Like many other industries, the staffing industry is subject to global pressures. Clients expect more and more from their suppliers but want to pay less. At the same time, a number of low-cost disrupters have emerged in the human cloud to challenge the traditional staffing model. Therefore, many staffing firms have looked at the potential of offshoring parts of their processes to less expensive labor markets.
The benefits for a staffing firm in using offshore recruitment services (ORS) can be summarized in four parts: cost reduction, flexibility, efficiency and focus. While cost may well be a primary motive for many, it would be a mistake to overlook the other advantages that offshoring may be able to offer. While there are plenty of credible offshoring destinations in the world, it does seem that, when it comes to ORS, it is essentially a choice between India and the Philippines. Of 30 vendors identified by Staffing Industry Analysts, 23 have offshore capability in India, four in the Philippines, and three have offshore centers in both countries.
Many ORS providers promote themselves as recruitment process outsourcing (RPO) firms and a number even include this service description within their brand name. However, it is clear that the offshore support available to staffing firms goes far beyond the processes directly related to recruitment. For example, many vendors will provide general administrative support, research, training, website design, search engine optimization, IT consulting and technical support. Of course, these types of services can also be outsourced to specialist local or offshore providers that would not be classified as ORS providers.
There are some best practices to consider before embarking on a relationship with an ORS provider.
Perform proper due diligence prior to commencing. Assess the financial stability of the vendor and select a suitable partner. Set expectations and understand the commercial terms. Agree to issue management processes, set up a governance structure and determine what systems access the ORS provider will need. Evaluate how you will be affected by exchange rate impacts and sales taxes.
Nominate an internal champion. Offshoring represents a significant change to your business and it will fail without appropriate executive-level sponsorship. One senior executive should be given specific responsibility to help manage both the external relationship with your provider and the internal relationship within your business. This internal champion needs to be vested in the project’s success and have the authority to solve problems and deal with any internal resistance.
Be open-minded. Offshore recruitment services can open up new opportunities for your business, so don’t just aim to replicate what you already have been doing internally. Your offshore partner may be able to offer new and more efficient practices by way of a recruitment audit and it is this expertise that you are tapping into — so think strategically and be prepared to re-engineer existing processes where it makes sense. Being too rigid in your approach may close down ways you can maximize an offshore relationship.
Establish return-on-investment targets. You are only offshoring to get a measurable return on your investment, and it is important to set realistic and achievable targets before the offshore project starts. Your ROI targets should be a mixture of hard savings, performance ratios and softer process improvements such as delaying or reducing internal hiring.
Agree on metrics. At the beginning of the engagement, determine with your offshore recruitment partner how you will be measuring progress and success. Establish what activities will be tracked and by whom, and clarify the exact manner and frequency that reporting data will be generated and delivered. KPIs could include time-to-fill ratio, interview-to-offer ratio, response times, and hiring manager and candidate satisfaction.
Start with a suitable pilot project. Rather than take a risk by offshoring a key part of your business, test the capability of your ORS provider with a project that focuses on an area that is visible and important, but not business critical. Offshoring your most challenging account or most difficult job orders is probably not the best place to start. Pilots could include retaining the ORS provider to handle existing database regeneration, populating your database with new, qualified candidates or supporting your business expansion. Once it has proven successful, the pilot project can then be expanded to play a larger and more critical role in your business growth.
Communicate. Good communication is essential to ensure everyone in your business understands and supports the objectives of your offshore project. Clear and consistent communication is equally important with your offshore partner, so establish a communication plan and stick to it. Regular (virtual) meetings should be established as part of your feedback mechanism. Overcommunication is rarely a problem; it’s best to do too much than too little, especially as clients failing to engage with the offshore team appropriately is a primary cause of project failure.
Satellite office. The best way to guarantee the success of your offshoring project is to regard your offshore partner as a satellite office, not as an external vendor. Ensure that the processes and best practices you have in place for managing your own staff are mirrored within your offshore partner. Offshore personnel will value regular feedback just as much as your internal recruiters do and need to feel they are part of your team.
Be realistic and be patient. A quick win may be possible in some circumstances, but overnight success is rare and most offshore projects will take time to deliver incremental value — 60 to 90 days is a reasonable timeframe to expect results to materialize. And you’re going to have to invest in the creation of business processes, training and a communication plan before you can expect to see any return for your efforts, so build this into your expectations and follow through on the plan.
Following a rigorous process and picking the right partner can lead to fundamental improvements in your business efficiency and cost. Many ORS providers, via their websites, suggest that a 50% cost reduction is an achievable target. z