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Importance Of Recruitment Process Outsourcing

NYU

Shushanna Guy

8 July 2016

Human Resources Management

The Importance of Recruitment Process Outsourcing

Historically human resource activities had been executed internally, the outsourcing of HR practices is a rapidly increasing phenomenon. The heightened rate of HR outsourcing also coincides with a wholesale change in which non transactional activities, in which selection and recruitment are some of the most outsourced HR practices. This paper will investigate the outsourcing outcomes of recruiting. ‘The Recruitment Process Outsourcing Association (RPOA) defines RPO as a form of business process outsourcing where an employer transfers all or part of its recruitment processes to an external provider. Recruitment Process Outsourcing providers can manage the entire recruiting/hiring process, or can manage one or two aspects of the process, essentially serving as an extension of the company’s human resources department. This definition illustrates that RPO services are not outsourcing in the traditional sense, as working with an RPO provider is much more consultative and customizable than normal recruiting.’

Appealing to and selecting a pool of talented, well-educated applicants is a necessary challenge for any organizations. By recruiting the right groups of people then the selection process becomes streamlined. As a result of the increased importance of human resources, it is now more than ever — imperative for all organisations to retain its existing labor force and at the same time recruit and the best possible talents. To recruit for unskilled jobs, A company will faces no problems due to the abundance of availability due to the high rate of unemployment in other countries . As you could see the recruitment function is more complex and dynamic for managerial positions or positions with professional skills. Finding skilled labor will always be much harder than finding an inexperienced work population.

Organizations often overlook the importance of recruitment– recruitment should be seen as the first step in attaining Human Resources function. The ever growing job market is making the execution of a plan in every business a priority due to increase in global competitiveness and the increase in labor market. Planning means to be able to anticipate your client’s changing needs, tailoring to a global stomping ground, and being creative. You could make a case that these skills are necessary to keep your company one step ahead of the competition. As you could probably tell by now the recruitment function is one of the most important parts of an organization’s Human Resource Planning.There is one major tenant that most experts ignore that may be the ultimate decider of how your business or organization does , which is hiring the right fit. It is the foundation of the organization because it serves fulfill the needs of the company needs it creates a competitive, motivated, and flexible operation for the fulfilment of organisations objective. In my perspective outsourcing the recruitment process helps with keeping the consumer prices down, it increases productivity, and it creates international stability. You have to keep in mind that not all goods and services that are consumed in our costly economy needs to be produced here. For example even within the confines of a metropolitan raw goods and services are being delegated to their cheapest avenues of production. Offshoring is applying the same logic but on a much bigger scale. Some might believe that Offshoring is just a way of unfairly exploiting cheap labor by moving into low economies, an organization could get away with paying substandard wages and substandard working conditions. But the reality is economic systems are not created equal nor were they ever meant to because most western industrialized nations created their economies on imperialism. In some sense many developing nations are using outsourcing as a way of shifting the imbalance just a bit in their favor , even if that means low wages. ‘Offshoring also helps development of underdeveloped countries: Offshoring relies on a basic industrial base and the necessary supporting infrastructure, including some sort of education system. The prospect of profiting from outsourcing contracts will encourage both public and private investment in infrastructure, both physical and social. In addition, offshoring provides bigger markets than would ever be possible domestically for an underdeveloped country, which allows it to benefit from economies of scale and capital inflow to develop more rapidly. And over time, the demands of companies for accountable, non-arbitrary government will encourage the rule of law and democracy, as will rising education levels and a growing middle class.’Over the years, the concept of RPO has gained favor among Human Resource management.because it reduces overhead costs and makes the company more competitive in the free market. Due to competition, RPO has become a more acceptable option. Since the 1990s companies have begun to consider the outsourcing of recruitment as a major part of their recruiting need.

Outsourcing recruitment processes reduces the costs of an organization by lowering pay wages and increasing productivity. One of the stand out features is that ‘Outsourcing of the recruitment process helps to cut the recruitment costs to around 20 % and provides economies of scale to a large sized organization.’ The corporations in the United States would no longer have to commission medical benefits, or many other restrictive workers laws i.e. child labor laws. The services that companies are taking advantage of the most is medical data entry. Companies such as JP Morgan Chase, T Mobile, and Microsoft have outsourced many of their jobs for low-cost yet efficient labor. Not only are the costs lower in most cases the organizations will receive tax benefits. American economy has been behind for years compared to China and Japan when it comes to innovations in technology. The countries like China are recruiting a large number of highly educated workers from the U. S. employment abroad normally translates to better pay and more advancement in the field. ‘China and India have improved dramatically in their education system in the last decade, so that they can support a competitive global market. The government has had a trade deficit for the past two decades the Department of Commerce reported in February 2004 the trade deficit was $42.1 billion. The current U. S debt is continued to be financed by successful countries such as China, Europe, and Japan. With the increase expansion on the trade deficit this has had a huge impact on the value of the dollar.’ Another benefit would be gaining new sources of talent, in recent years the number of people leaving the workforce is more than the amount joining. finding, skilled workers is always hard because in the workforce there are only a few countries that has a skilled labor. As per the discussion, ‘the focus is not on the shortage of employees but the scarcity of talent needed by the worldwide labor market. The reason people hire is the irresistible desire to obtain high quality (Doz, 2011). With the availability of large pool of applicants, it becomes easy for the organizations to get f specific talents. Thereby, it introduces and infuses new blood in the organization.This problem is universal but concentrated in the Middle East region where most companies are experiencing difficulty in filling their workforce with eligible workers.There is rising need to target new sources of talent that included the retired people, free agents, and employees in the emerging markets. However, sustaining these needs is proving to be a very difficult task that is why many companies prefer practicing recruitment outsourcing’. Outsourcing has become rewarding for the companies and the outsourcing services. Not only does it increase revenues,the outsourcing process also creates opportunities to the service providers, it raises the skill set and exposure to various experiences thereby increasing their expertise. HR professionals can finally relax and just focus on more pertinent tasks at hand. even the larger companies are outsourcing their recruitment processes to reduce costs.’Since the process is open, it attracts requisite number and type of applicants which in turn, widens the option for selection most companies prefer to outsource their recruitment in order to achieve consistency and sincere stewardship of their products. As the recruitment process outsourcing continues to gain power globally, buyers start seeing ways of creating benefit.Hiring of a recruitment company to do the recruitment process for a new project saves precious time. The recruitment agency already has the database of prospects classified according to their skills, knowledge and experience. By choosing firm specific talents from external sources, it becomes economical in long run as the employees do not need extra training to perform their jobs.

Once the requirements are provided by the organisation and the service provider provides the organisation with a list of candidates that would be ready to be interviewed. It promotes healthy competition in the work environment and makes it productive and conducive. Providers can help with the creation of better processes, across locations, and tracking essential metrics for example quality of hires. This involves long-term measurement of factors like performance scores, commitment, promotion and other factors linked to the talent acquisition strategy.’ in the two contexts outsourcing of administrative Recruitment practices such as advertisements and pre-screening and strategic Recruitment practices such as selection.The findings confirm how efficiency motivations and competitive issues carry theoretical and managerial implications are offered on the basis of such evidence. ‘The recruitment process basically consists of four main recruitment activities: job advertisement, preselection of candidates, telephone interview, and in-person job interview the client company is responsible for all recruiting activities and only delivers administrative parts of the recruitment to an external provider (e.g., administer the recruiting and selection process, design the selection instruments).’

What has always made America great in the eyes of the world is the idea that with a lot of hard work one can change their circumstances. Some see this new trend towards outsourcing as a full on assault on the American way of life. American corporation in pursuit of their own interest are leading to the decline in jobs available to the ordinary american. Another group of americans losing their jobs to outsourcing has become a staple on the news, and many are afraid that they will soon. As a result of this new round of globalization a lot of upscale jobs are being pushed overseas many elites in corporations would say that shipping high tech jobs overseas is a good thing while the average American disagrees. They are becoming progressively concerned about their children’s future. Argument against outsourcing is that organizations that outsource their business to foreigners will have an incompetent workforce. While some look at Americans as being the better educated lot while compared to the rest of the developed world. The Organization for Economic Cooperation & Development reported that ‘30% of Americans aged 25 to 34 have a college degree compared to 24% for Japan and Germany. Workers that are better educated are more productive, efficient, and can adapt to rapid change in the workplace’ There is this notion that allowing another country to contract recruitment will lead to the corporation’s inability to relate to their customers.. During the current election , presidential candidate Donald Trump has focused on the outsourcing jobs whether onshore or offshore. The feeling is that companies are shirking their duties as nationalists and trying to find an easy way around avoiding taxes. As a bills have been proposed to keep jobs in the United States the proposal would work to find tax incentives for businesses that limit their outsourcing activities and to offer continuing education and training for their employees. However, there are possible disadvantages ‘for example, losing well-trained staff and organizational skills in a critical area beyond academic research, outsourcing providers steadily predict an increase in outsourcing of recruitment and selection which might increase cost.’ The main reason for an outsourcing decision is to save costs. Further, companies expect to decrease the time to hire and to get access to highly skilled staff through multiple sourcing channels the majority of organizations outsource job postings and advertisements as well as preselection procedures. Then, the external provider is in charge of the job advertisement. The job description usually will contain the contact details of the external provider this has been noted to send the applicant a bad image of the organization. It doesn’t show represent ‘the client in a positive and professional way’ As you could assume businesses will try to minimize the applicants notion of there being RPO while hiring.

In the article ‘Recruitment and Selection services: efficiency and competitive reasons in the outsourcing of HR practices’–It questioned the scope in which, HR activities can be performed externally, outsourcing of such activities has been rapidly increasing. The study also found that while most common in the ‘United States and Canada (87% and 71% of firms reported HR outsourcing, respectively), HR outsourcing was also prevalent in Europe (57% of interviewed firms)’. The article explained the changes of HRM/ RPO by the process of globalization and making distinctions between globally optimized or localized HR processes. The theoretical understanding of the concepts is entrenched in global staffing strategies based on the management. The fragmentation of international employee populations and the changing structure and role of international HR functions has raised three important questions. The first concerns the study of ‘globalization processes at functional level (staffing) the patterns or strategies within the global HR recruitment activity of organizations across domestic and overseas labour markets and whether these patterns can be explained by existing theory. This paper reports on a study of firm-level developments in international recruitment and selection, drawing upon an analysis of four case studies each conducted in four theoretically derived contexts of centralized or decentralized control and coordination, and focus on domestic or overseas markets.’ The article examined the inequities between policy and practice through HR actors at in state operations. ‘There are a number of reasons, at both the strategic and operational level, why firms want to outsource HR activities. Many share similarities with the outsourcing of other organizational functions. In particular, demands for increased productivity, profitability, and growth have forced organizations to examine their internal HR processes, HR outsourcing decisions are frequently a response to an overwhelming demand for reduced costs for HR services. Downsizing and tougher competition mean that the HR function is under increasing pressure to demonstrate value, both in terms of efficiency and effectiveness(Roberts, 2001)’.The HR functions may have always been performed by external service providers, it is now money-focused idea connecting outsourcing to human resource management ‘ the idea that you can save a lot of money by outsourcing . In addition, outsourcing is seen as a way of liberating HR professionals within the client organization to perform the more consultative and strategic role of designing and implementing programs aimed at retaining the workforce and enhancing its performance. The thesis of the four roles of HR, in which was proposed is that HR should be a strategic partner, an administrative expert, an employee champion, and a change agent. HR outsourcing is consistent with the business partner role that the in-house HR department is attempting to assume.’

In the history of industrialization and the modernization of developing nations,the aid of external workers has tradition. ‘After its revolution in 1868, Japan was on the quick path to modernization. They realized that they needed the assistance of experts, so they hired foreign technicians and engineers to set up their factory system and taught native Japanese how to operate the high-tech equipment. Educated foreign workers can be a pivotal addition to a growing economy.’ The trend became abundant by the early 1900’s –the majority of mining and oil extraction was externally owned. ‘The 20th Century has provided an even greater leap in technological and communications innovation. History has been proven that old trends come back around when there are great changes to a society; it was only natural that some old business tactics would become important in the modern world. After World War II, certain developments made business more ‘global’. The first use of outsourcing in recent history was in the 1950s with time sharing. It lasted for 25 years, but as technology continued to advance, so did new outsourcing ideas.’ consulting firms, created remote management services, systems, networks, and applications were monitored and managed remotely. ‘Customers liked these services and bought them mostly to ensure availability for their systems and networks.’ New models of outsourcing came about in the late 1980s and 1990s with the profound leap in Internet technology and software. IT outsourcing was a result: companies wanted to divest from their own facilities, operations, and personnel to focus on other business interests. Companies could put their resources in other important areas, while leaving outsourced areas to specialize in the area that they found less important; this was sort of a modern division of labor.’

Outsourcing appears to be here to stay! As a result of its cost effectiveness— ‘there is just too much cost savings for companies to ignore when they’re trying to survive in a very competitive, global market. various predictions of offshore outsourcing all indicate continued increases: HR services and staffing firms in India are expanding their teams and operations to cater to the rapidly growing demand for recruitment process outsourcing (RPO) as organisations increasingly farm out all or part of the hiring functions to focus on their core businesses. With the estimated Rs 400 crore RPO business in India expected to grow at a staggering 40-50 per cent a year for the next few years’ The cost of labor is normally the greatest value for an organization. ‘since it is generally the core to service delivery this includes temporary workers such as those on fixed period contracts, agency temping, casual work, seasonal work, and other temporary work. According to a report by the Recruitment and Employment Confederation (REC), since the recession in 2008 to 2014, the number of full-time workers has risen by 0.3 per cent (19 million), whereas the number of temporary workers has risen by 20 per cent (1.7 million). Any business operating in today’s challenging and ever-changing environment will need to plan ahead and design scalable solutions that deliver cost-savings and help the business invest in future by 2020 IT services and back-office work in India will swell fivefold, to a $57 billion annual export industry employing 4 million people and accounting for 7 percent of India’s gross domestic product.’

In Conclusion, outsourcing jobs is a natural evolution in the global economy and will support American businesses to remain profitable by erasing expenses. The costs savings will lead to reinvestment for research and development–outsourcing is a smart management practice and will improve customer service and will lead to a competitive market. Business are facing the challenge of competition and retaining customers while minimizing costs. The way to achieve this is to delegate labor to foreign countries that will offer economies of scale and will improve business strategies. In the highest level, the external provider becomes a strategic partner and gains responsibility for all recruiting activities strategic parts of the recruitment (i.e., colloquia and selection) were predominantly outsourced due to competitive reasons. Outsourcing has become a strategic alternative for many companies:’ executives lower the cost savings and subsequent equity returns for investors and the benefits consumers reap in the form of lower prices. However, others point to the loss of IT jobs and intellectual capital as economic concerns. As with other market changes, the key to survival is learning how to meet the challenges and find ways to capitalize on the evolving business landscape. In other words, continued innovation will play a large role in how well the U.S. IT industry emerges from the outsourcing boom.’ In spite of the fears, most CEOs/CIOs see offshore outsourcing as a necessary evil due to the ongoing globalization of businesses. According to Jeff Campbell, vice president of technology services and CIO of Burlington Northern Sante Fe Railway . You can fight global trade with tariffs, but long term it just doesn’t work’.You have to meet cost challenges or you won’t provide shareholder returns.’ So in other words we must embrace change.