RPO: Powering recruitment process

That talent scarcity is one of  the biggest obstacles to growth of organizations across the world, is not a new phenomenon. However, the sheer number of candidates that are being recruited by organizations particularly in the IT, BPO and engineering sector is unprecedented. Globalization is compelling businesses to ramp-up their talent base across sectors and across geographies in the shortest possible time. Under such circumstances, organizations are facing an enormous challenge in ensuring high quality of hires. In today's fiercely competitive environment, hiring the best quality manpower is not just a requirement, it is mission-critical. Any HR Manager will agree that poor hires not only hit profitability but also pose a grave threat to a company's reputation. Hiring such candidates, particularly in Business Process Outsourcing (BPO), sales and information technology positions can sound the death knell for an organization. This brings one to the crucial question - How does one ensure hiring the right talent for the right position at the right time in the right location?

This is where the need for a strong "process" comes into the HR function - for both recruitment and retention. Both these areas figure as top priorities for Indian BPO industry which witnessed an attrition rate of close to 40% in 2006-07. Moreover, the process needs to be replicated across other markets to ensure that the grade and quality of candidates being hired globally is consistent. This requires a dedicated and highly experienced team of recruiters. While businesses have strong processes for most of their other functions like sales, manufacturing, customer relationships etc. they tend to be weak in recruiting.

Recruiting function is generally short staffed, lack sector specific specialist focus and rely on executive search firms for candidate pools. Most executive search firms or routine Human Resource Outsourcing (HRO) providers lack the core expertise required in hiring talent for specialized sectors such as IT and engineering.

Organizations are realizing the need to partner with world-class recruitment experts who can support an organization's requirements not just within the country of origin but across geographies. This is where Recruitment Process Outsourcing (RPO) providers come into the picture as they bring an overriding focus on "process" which differentiates them from other HR service providers. No surprise then that RPO is the fastest growing segment for HR industry. IT companies are among the early adopters of this trend. Although organizations in the US were first to adopt RPO, they are now looking to extend the scope of work to their offices across the world including those in developing markets such as India.

RPO is NOT an extension of HRO

In order to ride the wave of RPO, many existing Human Resource Outsourcing (HRO) players claim to be providers of RPO services by either simply re-branding their services or hiring a handful of headhunters to pose as RPO professionals. It is critical for customers to fully understand the range of services offered by true RPO providers, so as to differentiate them from HRO services.

As per US-based ERE Media, Recruitment Process Outsourcing is defined as the outsourcing of specific, discrete recruitment processes, performed in both centralized

and decentralized 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 manager's approved criteria, candidate quality as determined by hiring manager surveys, the speed with which the hired candidates are presented and overall program cost. Another criterion that organizations 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 specialized RPO providers which can partner with them in their global recruitment strategy.

Process as the differentiator

RPO brings forth measurable and definable standards. Using a rigorous selection and assessment process, an RPO partner can screen out potentially below-par candidates early in the process.

The RPO providers help to improve the hiring process immensely by bringing the process improvements at each stage of the recruitment exercise. These stages include sourcing, screening, assessment, selection and on-boarding. The importance of these process improvements can be gauged from the fact that as per a recent study by the U.S. Small Business Administration, every dollar invested in screening and assessment saves employers $5 to $16 in reduced absenteeism, improved productivity, lower turnover, safer working environment, reduced insurance premiums and decreased employer liability. The sourcing and screening process is quite challenging as it includes active and passive headhunting, referral handling, candidate tracking, placement and staffing agency coordination, market intelligence gathering, building recruiter domain knowledge and compiling screening tools. In assessment too trained specialists are required to conduct psychometric and aptitude testing, comprehension testing, verifying capacity and problem solving, motivation metrics etc. While the hiring decision remains an internal one, RPO providers support managers in a variety of ways to speed the hiring process. Finally, in order to ensure speedy on-boarding, RPO providers facilitate background checks, drug screening, employee orientation, employee record creation and data porting and on-site and off-site logistics support. Apart from ensuring a glove-fit match for the positions, RPO providers help to reduce cycle time significantly.

At the same time true RPO providers 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 suggest improvements in the recruitment process.

RPO providers employ teams of specialized recruiters with industry experience in segments such as engineering, IT, finance, scientific, administrative and industrial. These recruiters are also experts in targeting passive candidates i.e. high-performing employees who are satisfied enough with their current jobs to keep them from actively seeking out new opportunities but not so satisfied that they can't be convinced to consider attractive positions.

Opportunity for 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, rich experience in outsourcing and a fast growing domestic market has the opportunity to establish itself as a preferred destination for recruitment process outsourcing. While the Indian domestic RPO market is still nascent and largely restricted to addressing the US market, the high level of recruitment taking place in the local market in the IT-ITES, retail and financial services industry presents the perfect environment for the industry to build scale. The beginning has been made with Wipro BPO having outsourced its recruitment process and other IT/BPO players evaluating similar options. Apart from the cost advantage, the processes are seen as a way to control attrition in the Indian BPO industry which currently stands at 40%.

Global RPO providers are already offshoring their RPO needs to destinations such as India. RPO providers which were early-adopters of an India-based model are already reaping the rewards. However, countries such as The Philippines and Costa Rica are fast gaining ground due to the increasing number of English-speaking people as well as the lesser time difference from USA. In such a scenario, it is important for India to concentrate on training its manpower so as to maintain an edge over other countries.

To summarize, HR managers need to tap RPO providers to effectively address their talent requirements. Working with an RPO partner will help an organization to identify, assess, and hire the best talent within its industry, thus gaining an edge over competition. In addition to delivering high-quality candidates, an RPO partner can help reduce early employee turnover and fulfill hiring needs quicker. Industry studies in the USA show that within two years, fifty-eight 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 organizations globally.

The author is Executive Vice- president, RPOWorldwide