Recruitment Process Outsourcing Recruitment Recruitment refers to the process of screening, and selecting qualified people for a job at an organization or firm, or for a vacancy in a volunteer-based some components of the recruitment process, mid- and large-size organizations and companies often retain professional recruiters or outsource some of the process to recruitment agencies. External recruitment is the process of attracting and selecting employees from outside the organization. The recruitment industry has four main types of agencies: employment agencies, recruitment websites and job search engines, "headhunters" for executive and professional recruitment, and in-house recruitment. The stages in recruitment include sourcing candidates by advertising or other methods, and screening and selecting potential candidates using tests or interviews.
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Recruitment Process Outsourcing
RecruitmentRecruitment refers to the process of screening, and selecting qualified people for a job at
an organization or firm, or for a vacancy in a volunteer-based some components of the
recruitment process, mid- and large-size organizations and companies often retain
professional recruiters or outsource some of the process to recruitment agencies. External
recruitment is the process of attracting and selecting employees from outside the
organization.
The recruitment industry has four main types of agencies: employment agencies,
recruitment websites and job search engines, "headhunters" for executive and
professional recruitment, and in-house recruitment. The stages in recruitment include
sourcing candidates by advertising or other methods, and screening and selecting
potential candidates using tests or interviews.
Difference between recruitment and selection
1. Recruitment is the process of searching the candidates for employment and
stimulating them to apply for jobs in the organisation WHEREAS selection involves the
series of steps by which the candidates are screened for choosing the most suitable
persons for vacant posts.
2. The basic purpose of recruitments is to create a talent pool of candidates to enable the
Recruitment Process Outsourcing
selection of best candidates for the organisation, by attracting more and more
employees to apply in the organisation WHEREAS the basic purpose of selection
process is to choose the right candidate to fill the various positions in the organisation.
3. Recruitment is a positive process i.e. encouraging more and more employees to apply
WHEREAS selection is a negative process as it involves rejection of the unsuitable
candidates.
4. Recruitment is concerned with tapping the sources of human resources WHEREAS
selection is concerned with selecting the most suitable candidate through various
interviews and tests.
5. There is no contract of recruitment established in recruitment WHEREAS selection
results in a contract of service between the employer and the selected employee.
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Steps involved in Recruitment Process
The decision is made as to whether recruitment is necessary.
The job description is prepared.
The personnel specification is prepared.
Plans are made on how and when to advertise.
Applicants are short-listed.
References are requested.
Candidates are invited for interviews and selection tests.
The successful candidate is offered the job and signs the contract of employment
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Some regular methods of Recruitment are
1) Head Hunting:
Many organizations have active formal employee referral programs, particularly
in tight job markets or where the employer has difficult-to-fill or high-turnover positions.
These programs reward employees for referring applicants to the organization. Other
organizations have less formal programs and encourage employees to refer potential
applicants, but do not provide an incentive for doing so.
Experience and research show considerable benefit to the employee referral type of
recruitment. First, employees are not likely to refer applicants that would not be good
employees. They do not want to be embarrassed by the performance or conduct of their
referral. Also, candidates that are referred by employees typically already have begun the
orientation process and have somewhat of a realistic job preview via their relationship
with the current employee. Finally, there is a positive correlation between employee
referral and employee retention of those hired as a result.
There is, however, one potential problem that can associated with employee referrals.
Employees tend to refer their relative and friends, who most likely are of the same
ethnicity or sex as themselves. Therefore, this type of recruitment does not normally
facilitate the achievement of diversity and affirmative action plan goals and can create
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adverse impact. This is particularly true if the organization has a past practice of
discrimination.
2) Job posting on job sites (Naukri, monster, timesjobs etc):
Job posting is the process of advertising and publicizing job openings to
employees. This might be accomplished by physically posting the opening on bulletin
boards or by electronically posting them on the company’s intranet or Internet. It is then
up to the employee to actually apply for the position.
3) Employment Agencies:
As mentioned earlier in the discussion of outsourced recruitment, employment
agencies and job search firms often are good sources of job candidates. First, all states
have unemployment offices, displaced worker units, or similar agencies performing the
same function. These are often sources of applicants.
Private employment agencies can be viable sources of applicants. These firms most
frequently charge the organization a fee for referral of candidates, either on a contingency
or retainer basis. Contingency-based firms receive the fee only if the applicant is hired,
whereas retainer-based firms receive a fee for engaging in the search even if no one is
hired. Employment agencies normally prescreen the applicants for the organization and
refer only those that are qualified. The agencies often have contacts and relationships that
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the organization does not, and might be able to locate excellent candidates for higher-
level managerial and hard-to-fill technical and professional positions. Although using
employment agencies and search firms might be cost-effective and yield results that the
organization could not achieve on its own, doing so can be extremely expensive. Costs
for using these types of firms often run 25–30% of the yearly salary for the position being
recruited.
6) Advertisements on news papers like TOI, Hindu etc.
7) Contract staffing
Recruitment Process Outsourcing
OutsourcingOutsourcing is subcontracting a process, such as product design or manufacturing, to a
third-party company. The decision to outsource is often made in the interest of lowering
cost or making better use of time and energy costs, redirecting or conserving energy
directed at the competencies of a particular business, or to make more efficient use of
land, labor, capital, (information) technology and resources. Outsourcing became part of
the business lexicon during the 1980s. It is essentially a division of labour.
Overview
Outsourcing involves the transfer of the management and/or day-to-day execution of an
entire business function to an external service provider. The client organization and the
supplier enter into a contractual agreement that defines the transferred services. Under the
agreement the supplier acquires the means of production in the form of a transfer of
people, assets and other resources from the client. The client agrees to procure the
services from the supplier for the term of the contract. Business segments typically
outsourced include information technology, human resources, facilities, real estate
management, and accounting. Many companies also outsource customer support and call
center functions like telemarketing, CAD drafting, customer service, market research,
manufacturing, designing, web development, print-to-mail, content writing, ghostwriting
and engineering. Offshoring is the type of outsourcing in which the buyer organization
belongs to another country.
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Outsourcing and off shoring are used interchangeably in public discourse despite
important technical differences. Outsourcing involves contracting with a supplier, which
may or may not involve some degree of offshoring. Offshoring is the transfer of an
organizational function to another country, regardless of whether the work is outsourced
or stays within the same corporation/company.
With increasing globalization of outsourcing companies, the distinction between
outsourcing and offshoring will become less clear over time. This is evident in the
increasing presence of Indian outsourcing companies in the United States and United
Kingdom. The globalization of outsourcing operating models has resulted in new terms
such as near shoring, noshoring, and right shoring that reflect the changing mix of
locations. This is seen in the opening of offices and operations centers by Indian
companies in the U.S. and UK. A major job that is being outsourced is accounting. They
are able to complete tax returns across seas for people in America.
Multisourcing refers to large outsourcing agreements (predominantly IT). Multisourcing
is a framework to enable different parts of the client business to be sourced from different
suppliers. This requires a governance model that communicates strategy, clearly defines
responsibility and has end-to-end integration.
Strategic outsourcing is the organizing arrangement that emerges when firms rely on
intermediate markets to provide specialized capabilities that supplement existing
capabilities deployed along a firm’s value chain (see Holcomb & Hitt, 2007). Such an
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arrangement produces value within firms’ supply chains beyond those benefits achieved
through cost economies. Intermediate markets that provide specialized capabilities
emerge as different industry conditions intensify the partitioning of production. As a
result of greater information standardization and simplified coordination, clear
administrative demarcations emerge along a value chain. Partitioning of intermediate
markets occurs as the coordination of production across a value chain is simplified and as
information becomes standardized, making it easier to transfer activities across
boundaries.
Due to the complexity of work definition, codifying requirements, pricing, and legal
terms and conditions, clients often utilize the advisory services of outsourcing consultants
(see sourcing advisory) or outsourcing intermediaries to assist in scoping, decision
making, and vendor evaluation.
Reasons for outsourcing
Organizations that outsource are seeking to realize benefits or address the following
issues:
Cost savings. The lowering of the overall cost of the service to the business. This
will involve reducing the scope, defining quality levels, re-pricing, re-negotiation,
cost re-structuring. Access to lower cost economies through offshoring called
"labor arbitrage" generated by the wage gap between industrialized and
developing nations.
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Focus on Core Business. Resources (for example investment, people,
infrastructure) are focused on developing the core business. For example often
organizations outsource their IT support to specilaised IT services companies.
Cost restructuring. Operating leverage is a measure that compares fixed costs to
variable costs. Outsourcing changes the balance of this ratio by offering a move
from fixed to variable cost and also by making variable costs more predictable.
Improve quality. Achieve a step change in quality through contracting out the
service with a new service level agreement.
Knowledge. Access to intellectual property and wider experience and knowledge.
Contract. Services will be provided to a legally binding contract with financial
penalties and legal redress. This is not the case with internal services.
Operational expertise. Access to operational best practice that would be too
difficult or time consuming to develop in-house.
Access to talent. Access to a larger talent pool and a sustainable source of skills,
in particular in science and engineering.
Capacity management. An improved method of capacity management of
services and technology where the risk in providing the excess capacity is borne
by the supplier.
Catalyst for change. An organization can use an outsourcing agreement as a
catalyst for major step change that can not be achieved alone. The outsourcer
becomes a Change agent in the process.
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Enhance capacity for innovation. Companies increasingly use external
knowledge service providers to supplement limited in-house capacity for product
innovation.
Reduce time to market. The acceleration of the development or production of a
product through the additional capability brought by the supplier.
Commodification. The trend of standardizing business processes, IT Services
and application services enabling businesses to intelligently buy at the right price.
Allows a wide range of businesses access to services previously only available to
large corporations.
Risk management. An approach to risk management for some types of risks is to
partner with an outsourcer who is better able to provide the mitigation.
Venture Capital. Some countries match government funds venture capital with
private venture capital for startups that start businesses in their country.
Tax Benefit. Countries offer tax incentives to move manufacturing operations to
counter high corporate taxes within another country.
Activities for outsourcing
Research & Development
The competitive pressures on firms to bring out new products at an ever rapid pace to
meet market needs are increasing. As such, the pressures on the R&D department are
increasing. In order to alleviate the pressure, firms have to either increase R&D budgets
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or find ways to utilize the resources in a more productive way. There are situations when
a firm may consider outsourcing some of its R&D work to a contract research
organizations or universities. Reasons why a firm could consider outsourcing are:
new product design does not work
project time and cost overruns
loss of key staff
competitive response
problems of quality/yield.
The key drivers for R&D outsourcing are emerging mass markets and availability of
expertise in the field. In this context, the two most populous countries in the world, China
and India, provide huge pools from which to find talent. Both countries produce over
200,000 engineers and science graduates each year. Moreover both countries are low cost
sourcing countries. Other strategic drivers for outsourcing R&D are access to expertise
and intellectual property, filling gaps in the capabilities of the R&D function, managing
risk better, reducing the time to market, and focusing on the core competence or activities
of the firm.
Criticisms of outsourcing
Quality Risks
Recruitment Process Outsourcing
Quality Risk is the propensity for a product or service to be defective, due to operations-
related issues. Quality risk in outsourcing is driven by a list of factors. One such factor is
opportunism by suppliers due to misaligned incentives between buyer and supplier,
information asymmetry, high asset specificity, or high supplier switching costs. Other
factors contributing to quality risk in outsourcing are poor buyer-supplier
communication, lack of supplier capabilities/resources/capacity, or buyer-supplier
contract enforceability. Two main concepts must be considered when considering
observability as it related to quality risks in outsourcing: the concepts of testability and
criticality.
Testability, in the context of quality risk in outsourcing a product or service, refers to a
product’s or service’s coverage, or the ease of inspecting every single unit. Testability
also refers to a product’s or service’s thoroughness, or the ease of inspecting for single
possible defect. Thus, the testability of a product or service is measured by where it lies
on the coverage and thoroughness axes:
Low Thoroughness + Low Coverage = Products or Services with Low Testability
High Thoroughness + Low Coverage = Complete Inspections of Few Products or
Services
Low Thoroughness + High Coverage = Incomplete Inspections of Most Products
or Services
High Thoroughness + High Coverage = Products or Services with High
Testability
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Criticality, in the context of quality risk in outsourcing a product or service, refers to the
potential negative impact of a quality defect - the higher the criticality of a product or
service the higher the potential negative impact. The quality risk in outsourcing a product
or service can thus be summed as a function of its testability and criticality:
Low Testability + Low Criticality = High probability of minor defects
High Testability + Low Criticality = Lowest Quality Risk
High Testability + High Criticality = Low Probability of Critical Defects
Low Testability + High Criticality = Highest Quality Risk
Quality fade is the deliberate and secretive reduction in the quality of labor in order to
widen profit margins. The downward changes in human capital are subtle but
progressive, and usually unnoticeable by the out sourcer/customer. The initial interview
meets requirements, however, with subsequent support, more and more of the support
team are replaced with novice or less experienced workers. India IT shops will continue
to reduce the quality of human capital, under the pressure of drying up labor supply and
upward trend of salary, pushing the quality limits. Such practices are hard to detect, as
customers may just simply give up seeking help from the help desk. However, the overall
customer satisfaction will be reduced greatly over time. Unless the company constantly
conducts customer satisfaction surveys, they may eventually be caught in a surprise of
customer churn, and when they find out the root cause, it could be too late. In such cases,
it can be hard to dispute the legal contract with the India outsourcing company, as their
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staff are now trained in the process and the original staff made redundant. In the end, the
company that outsources is worse off than before it outsourced its workforce to India.
Public opinion
There is a strong public opinion regarding outsourcing (especially when combined with
off shoring) that outsourcing damages a local labor market. Outsourcing is the transfer of
the delivery of services which affects both jobs and individuals. It is difficult to dispute
that outsourcing has a detrimental effect on individuals who face job disruption and
employment insecurity; however, its supporters believe that outsourcing should bring
down prices, providing greater economic benefit to all. There are legal protections in the
European Union regulations called the Transfer of Undertakings (Protection of
Employment). Labor laws in the United States are not as protective as those in the
European Union. On June 26 2009, Jeff Immelt, the CEO of General Electric, called for
the United States to increase its manufacturing base employment to 20% of the workforce
commenting that the U.S. has outsourced too much and can no longer rely on consumer
spending to drive demand.
Language skills
In the area of call centers end-user-experience is deemed to be of lower quality when a
service is outsourced. This is exacerbated when outsourcing is combined with off-shoring
to regions where the first language and culture are different. The questionable quality is
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particularly evident when call centers that service the public are outsourced and off
shored.
There are a number of the public who find the linguistic features such as accents, word
use and phraseology different which may make call center agents difficult to understand.
The visual clues that are present in face-to-face encounters are missing from the call
center interactions and this also may lead to misunderstandings and difficulties.
Social responsibility
Outsourcing sends jobs to the lower-income areas where work is being outsourced to,
which provides jobs in these areas and has a net equalizing effect on the overall
distribution of wealth. Some argue that the outsourcing of jobs (particularly off-shore)
exploits the lower paid workers. A contrary view is that more people are employed and
benefit from paid work.
On the issue of high-skilled labor, such as computer programming, some argue that it is
unfair to both the local and off-shore programmers to outsource the work simply because
the foreign pay rate is lower. On the other hand, one can argue that paying the higher-rate
for local programmers is wasteful, or charity, or simply overpayment. If the end goal of
buyers is to pay less for what they buy, and for sellers it is to get a higher price for what
they sell, there is nothing automatically unethical about choosing the cheaper of two