Soft Skills

RPO: The killer app in HR services

Murali Balasubramanyam focusses on the trend of recruitment process outsourcing.

If there is one problem that is seen as the biggest hurdle to the growth of organisations across the world and across sectors, it is talent scarcity. As part of the HR function, recruiting is the most crucial and time consuming function of any HR department. This leads to a complete transformation in the way the recruitment function is perceived by organisations around the globe. This emanates from the simple logic that when companies across worldwide are trying to focus on their core functions and outsource all non-core functions, why shouldn’t recruitment be outsourced to the experts too? Having said that, it isn’t difficult to understand why Recruitment Process Outsourcing (RPO) as a concept has gained such popularity in a span of a few years. Initially companies expressed reservations, since recruiting the right individual is so crucial to an organisation’s success. Companies soon realised that with talent crunch becoming a perennial problem, its time to bring in the experts. The RPO segment is today the fastest growing global segment for HRO firms. IT companies are among the early adopters of this trend. In fact, the high level of activity seen in this space leads several analysts to believe that the time for multi-million dollar deals in the global RPO space has come. 

So what exactly is RPO? 

The popularity of the concept has led to several new players entering the market. Some existing HRO players claim to be providers of RPO services by simply re-branding their services. It is of great importance for customers to fully understand the range of services offered by true RPO providers, so as to differentiate them from “RPO-posers”.  

As per US-based ERE Media, Recruitment Process Outsourcing is defined as the outsourcing of specific, discrete recruitment processes, performed in both centralised and decentralised applications, involving detailed service level agreements, with the vendor taking complete ownership of the processes of recruitment. Full life-cycle RPO engagements always include a written service-level agreement (SLA) that typically includes a guaranteed minimum number of applicants who meet the hiring managers approved criteria, candidate quality as determined by hiring manager surveys, the speed in which the hired candidates are presented and overall programme cost.

Another criterion that organisations are evaluating is whether the RPO provider is capable of recruiting candidates for its operations, not only in the country of origin but across its offices in various parts of the globe. In other words, they are beginning to differentiate between ‘vanilla’ RPO players and those specialised RPO providers which can partner with them in their global recruitment strategy.  

Advantage India 

Research firm IDC forecasts staffing and recruitment spending to reach $92 billion globally by 2009 (Source: ERE media study) and RPO services stand a good chance of garnering a large portion of this spending. India, with its huge talent pool and its rich experience in the outsourcing industry, can indeed ride this wave of recruitment process outsourcing. Although the Indian domestic RPO market is still in its nascent stage, global RPO providers are seriously evaluating the option of offshoring their RPO needs to destinations such as India. RPO providers which were early-adopters of an India-based model are now reaping the rewards.  

The RPO lifecycle  

Companies opt for RPO services based on the range of functions that they consider fit for outsourcing. For example, a client organisation may decide to outsource its entire recruitment/hiring function for all hiring needs, including all skill sets and all job families within the organisation. In this instance, the RPO provider acts as an extension of the organisation’s HR function. This is termed as end-to-end RPO.   

In the other type of RPO, a client organisation decides to outsource certain job families and skills to the RPO provider, or it may outsource the expansion of a client’s operations into defined geographies. This is termed as project-based RPO. 

The service functions that an RPO player is involved in can be broadly classified into five main categories: 

• Consulting: This includes recruitment process design, competitive analysis, job design, market expansion support and technology planning. RPO providers are demonstrating the value-add that RPO can bring to an organisation through their involvement in the planning phase of a client’s human capital needs.
• Sourcing and screening: The candidate sourcing and screening process is very challenging; often, there are limited qualified candidates for open positions, but an abundance of irrelevant resumes. Sourcing and screening includes active and passive headhunting, referral handling, candidate tracking, placement and staffing agency coordination, market intelligence gathering and building recruiter domain knowledge and compiling screening tools. While the hiring decision remains an internal one, RPO providers help to support managers in a variety of ways to speed the hiring process.
• Assessment: This is aimed at gaining valuable insight into candidate personalities and aptitude, prior to making a job offer. It requires specialists trained to conduct psychometric and aptitude testing, comprehension testing, verifying capacity and problem-solving, inspiration and motivation metrics, etc., helping the organisation ensure a glove-fit for the positions.
• Selection: This involves scheduling of interviews, database updating, compliance checking, logistics support, and offer/rejection letter composition. While the hiring decision remains an internal one, RPO providers support managers in a variety of ways to speed the hiring process.
• On-boarding: This involves background checking, drug screening, employee orientation, employee record creation and data porting, and on-site and off-site logistics support. A broadened scope enables buyers to transfer many traditional internal on-boarding activities to RPO providers, further reducing cycle time.

One of the major tenets behind RPO is that there should be the ability to create a significant candidate pool to draw on for their clients. By doing so, the RPO vendor is able to turn around job requisitions more quickly and efficiently than a single employer. At the same time true RPO players need to invest time in follow-up surveys, compiling benchmark data, gauging hiring manager and employee satisfaction post hire and determination of quality of hires. By examining data relating to employee satisfaction, retention rates, and others, RPO providers can improve the recruitment process.

Over the past few years, RPO services have been chiefly employed by IT, retail, finance and insurance and engineering sectors. The trend seems to be gaining ground not only among big organisations but also the small to mid-sized companies. Since RPO affects an organisation’s business growth and success, the organisation should have a detailed understanding of the concept and also of the expenditure for the recruitment process. This helps to identify the processes that should be outsourced, and which RPO is best suited to the unique requirement of the company. Industry studies in the USA show that within two years, 58 percent of the Fortune 2000 companies will rely on this model. This further strengthens the point that RPO is indeed the answer to the recruitment woes of organisations globally.

Among the leading offshore RPO providers is RPOworldwide, a subsidiary of the $270 million IT and BPO provider iGATE Corporation based in the USA. The company is headquartered in Pittsburgh, PA and has its Global Recruitment Centers (GRC) located in Chennai, Bangalore and New Delhi. The company also has its GRCs in Bulgaria and Costa Rica. To date, more than 2,000 professionals have been successfully recruited by the company on behalf of its clients. 

Murali Balasubramanyam is Executive Vice-president, RPOworldwide