Accessing the global marketplace is more of a norm than an exception today. So recruiters going offshore elicit little surprise. Recruiters have to do a lot of back-end activities like searching for candidates from database and job boards, testing their skills, checking their backgrounds, testing them for drugs, screening their resumes, etc. Companies have now begun to outsource these back-end tasks to third parties — and this process has been grandly christened, like many before it, as Recruitment Process Outsourcing (RPO). RPO is also known as Employment Process Outsourcing.
RPO not only reduces the cost of operations and increases the speed of recruitment, but it also frees up HR managers from back-end sourcing tasks. Recruiters generally spend about 60% of their time sorting through resumes in their inboxes or finding candidates from job boards. RPO frees them up from such mundane tasks.
Generally, large companies with a few thousand employees opt for RPO because they stand to gain from economies of scale in process improvement and cost savings.
The worldwide HR outsourcing market is expected to hit $80 billion by 2008, and RPO, its sub component, will be worth $30 billion, according to Kelly HRfirst, a subsidiary of Kelly Services and one of the largest global RPO players. Another large RPO player is Kenexa.
There are also plenty of smaller providers active in this area. RPOworldwide (a fully owned subsidiary of iGate Corporation in the USA) which is using the services of staff in India, Costa Rica and Bulgaria to recruit locally in the U.S. The company has a staff of 140 sourcers (for backend sourcing of candidates) and 50 recruiters (for interviews, screening, etc.), and has plans to take this up to 600 by end 2008.
Many factors have contributed to the growth of sourcing in recruitment services. Growing attrition level is one of them. Companies across the world are witnessing attrition rate of an average of 18%. Out of these, the call-center industry witnesses the highest of 45% attrition level. This clearly indicates that a fifth of the world's workforce goes for a new job every year.
Another aspect that drives such outsourcing is the growing number of jobs across the world. There are four new jobs added for every 100 jobs per year — this is the result of increasing GDP of all countries in the world, at an average four percent, according to PeoplePoint, an India-based RPO player.
Hence, increasing supply of and growing demand for new jobs are forcing both companies and jobs seekers to take assistance from outsiders. On an average 25% of hiring takes place through recruitment-services providers. Whether this major part of HR outsourcing will become a big market, or remain hype, is yet to be seen.
