A Research Project Report On RECRUITMENT PROCESS OUTSOURCING Submitted in partial fulfillment for the requirement of the MBA Degree awarded by Bangalore University Submitted by Madhuri.A 07XQCM6001 Under the guidance of HEMAHARSHA Professor M.P.Birla Institute of Management M.P.Birla Institute of Management Racecourse road Bangalore-1 INDIA M.P.Birla Institute of Management 1
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A Research Project Report
On
RECRUITMENT PROCESS OUTSOURCING
Submitted in partial fulfillment for the requirement of the
MBA Degree awarded by Bangalore University
Submitted by
Madhuri.A 07XQCM6001
Under the guidance of
HEMAHARSHA Professor
M.P.Birla Institute of Management
M.P.Birla Institute of Management Racecourse road
Bangalore-1 INDIA
M.P.Birla Institute of Management 1
DECLARATION
I hereby declare that, this Dissertation entitled “Recruitment process
outsourcing” of project work undertaken by me under the guidance and
supervision of Prof. HemaHarsha, MPBIM, Bangalore, in partial fulfillment
of the requirements for the award of Degree of Master of Business
Administration.
I further declare that this dissertation has not been submitted to any
University/Institute for the award of any degree/diploma or any other similar
title.
Place: Bangalore Madhuri.A Date:
M.P.Birla Institute of Management 2
GUIDE’S CERTIFICATE
I hereby certify that the research work embodied in the dissertation entitled
“Recruitment Process Outsourcing” has been undertaken and completed by
Madhuri.A. under my guidance and supervision.
I also certify that she has fulfilled all the requirements under the covenant
governing the submission of dissertation to the Bangalore University for the
award of MBA degree.
Place: Bangalore Prof. HemaHarsha
M.P.Birla Institute of Management 3
PRINCIPAL’S CERTIFICATE
I hereby certify that this dissertation is an offshoot of the research work
undertaken and completed by Madhuri.A under the guidance of Professor
HemaHarsha, M.P.B.I.M. Bangalore.
.
Place: Bangalore (Dr. N. S. Malavalli) Date: Principal
M.P.Birla Institute of Management 4
Acknowledgement The satisfaction that accompanies the successful completion of any
task would be incomplete without the mention of the people who
made it possible, whose constant guidance and encouragement
made my efforts a success.
My profound thanks to my project guide HEMAHARSHA, Professor,
M.P.Birla Institute of Management, Associate Bharatiya Vidya
Bhavan for helping me throughout the project. I take this opportunity
to thank her for her immense support, guidance, specifications and
ideas without which the project would not have been a success.
I wish to thank our Principal Dr. N. S. Malavalli for his
encouragement and support.
Madhuri.A
M.P.Birla Institute of Management 5
CHAPTER TITLE PAGE NO.
Executive summary 07
1. • Introduction
• Best practice Tips
• A Look in RPO
15
2. • Review of literature
• Purpose of the review of literature
• Methodology of the review of literature
• Summary of Review of Literature
58
3. • Problem Statement • Research Objectives
68
4. • Research methodology
69
5. • Limitations of the research
71
6. Data Analysis & Interpretation 72
7. Summary of Research Findings 91
8. • Recommendations • Suggestions & Conclusion
92
9. Annexure 97
10. Bibliography 97
11. Questionnaire 98
M.P.Birla Institute of Management 6
Executive Summary
As the organizations mature, HR practices also mature. The HR function is at three
different states in its evolution cycle where it starts as a Business Function, becomes a
Business Partner and then a Strategic Partner. The following figure shows the migration.
In each of these cases the role and impact of the HR department becomes progressively
more strategic in nature. At higher levels of maturity, the HR function can add
tremendous value to the leadership potential, top-line, bottom line and long-term
sustainability of the organization.
At each stage the attributes & value add by the Human Resources function change and
the tools required vary significantly.
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HR as a Business Function
At the very least, when an HR function is available in an organization, it is
responsible for managing employee data, takes care of payroll, time and attendance
and the setting of company policies.
The role is largely that of Personnel Administration focused on Compliance both
internal & external, and on Management of employee records.
The tools that the HR requires are related to management of employee data and
include a rudimentary HRIS, Payroll processing software, Time and Attendance
systems (could include time-card readers, swipe systems and associated devices). I
have found that in many cases organizations even use spreadsheets and shared
directories to manage their employee data, policy documents and employee leave
applications, contracts etc. In most cases, paper based employee files are the only
source of employee data which are managed by the Personnel Administration
department of the organization.
HR as a Business Partner
As a Business Partner, the role of HR is to meet the “existing business needs” of the
organization so that the organization could grow at a measurable rate.
At this stage of evolution, the focus of the HR shifts to competency based
Recruitment, Total Compensation, Employee Development, Communication and
Organization Design.
The HR function helps in formalizing the organization structure (who does what and
reports to whom). Once that is complete, the next role is that of identifying the skills
necessary for different job roles. HR further helps in defining appropriate training
programs that are necessary for developing these skills, recruitment techniques to
evaluate the skill levels and benchmarking the skill database against industry
standards and competitors.
Total compensation (payroll and benefits) also becomes a focus area where the HR
helps the organization attract and retain skilled employees by becoming a leader in
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compensation management.
Using the skill database and the organization structure, the HR function iteratively
evolves compensation practices, improves the training function and makes the
recruitment function more attuned to the skills needed by the organization.
To facilitate the above functionality, HR uses tools such as Applicant Tracking softwares
for recruitment, Employee Portals for communication, Self Services for employees
empowerment, Learning Management Systems for training & development and an
Employee Database for capturing employee skills & competency profiles. Organizations
even have well defined Job Descriptions with details of qualifications, experience, special
skills required for the job and job roles & deliverables for each job position.
We have found that at this stage most organizations prefer some degree of automation
and are using tools either built internally or procured from vendors. Another
characteristic of organizations at this level of maturity is the break-up of the HR function
into sub-functions such as Training , Personnel Administration, Recruitment and
Compensation & Benefits, each being partly dependent on the other.
HR as a Strategic Partner
Organizations that view their HR as a strategic business partner believe in full maturity of
their HR function. Such organizations are focused on attaining leadership positions rather
than an year-on-year growth. Bottom-line and top-line growth are expected to be
achieved automatically.
At this level, HR becomes responsible for identifying core competencies necessary for
their organization to attain leadership position. Further HR facilitates in
• Aligning employees to a common sets of objectives derived from the mission and
value statements,
• Mitigation of risk by devising appropriate Succession Planning Strategies,
• Identification of top-performers and non-performers,
M.P.Birla Institute of Management 9
• Continuous measurement of the effectiveness of leadership and employee
satisfaction,
• Increasing employee engagement through appropriate measures,
• Aligning compensation to performance,
• Adjustment of recruitment and training to competency gaps,
• and specifying well-defined Job Descriptions which map to the organization
structure . These become the basis of Recruitment, Goal Setting, Training,
Performance Evaluation and Career Development.
As a strategic partner HR uses a variety of automation tools for Learning Management,
Performance Management, Compensation Planning, Recruitment and On-boarding,
Succession Planning, Alignment and Employee feedback.
The largest benefits accrue when employees are encouraged to use these tools as a routine
practice at their work place. An integrated view of employee’s life cycle in the
organization is visible through appropriate dashboards which are available to the decision
makers at all levels in the organization.
HUMAN CAPITAL IS EVERY ORGANIZATION’S essential DNA. And the root of all
such DNA is the enterprise’s hiring process, which needs to be nourished rather than
stifled. Why, then, do many organizations delegate the hiring process to an overburdened
and/or understaffed Human Resources Department and to hiring managers who have only
enough time to be concerned with their own immediate needs? When that happens, active
and passive job candidates are treated more like non-entities, or even intruders, than the
customers that they, in fact, are. Inevitably, the enterprise suffers serious leaks throughout
its organizational ship. These losses have both tangible and intangible value that can be
measured in the form of employee attrition, lost productivity, lost opportunity, stunted
growth, possible litigation, and excessive third party costs. Eventually, the inability to
obtain and retain top quality talent threatens the very survival of the enterprise. This
reality became quite evident in the late 1990s, when a War for Talent was fought. This
“war” was the result of a demographic imbalance in which industry was creating too
many jobs for the number of qualified people available in the workforce. Industry
M.P.Birla Institute of Management 10
responded to this imbalance in very positive ways by making talent acquisition and the
hiring process performance a priority, and provided the functions with an appropriate
budget to get the job done. This era came to an end in the form of a steep recession that
began in 2001, when management’s primary focus turned to cost cutting. As a result, a
movement stressing layoffs and budget cuts replaced the focus on talent acquisition. But
the War for Talent did not end. The enterprise merely experienced a temporary cease-fire.
Now, however, hostilities are breaking out again, and most companies do not possess the
forces, expertise, positioning, tools, technologies and/or budgets to properly launch an
effective and timely offensive attack.
Recent surveys of Chief Executive Officers confirm the highest level of concern around
recruiting and retaining talent since the year 2000. They also show that CEOs are
embracing the concept of outsourcing. Taking these facts into consideration is what
interested me to do a project in RECRUITMENT PROCESS OUTSOURCING (RPO).
The study concludes that the companies prefer outsourcing their HR duties to the RPO
which they select depending on certain criteria. And the main reason for selecting RPO
would be to improve the service quality and to have an effective time management
system implemented in the company.
Ten Trends shaping the fast growing RPO market today.
1. The value proposition is expanding. Buyers expect service providers to deliver a robust
value proposition that goes well beyond economic/cost savings benefits. Service
providers are developing solutions that also achieve strategic, operational, technology,
human resources, and risk management benefits.
2. RPO providers are extending the value chain to deliver a robust value proposition and
significantly increase the ROI for buyers. The firms now shaping the RPO market
recognize that you need to win the war for talent on two fronts – acquisition and
retention. This new breed of service provider is moving towards a true “end to end”
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definition of talent acquisition: from outsourcing simple recruiting, to the talent
acquisition and management value chain. It starts at the opening of the requisition and
extends through initial on boarding, orientation, and training. This end-to-end process is
designed to deliver maximum value, making a huge difference in lowering costs and
improving business performance.
3. The pricing equation is changing. Sophisticated buyers are moving away from per hire
fees. They have become smart enough NOT to look just for labor arbitrage or cost
savings driven by outsourcing alone. They are moving towards a BPO pricing model with
performance guarantees and performance pricing. They recognize that business
transformation and performance improvements result in competitive advantage and
enduring value.
4. It’s all about the process in this changing market. Buyers are looking for new
methodologies. Buyers are increasingly looking to RPO firms that can bring world-class
processes and change management tools to their organization. The RPO market is being
redefined and extended for the first time with R2R; a well defined structured process that
goes through the value chain from regulation to results covering 1100 steps. The RPO’s
Most Common Metrics: Days to fill, costs per hire, offer to hire, recruiting efficiency
index, candidate aging, client scorecard, and candidate scorecard.
12. TALENTTRACK
Employees Placed Through RPO: 2,800
Headquartered in Toledo, Ohio, TalentTrack is a national provider of comprehensive,
end-to-end talent management solutions. They provide a unique blend of high-touch
and high-tech talent applications that deliver RPO in three ways: HR back office (staff
augmentation); event based outsourcing (projects); and long-term/ongoing outsourcing.
Their distinctive strategiesa combination of world class intellectual capital, high-tech,
cutting edge Web technology platforms, and other related toolsdeliver best-in-class
M.P.Birla Institute of Management 55
results. Pieces and parts of the talent management process are outsourced to
TalentTrack either short term, as needed, or on an on-going basis.
RPO Client(s): HCR Manor Care, Owens Corning, First Data Corp, TNS NFO, Fifth
Third Bancorp, Federal Reserve Bank Zurich, Faurecia, Ohio Savings
Services: HR Back Officeoffer an effective staff augmentation strategy, placing highly
skilled,
certified talent management personnel at client site, vendor site, or virtually; Event-
Based Outsourcingdesigned to work with the clients talent management team to
develop and implement a solution that will meet the needs of the organization, a short-
term solution to an ongoing long-term engagement that is a method of tasting before
committing to a long-term solution; Ongoing Outsourcingoperate a total talent solution
meeting the short- and long-term goals of the organizations including transition and
transformation as well as access to best-in-class technology; E-cruiting solutionInternet
recruiting product that utilizes a job board aggregator and Web spider technology to
drive the appropriate candidate flow for each skillset, offer a level-one screening
(entirely automated), and human intervention (certified recruiters) to conduct phone
interviews.
Most Common Metrics: Cost per hire, time to fill hit rates (fill rates), applicant
source metrics/reports, customer satisfaction metrics, and new hire/exit survey metrics
and reports.
13. SUMMIT HR WORLDWIDE
Employees Placed Through RPO: 2,100
Summit owns and operates companies globally that provide HR services including
contingent staffing and recruitment process outsourcing to the worlds leading firms.
Summit offers a new approach to the way in which human capital is identified,
sourced, acquired, and managed. Summits vision is to create high-quality, low-cost
service delivery platform for HR services using process excellence and high-quality
global talent pool.
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RPO Client(s): CISCO, Stanford Linear Accelerator Center, Sun, KLA Tencor, LSI
Logic
Services: Source; Interview; Test; Background Check; Talent Community Building;
Headhunting; Resume Database Building; RPO IT systems; Designing, Building, and
Running Recruiting Shared Service Centers; International Recruiting; India-based
Recruiting.
Most Common Metrics: Time to fill, fill ratio, cost per hire, time to submission,
submission per job order, time to first interview, number of candidate reschedules, and
number of manager reschedules.
M.P.Birla Institute of Management 57
REVIEW OF LITERATURE
Purpose of Literature Review The purpose of the literature review is to identify the problem statement, understand the
secondary data that has been gathered in the field of study and to make new finding on
the problem statement.
RPO Is the Next Generation Of HR Services Ramandeep Nehra, EFY News Network (Wednesday, April 11, 2007 8:22:55 PM) With more companies looking to streamline their internal HR functions, offering end-to-end recruitment services is an alternative that the RPO service providers can tap into
Wednesday, April 11, 2007: With the costs of payrolls and payroll taxes, health-care and
other expenses associated with full-time workers shooting up day by day, outsourcing has
now become an essential solution for businesses of all sorts. Moreover, access to superior
competency typically emerges as a motivator for outsourcing; the external service
provider offers a degree of sophistication that in-house specialists cannot match. In a
nutshell, outsourcing is resorted to with a view to reducing firm costs and achieving
improvement in four key areas – quality, cost, speed and service. How does a company
enhance these core areas during the recruitment process? The answer is outsourcing and
transferring all or parts of the staffing processes to an external service provider through
Recruitment Process Outsourcing (RPO) or Employee Process Outsourcing (EPO). It is a
more specific department for HR personnel and a new subset of Business Process
Outsourcing (BPO) and emerging as a key outsourcing demand from the clients.
As Pam Berklich, Global SME and thought leader for RPO Kelly Services Inc defines
RPO, “In my experience, and in the world of true pure play RPO providers, this practice
involves end to end responsibility for the recruitment/hiring process. There are really
M.P.Birla Institute of Management 58
only two forms of RPO, namely the Enterprise RPO and Project Based RPO.” In the
Enterprise RPO, a client organization decides to outsource their entire recruitment/hiring
function for all hiring needs including all skill sets and all job families within the
organization. Here the RPO partner becomes the seamless extension of the HR function
and serves as the recruitment/hiring department. In the second type of RPO, a client
organization decides to outsource certain job families and skills to the RPO partner, or it
outsource the expansion of a client’s operations into defined geographies.
True RPO is not about outsourcing a piece or pieces of the recruitment process - it is
taking full responsibility for the entire function. Therefore, it also becomes significant for
an organization to know when and what parts of the recruitment process need to be
outsourced. The organization needs to be aware of its requirement vis a vis business
growth and expansion plans. As Shailja Puranik, COO, Xansa BPO points out," It is most
appropriate to outsource when an organization has achieved stability and maturity of
processes and looks to outsource those components that are well-defined, repeatable and
reproducible."
Being a viable, strategic and cost effective solution, RPO has turned out to be a growing
global trend. “RPO should along with its cost effective feature also be given its due
importance for hiring the " right candidate from a wider pool of talent available," adds
Rahul Goyal, CEO, Ma Foi, UK. The emergence of RPO solutions is growing at a very
steady pace. No matter how you slice the share from the HRO market worldwide, it still
remains substantial. The trends in growth vary on the basis of geographical location and
the acceptance of outsourcing solutions within country cultures. Era, a recruitment
industry body, estimated the size of the RPO industry to be around 6000cr for 2006-2007.
However, as per Jacob Samuel, Associate Partner, Elixer Web Solutions, “This figure
does not include the market size which gets added through overseas business and other
recruitment related expenses.” This year the RPO market is expected to grow at 300%
over the last year,” he added. “The predictions are not consistent. From most assessments
M.P.Birla Institute of Management 59
there is a general agreement that the potential for this market is estimated at $20 billion
by the end 2008. Not only this but India is predicted as the one of the fastest growing
market trends for RPO (30% or greater annually) in the years ahead,” observed Berklich.
Talking about the market, Sunil Anand, Vice President, Datamatics Ltd, adds, “It would
be $25 billion globally. But I cannot comment on the Indian market as it is still in the
nascent stage.” Presenting almost the same view Puranik adds, “UK, US, Australia being
the mainly English speaking countries will comprise around 10-15% of the outsourcing
pie – a good enough size to consider as one of the niche areas of focus for India.” But as
per the Goyal of Ma Foi, “Although at present India does not figure out in the global
RPO market, the country, with its excellent skill set, developing infrastructure, along with
a huge IT and labour pool, is expected to grow at a fast pace within in next three years.”
However, problems like lack of differentiation, labour shortages and competition among
the candidates might act as deterrents to the growth of the Indian RPO market. Above all
one of the biggest problems that RPO companies face is with the HR Manager and HR
hirers from the organization. Most often its is difficult for an RPO vendor to explain and
negotiate with the organization about the mechanism of hiring. So “the understanding of
the RPO as an industry has to evolve in India," says Goyal. Highlighting the most
common problems faced by RPO's, Berklich emphasized on educating the market on the
benefits of RPO as well as its pitfalls. Puranik identifies talent management, knowledge
enhancement, career progression opportunities as the top three challenges faced by the
industry.
Since the demand far outstrips supply in this segment with an alarmingly increasing
attrition rate and paucity of skilled candidate this shortage leads to immense poaching of
talent in the industry per se. Moreover, RPO being a rather infant industry (less than 10
years), it is difficult to secure the experience and talent required to meet the growth
demand of the expanding industry. “This business needs investment in training and
upgrading of skills and strong HR activities,” opines Anand
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According to a study across the nation, 21000 appointment letters were sent out in a
particular month while only 8000 showed up on the joining date. This has turned out to
be a tough challenge for the RPO industry as this adversely affects the Client business.
The biggest threats to the industry are receptiveness to the concept, shortage of skilled
recruiters, high investment business and internal resistance,” reiterates Samuel.
All in all, the most important qualities to look for in a full service RPO provider are
flexibility, time to fill / speed and experience / sourcing expertise including the
experience track record in hiring large volumes which is very different from the adhoc
hiring. Last but not the least, is of course the global reach of the recruitment provider and
quality of candidates recruited so far. Today, almost all industry verticals require RPO
services and it is even beneficial for companies who operate in the niche segments.
Till date, RPO services have been chiefly employed by retail, pharmaceutical and health
care, financial and insurance, manufacturing and aviation industry. The trend seems to
get hold of not only big organization but also the small or mid-sized organization. As the
trend goes, the managed recruitment services or the recruitment process outsourcing is
expected to acquire the centre stage this year. As an RPO largely affects an
organization’s business growth and success, the later should have a detailed
understanding of the concept and also of the expenditure for the recruitment process. This
helps them decide which processes are to be outsourced and which RPO is best suited to
the unique requirement of the company.
M.P.Birla Institute of Management 61
Methodology of the review of literature Different sources used in order to collect the information or data are:
� Magazines and journals
� The internet
� Publications
� Articles
The articles have been analyzed and used in the research for better understanding of the
topic.
M.P.Birla Institute of Management 62
RECRUITMENT OUTSOURCING SERVES UP OPTIONS Companies can get a perfect fit and save money by outsourcing portions of their
recruiting function. Payroll outsourcing is often black or white. A company usually either
handles payroll in-house or outsources it entirely. Recruitment outsourcing is a function
of a different color.
With employment process outsourcing (EPO), sometimes called recruitment process
outsourcing (RPO), companies have the flexibility to outsource a little—or a lot. Kellogg
Co., for example, has chosen Recruitment Enhancement Services, a division of Bernard
Hodes Group, to handle all of its recruiting.
Although “still in its infancy,” EPO is the fourth-largest component of HR being
outsourced and the fastest growing, according to Allan Schweyer, executive director of
the Human Capital Institute (HCI). Schweyer’s research has led HCI to establish a
“learning track” on the topic.
In Search Worldwide Corp. surveyed 300 HR executives about professional-level EPO
and found that more than 30 percent are doing at least some recruitment outsourcing.
“With recruitment most people outsource a specific business unit or specific function.
People are testing it and in general finding that it works for them,” says Steven Landberg,
InSearch’s senior vice president and managing director. It is working so well, he notes,
that 60 percent of the surveyed users plan to increase their recruitment outsourcing.
“Recruiting has more personal touches; it’s more cultural- and relationship-oriented.
There are more options than in some transactional-oriented disciplines,” says Jane
Paradiso, national workforce planning director for Watson Wyatt Worldwide. Watson
Wyatt does not offer EPO but counsels clients about outsourcing choices. “It’s not a
black and white thing,” Paradiso says.
It has taken a little time to learn that. Five years ago, “when you talked about
outsourcing, the recruitment piece was always left off,” says Bruce Ferguson, who is
responsible for talent acquisition solutions for Hewitt Associates. “People would think,
‘That’s too critical to our needs.’ ” In the past two years, “that has switched and in almost
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every deal recruitment outsourcing has been one of the primary things clients want to talk
about. They realize there is a way to operationalize recruitment that helps them meet their
goals of getting the right people for less,” says Ferguson, who was with Exult before it
merged with Hewitt last October.
Those are key reasons for the increased interest in EPO: the need to keep costs down and
the need to keep the talent pipeline full. “For the past few years, the focus was on cost of
hire. But demand is rising, and fewer good people are looking,” Landberg says. He
believes that while many recruitment outsourcers sell their services primarily on their
ability to cut costs, “people are actually using outsourcing to get better results in terms of
talent.”
Still, those cost savings are no small matter. As companies’ recruiting needs ebb and
flow, sometimes “they have staff with nothing to do. We flatten out those peaks and
valleys,” Ferguson says. “We can measure [cycle time, quality and customer
satisfaction], and we can do it for less money. We can take the strength
of our network and leverage it so they can significantly reduce the cost of recruitment. …
We typically will give them a guaranteed cost savings.”
Kellogg Co. has seen a 60 percent drop in its cost-per-hire rate as a result of outsourcing,
according to Cydney Kilduff, director of recruiting and staffing. And the time it takes to
fill a position has been cut almost in half.
Kellogg, in fact, now has only two corporate employees with recruiting responsibilities.
Those responsibilities are:
•Setting strategic priorities and communicating them to the vendor.
•Developing, managing and monitoring the vendor relationship.
•Serving as internal champion for the outsourcing model.
Yet another reason for the upswing in interest is technology. “The outsourcer can invest
in the technology, keep it current and spread the cost across multiple clients,” says Carl
Greenberg, senior vice president of Aon Consulting, which has an EPO component.
Elliot Clark, chief operating officer of Kenexa, agrees that is a big part of the attraction.
“We can bring the technology in with us. In some cases customers have legacy systems
that we work with, but more and more they’re looking for turnkey solutions.”
M.P.Birla Institute of Management 64
The Role of Technology
Technology has changed the recruiter’s job. “Recruiters used to go into this because they
wanted to talk to people,” Ferguson says. “Now there’s a demand for faster turnaround,
and you can’t do it without technology. You have to be great at networking with
technology and the old-fashioned person-to-person way. The good news is, I don’t think
needs are going to change.” In-house or outsourced, companies need recruiters who “can
find the right people and help guarantee they’ll stay. They have to be able to achieve
business objectives.”
In spite of—or perhaps due to—the emergence of technology in recruitment efforts,
Greenberg, Clark and Ferguson all see a bright career path for in-house recruiters, who
will be able to devote more time to workforce strategy after turning the transactional
work over to outsourcers.
RPO “is not abdicating the selection process of who ends up on your doorstep. It’s still
the client’s responsibility to set strategy about what kind of people, what kinds of
competencies and, ultimately, who is given an offer. It’s not for the outsourcer to decide
who will get an offer,” Ferguson says.
Companies have finally come to understand that outsourcing is not about giving up
control but about freeing up more time to focus on strategy, Clark says. “They agree that
talent is very important; they don’t agree that they should do the tactical sourcing,
processing and onboarding. They come to firms like Kenexa [that have] a track record to
do that work.”
Aon Consulting does “the sourcing of candidates through their on boarding. We do all of
it or any part of it,” Greenberg says. A particular strength, he adds, is that Aon has
industrial psychologists that can assess candidates.
“We have a package of different types of tests and different methods of delivery,” he
says, including “a lot of job simulation.”
Ferguson sees it as the best of times for all recruiters, not just those in-house
concentrating on strategy. Working in the recruiting outsourcing business “make
you the business, not internal overhead. When you work for an outsourcing company,
you are a revenue-producing person.” Another upside is that “there are a variety of clients
to work for or with and different management opportunities.”
M.P.Birla Institute of Management 65
Better for Large or Small Companies?
EPO experts disagree over whether outsourcing works best for large or small companies.
Companies with more than 1,000 employees are more likely to use EPO, according to
Schweyer. Ferguson agrees that it “is largely focused on larger companies, as is RPO
[business process outsourcing] in general. As outsourcers become more sophisticated and
offerings become more ingrained and accepted, it will move downstream.”
But Watson Wyatt’s Paradiso argues that larger companies are often less likely to
outsource because “they want their own direct input” into branding the company and
because they need in-house recruiters to handle the higher volume. Smaller companies,
on the other hand, “don’t have the infrastructure, so they want to deal with the recruiter
when they need someone.” There is also a variety of opinions about the types of positions
best handled by EPO. Paradiso sees it as easiest to outsource high-volume positions that
require specific testing. “As you move up the line, it gets harder to assess cultural fit.”
Sales have become a popular target. Kenexa, for example, recruits for all primary sales
positions for pharmaceutical giant Schering-Plough. “They see their core competency as
making and selling and marketing high-quality drugs. We can provide them with turnkey
operations,” Clark says.
Aon also handles recruiting for pharmaceutical companies, as well as for manufacturing,
seasonal retail and call centers. The common denominator, according to Greenberg, is
that these companies generally have a small recruiting department that can handle normal
attrition but can’t manage the hiring blitzes needed when a pharmaceutical company
releases a new drug or a manufacturing company opens a new plant or shift.
EPO vendors naturally believe they offer an advantage over HR RPO generalists.
“It’s better to have a strategic partner than people doing a little of this, a little of that,”
says Landberg, who believes it is important to know the recruitment outsourcer’s
background—whether it was originally a temporary, technology or retained search firm.
To get retained level quality across the recruiting spectrum, “you need a recruitment
partner. You get greater value because you have someone who is more efficient, who
becomes much more of a partner vs. a vendor. It’s all about improving the effectiveness
while not driving up cost. Everybody’s doing it in their own way,” he says.
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Many generalist HR outsourcing firms “have already stubbed their toe because they don’t
have the infrastructure sourcing engine” to handle recruitment outsourcing, according to
Clark. “Some who say they do RPO are often just sourcing machines; they’re just spitting
resumes. There’s more to staffing than just recruitment.
“Recruiting is a different animal,” he says. “It’s less like an HR generalist, more like
process management and sales. Staffing people have to have ability to sell the concept”
of the position and the company to high-potential hires.
Stephenie Overman is an Arlington, Va.-based freelance writer who specializes in HR
issues.
M.P.Birla Institute of Management 67
CHAPTER 2 PROBLEM STATEMENT
• Criteria for the selection of RPO.
• An assortment of considerations for deciding on RPO
• Effectiveness of a RPO with the company.
CHAPTER 3
RESEARCH OBJECTIVES:
• To identify the factors considered while outsourcing the recruitment process.
• To identify RPO providers.
• To find out the importance of RPO for a company
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CHAPTER 4 RESEARCH METHODOLOGY Area of enquiry:-Consultancy firms and other personal contacts. Sample: The sample consists of fifty companies. Data collection: The data will be collected through contacts and consultancy firms
spread over the city.
Data analysis and inference: A structured questionnaire is used to analyze the data.
The data generated is exposed to statistical treatment through the application of relevant
statistical tools and inferences are drawn accordingly.
Primary data is collected by the questionnaires.
Secondary data is collected by the referring to several journals, books, Internet,
magazines etc.
Questionnaire Design:
The data collected during the research is Primary in nature and in that Questionnaire
method has been taken because it is cost effective, free from the biasness of the
interviewer and respondents can give sufficient time to give well thought out answers.
A questionnaire is a formalized set of questions eliciting information. It contains closed
ended questions to elicit the required information. The closed ended questions were
asked as they are easier and much convenient for both the respondent and the researcher.
A total of 50 respondents were interviewed and their opinions were taken regarding their
perception, awareness and attitude towards the RPOs.
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Data analysis and inference: The questionnaire technique is used for the survey.
The data generated is exposed to statistical treatment through the application of relevant
statistical tools and inferences will be drawn accordingly. Relevant test of significance
will be used.
Hypothesis:
4. H0: All the factors are equally important and are considered while selecting an RPO.
H1: Only few factors are considered for selection of RPO.
5. H0: All the reasons are equally important and there is no difference between the
priorities of these factors.
H1: There is difference between the priority levels among the reasons.
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RESEARCH LIMITATIONS
The importance of RPO for a company will vary from others since the research
investigation is generic in nature.
There can be a hurdle to access the information, since certain factors regarding RPO
will not be disclosed for security reasons. However this can be overcome through
meticulous cross-checking of the data.
The survey is conducted in Bangalore city only.
‘
.
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CHAPTER 5
DATA ANALYSIS AND INTERPRETATION
1. Do you outsource any of your HR services
a. Yes b. No .
36
14
ab
Interpretation: As it is evident from the above graph majority i.e. 72% companies
outsource their HR activities.
M.P.Birla Institute of Management 72
2. If yes rank the following according to your importance
a. Online job portals b. Employee References c. R.P.O. Service providers d. Others
preference
0
5
10
15
20
25
a b c d
category
num
ber o
f res
pond
ents
Series1
Interpretation: From the above graph it is clear that 20 of 50 respondents preferred
RPOs to other alternatives.
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3. Are you aware of RPO a. Yes b. No
64%
36%
ab
Interpretation: The graph depicts that about 64% of the market is aware about the
RPO services.
M.P.Birla Institute of Management 74
4. What factors do you consider while selecting an RPO
a. Cost reduction b. Service improvement c. Better people d. Effective time management Inference: ψ2 test is implied. Not Important
Some what important
important Very important
Extremely important
8 7 23 12 9 4 6 7 11 22 4 14 11 9 12 4 7 7 12 20 N Imp SW Imp Imp V Imp E Imp Total a 8 7 23 12 9 184 b 4 6 7 11 22 191 c 4 14 11 9 12 161 d 4 7 7 12 20 187 --------- 910 --------
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O E (O-E)2 (O-E )2 E E = 910 = 227.5 -------- 184 228 1936 8.5 4 191 228 1369 6.0 161 228 4489 19.7 187 228 1681 7.4 --------- Ψ2 cal 41.6 --------- Level of Significance = 5% Degrees of Freedom = (n-1) = (4-1) = 3. ψ2 tab = 12.8 H0 is rejected. So alternative hypothesis is accepted. Therefore companies consider only few aspects as important while selecting
an RPO.
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5. What are the reasons for selecting an RPO a. RPO is superior to in-house recruiting b. RPO has the skill-set, and has developed sophisticated tools c. Allows the HR department to focus on other strategic issues d. Single point of entry to the candidate market Inference: Not Important
Some what important
important Very important
Extremely important
2 7 8 14 19 3 5 18 12 12 1 3 5 19 22 17 8 6 11 8 N Imp SW Imp Imp V Imp E Imp Total a 2 14 24 56 95 191 b 3 10 54 48 60 175 c 1 6 15 76 110 208 d 17 16 18 44 40 135 --------- 709 --------
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O E (O-E)2 (O-E )2 E E = 709 = 177.25 -------- 191 177 196 1.11 4 175 177 4 0.02 208 177 961 5.43 135 177 1764 9.97 --------- Ψ2 cal 16.52 --------- Level of Significance = 5% Degrees of Freedom = (n-1) = (4-1) = 3. ψ2 tab = 12.8 H0 is rejected. So alternative hypothesis is accepted. Therefore the priorities given to the reasons for selecting the RPOs by the
companies differ among the above reasons.
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6. What kind of service do you outsource to an RPO
a. Core recruitment process b. Help the recruiting department c. Particular requirement d. Contracts for offshore requirement (if any) e. Filling key positions
30%
10%
10%
26%
24%
abcde
Interpretation: Companies prefer outsourcing to the RPO s their core recruitment
processes the most followed by the offshore requirements which is 26% and the
key positions of their companies which is 24%.
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7. Is RPO the only means for talent supply chain a. Yes b. No
36%
64%
ab
Interpretation: 64% of the respondents do not consider RPO s as the only means of
talent supply chain. This can be because the companies prefer different kinds of
recruitment sources as per the requirement and not only they believe in RPO s for all the
requirements.
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8. Do you uphold certain metrics for RPO Providers a. Yes b. No If yes please mention ______________________________________
92%
8%
ab
Interpretation: Almost all the companies have their own metrics for selecting the RPO
s according to their requirements. And these metrics are different to different companies
depending their HR policies. These metrics could be like:
The Credibility & brand name along with the metrics they have in recruitments & service
levels that they are providing
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9. Failing to meet these metrics would result to
a. Simple correction
b. Termination of services to the RPO
56%
44%ab
Interpretation: According to the respective company norms the action for the failure of
the RPO s meeting the metrics differ from a small correction to the termination of the
RPOs
10. Do you have a lucrative awarding system for achieving those metrics a. Yes b. No If yes what are they?
Interpretation: As it is evident from the graph about 52% of companies have awarding
system for the RPO s with good performance. These awards could be like: Holding them
as the prime partners of the company & give them the appreciation in terms of
association with the company as well as giving them good business & commercials.
.
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11. What do you feel about the future of RPO
a. Bright
b. Satisfactory
c. Can’t say
27
13
10
0
5
10
15
20
25
30
a b c
Series1
Interpretation: From the research it is found out that about 54% of the companies
believe in RPO s and they expect a bright future for the RPO providers
12 What are the risks associated with the company if they go in for an RPO
a. Losing managerial control
b. Hidden and missed out costs leads in underestimation of overall costs
c. Threat of security and confidentiality of issues for a company (Salary etc)
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19
11
20
0
5
10
15
20
25
a b c
Series1
Interpretation: It is found that the companies consider the security of confidential
information and the threat of loosing managerial control as the critical risks in hiring the
RPO providers.
13. How do you handle the above risk with the RPO providers ______________________________________________________________ Interpretation: Companies prefer signing Non-Disclosure agreements. 14. What is your percentage of cost reduction by opting for an RPO ______________________________________________________________ Interpretation: Cost reduction for the companies by hiring an RPO is from the areas
like Employee Engagements and other miscellaneous expenses.
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15. Do you believe that RPO is the solution for all vacant layers of an organization a. Strongly agree b. Agree
c. Strongly Disagree d. Disagree
e. Can’t say
16%
32%
14%
26%
12%
abcde
Interpretation: About 32% of the companies believe that an RPO can serve for
vacancies at all levels of the organization.
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16. Do you feel that RPO might be a way to offload high volume recruiting a. Strongly agree b. Agree
c. Strongly Disagree d. Disagree
e. Can’t say
38%
28%
10%
16%
8%
abcde
Interpretation: From the graph it is evident that a major percentage of the companies
believe in that RPO s can help the companies in offloading the high volumes of recruiting
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17. Does your organization outsource the performance of a function and not the responsibility for it a. Strongly agree b. Agree
c. Strongly Disagree d. Disagree
e. Can’t say
12%
26%
16%
34%
12%
abcde
Interpretation: Most of the companies outsource just the performance function to the
RPO s but not the responsibility for it.
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18. Do you think outsourcing is worth it if there is no recruiting leadership provided by The RPO provider to cope with the recruiting challenges a. Yes b. No
12
38
0
5
10
15
20
25
30
35
40
a b
Series1
Interpretation: About 76% of companies do not prefer an RPO, if it does not provide
recruiting leadership to the company. Companies prefer an RPO with good performance
and which can provide competitive advantage to the company
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19. Do you feel that RPO is nothing but “PANIC STAFFING” a. Yes b. No
29
21
0
5
10
15
20
25
30
35
a b
Series1
Interpretation: About 58% of the respondents believe that RPO s are considered as the tool for staffing only when the requirement is urgent and not for general recruitment process of the company. 20. How do you calculate the return on investment when you outsource your requirement To the RPO provider ____________________________________________________________________ Interpretation: There is less risk involved in terms of logistics & resource used if an
RPO is hired, in terms of contract staffing company can have good hold on resources as
well as the CTC payouts through the contract staffing which can help organization to
have low risk
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CHAPTER 6
SUMMARY OF RESEARCH FINDINGS
As per the research carried out on RPO it has been found out that majority of companies
favor RPOs . As we can clearly understand the findings from above the charts that the
companies prefer RPO to other outsourcing agencies. The reason for selecting an RPO is
also not only the cost aspect but the performance and the time management. Not only are
the benefits, the companies are also satisfied with the performance of RPO. Most of the
companies agreed on certain areas, which test the RPOs’ performance. Through the research it is also found that the companies uphold certain criteria while
selecting an RPO and in case of any failure of the RPO in achieving these metrics would
lead to the action to the extent of termination of the RPO services with the company.
RPOs are the new trend followed by the companies for their recruiting processes, as
nowadays companies are given with excess of work loads and targets. By which the work
carried out by 3 persons had to be done by 1 employee with the same levels of high
performance quality. This has become a challenge for most of the companies and this
also helps in having the competitive edge in the market. So the companies want to cut
down their employee number to the required and the processes which can be carried on
by the agencies are being outsourced. And companies also want to cut their costs and
utilize the resources to their best.
An RPO makes it true by taking up the time consuming and processes which involves
high costs, thus providing the companies with enough time to carry on their strategic
processes and letting them a competitive edge in the market.
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CHAPTER 7
RECOMMENDATIONS
Certain recommendations were made to companies in general per the verified result of
my research work and they are:
Large organizational size is no longer a competitive standard. Small, agile niche
competitors can now change industries and cost structures overnight .Competitive
pressures are more sever in a global economy .Product and service cycle times have
reduce dramatically, and time based competition demands quicker response. Investors
and analysts demand a focused management that delivers .Bottom line performance,
growth and size are no longer predictors of future profits. Significant operating and
financial performance improvements are critical to success, and long term survival
.Supplies of technical specialists is reasonably plentiful, thus employing them internally
is unnecessary to their availability.
Suggestions for Outsourcing and Conclusion
As per the survey if was found that the reason for outsourcing is that the companies do
not have to build the internal skills and technologies for recruiting. If the company is
looking for a way of providing increased services without incurring additional internal
cost and maintenance of those programs, outsourcing is the good solution.
Outsourcing gives the companies an enhanced control of their HR/benefits
responsibilities, especially in those areas like administrative control of data, reports, and
staffing.
Finding a vendor that can provide comprehensive solutions enhances the effectiveness of
outsourcing.
Effective time management is one of the factors that the companies have to be considered
while outsourcing to an RPO.
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While selecting an outsourcing agent consider its records with other companies and the
performance changes at the organization or the results to the company by these agencies.
Calculate the investment and the rate of return on that to the company expected from the
outsourcing agency.
Make agreements or policies which would help the companies in protecting their
confidential information.
Companies should utilize its in-house recruiting resource to the outsourcing options as
this would help the companies to enhance their skill and being independent at any state of
the market.
Suggestions to the RPOs:
RPO s should try to utilize the best of its resources and also of the company’s to be in a
win -win situation to the company and also to the RPO.
RPO s should try enhancing the awareness about the benefits of outsourcing the routine
and time consuming jobs like recruitments.
These RPO s should expand their services from just recruiting to other areas which are
routine in nature to the company. Which helps the RPO s to get expertise at other
different areas of the company functions
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Certain questions which were answered after I took up this research
work.
1. Does the outsourcing opportunity match the organization’s business needs?
If an outsourcing initiative can create a strategic advantage, then its worth pursuing. If it’s
merely intended to deal with temporary tactical problems--such as a reluctance to invest
in an upgrade to a core HRMS while revenues are down then it’s doomed to failure.
2. Will outsourcing improve performance?
A successful outsourcing initiative, translates into service that is better than it would be if
an organization handled the tasks internally. Before turning to RPO, it’s important to ask
how and why it will drive improvements.
3. How can an organization that turns to outsourcing develop excellent human
resources generalists, specialists and experts in managing vendor relationships?
Remaining human resources executives and managers use metrics and other
measurements to ensure that the company is managing its initiatives and relationships
well and meeting business goals.
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4. How can an organization understand and control costs?
It’s essential to understand the cost structure for various components of outsourcing,
particularly if the entire package of products and services is bundled into a single fee.
5. Are adequate protections in place for when business conditions change?
Make sure that the proposed contract protects your organization as much as it protects the
outsourcing provider. Your business may look quite different three to five years from
now.
6. What are the cultural ramifications of RPO?
How will managers and employees react to the changes? Will these individuals view the
new system as a positive or a negative? How can such reactions affect the success of the
initiative? Is it possible that these individuals will walk out if they see a major upheaval?
7. Who will manage the financial and performance aspects of the project?
Without people, processes and technology to measure and manage the outsourcing
initiative, an organization can find itself overspending and Underachieving. Factoring the
management aspects of the task into the initial proposal can reduce the odds of problems
occurring later on.
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8. Is there an escape strategy?
If the RPO provider fails to live up to expectations-- even with a solid service-level
agreement in place--or if the vendor is acquired by another firm that has been previously
rejected (because of management style, ethics, customer-service track record, technology,
geographic coverage or other factor), there must be a way to make a change without
a. Yes b. No 2. 2. If yes rank the following according to your importance
a. Online job portals b. Employee References c. R.P.O. Service providers d. Others specify ____________________________ 3. Are you aware of RPO a. Yes b. No
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4. What factors do you consider while selecting an RPO
a. Cost reduction b. Service improvement c. Better people d. Effective time management 5. What are the reasons for selecting an RPO a. RPO is superior to in-house recruiting b. RPO has the skill-set, and has developed sophisticated tools c. Allows the HR department to focus on other strategic issues d. Single point of entry to the candidate market 6. What kind of service do you outsource to an RPO
a. Core recruitment process b. Help the recruiting department c. Particular requirement d. Contracts for offshore requirement (if any) e. Filling key positions 7. Is RPO the only means for talent supply chain a. Yes b. No
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8. Do you uphold certain metrics for RPO Providers a. Yes b. No If yes please mention ______________________________________ 9. Failing to meet these metrics would result to
c. Simple correction
d. Termination of services to the RPO 10. Do you have a lucrative awarding system for achieving those metrics a. Yes b. No If yes what are they? __________________________________________________________ 11. What do you feel about the future of RPO
d. Bright
e. Satisfactory
f. Can’t say 12 What are the risks associated with the company if they go in for an RPO
d. Losing managerial control
e. Hidden and missed out costs leads in underestimation of overall costs
f. Threat of security and confidentiality of issues for a company (Salary etc)
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13. How do you handle the above risk with the RPO providers ______________________________________________________________ 14. What is your percentage of cost reduction by opting for an RPO ______________________________________________________________ 15. Do you believe that RPO is the solution for all vacant layers of an organization a. Strongly agree b. Agree
c. Strongly Disagree d. Disagree
e. Can’t say
16. Do you feel that RPO might be a way to offload high volume recruiting a. Strongly agree b. Agree
c. Strongly Disagree d. Disagree
e. Can’t say
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17. Does your organization outsource the performance of a function not the responsibility For it a. Strongly agree b. Agree
c. Strongly Disagree d. Disagree
e. Can’t say
18. Do you think outsourcing is worth it if there is no recruiting leadership provided by The RPO provider to cope with the recruiting challenges a. Yes b. No 19. Do you feel that RPO is nothing but “PANIC STAFFING” a. Yes b. No 20. How do you calculate the return on investment when you outsource your requirement To the RPO provider ____________________________________________________________________