are highly strategic and represent the intellectual capital of the firm. Others choose to outsource what they consider to be administrative functions of little strategic value, only to find that the opposite is true. For example, more than one firm has outsourced its call-center staffing function, only to find that the people who directly interface with customers ó often unhappy or upset customers ó are actually highly important to the company’s brand and profitability. Many times these decisions get revoked and the recruiting returns inside. Unfortunately, the RPO firm usually gets the blame, when the real blame lies within the HR decision-making process itself. Manage the Relationship The final consideration is whether or not you can mange the relationship with the RPO vendor and whether the vendor can work with you on a continuous basis. Managing a vendor requires different skills from those most recruiters have. You will have to negotiate pricing and timeframes, and act as a communications channel with the vendor. Not all vendors who claim to offer RPO really do so. Most RPO firms are also retained or contingency recruiting organizations. They may have the ability to find good candidates, but many of these firms are used to the one-at-a-time placement of candidates. They have administrative and management challenges with a day-to-day, ongoing relationship. Use the resources of the Recruitment Process Outsourcing Association to help you as you decide which way is best for your organization. More and more firms are deciding that RPO offers them real advantages and cost savings over an internal function, but there are always tradeoffs to make. Only a well-thought-out, thoroughly researched plan will succeed in the long run.

This article is provided for informational purposes only and is not intended to offer specific legal advice. You should consult your legal counsel regarding any threatened or pending litigation.

  1. Scott Sprague

    I have to chuckle, since (again) it’s as if Kevin is writing to me. I suspect there are many that feel the same.

    In the past 2 weeks, we took proposals from Kenexa, RES, Augustine and Accolo on project-base amplification of candidate flow and/or full outsourcing. We asked Towers Perrin/EDS, but they’re product is not quite ready. Each organization responded to the request in accord with their tools and business model.

    Kevin’s advice is good, but won’t answer the questions for most companies considering this route.

    I will say one thing, Accolo is a leader in this area. John Younger, their President & CEO
    - is very impressive. We’re just not quite ready for full BPO in this area.

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