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Alluru madhuri(07 xqcm6001

  1. 1. A Research Project Report On RECRUITMENT PROCESS OUTSOURCINGSubmitted 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
  2. 2. DECLARATIONI hereby declare that, this Dissertation entitled “Recruitment processoutsourcing” of project work undertaken by me under the guidance andsupervision of Prof. HemaHarsha, MPBIM, Bangalore, in partial fulfillmentof the requirements for the award of Degree of Master of BusinessAdministration.I further declare that this dissertation has not been submitted to anyUniversity/Institute for the award of any degree/diploma or any other similartitle.Place: Bangalore Madhuri.ADate: M.P.Birla Institute of Management 2
  3. 3. GUIDE’S CERTIFICATEI hereby certify that the research work embodied in the dissertation entitled“Recruitment Process Outsourcing” has been undertaken and completed byMadhuri.A. under my guidance and supervision.I also certify that she has fulfilled all the requirements under the covenantgoverning the submission of dissertation to the Bangalore University for theaward of MBA degree.Place: Bangalore Prof. HemaHarsha M.P.Birla Institute of Management 3
  4. 4. PRINCIPAL’S CERTIFICATEI hereby certify that this dissertation is an offshoot of the research workundertaken and completed by Madhuri.A under the guidance of ProfessorHemaHarsha, M.P.B.I.M. Bangalore..Place: Bangalore (Dr. N. S. Malavalli)Date: Principal M.P.Birla Institute of Management 4
  5. 5. AcknowledgementThe satisfaction that accompanies the successful completion of anytask would be incomplete without the mention of the people whomade it possible, whose constant guidance and encouragementmade my efforts a success.My profound thanks to my project guide HEMAHARSHA, Professor,M.P.Birla Institute of Management, Associate Bharatiya VidyaBhavan for helping me throughout the project. I take this opportunityto thank her for her immense support, guidance, specifications andideas without which the project would not have been a success.I wish to thank our Principal Dr. N. S. Malavalli for hisencouragement and support. Madhuri.A M.P.Birla Institute of Management 5
  6. 6. CHAPTER TITLE PAGE NO. Executive summary 071. • Introduction 15 • Best practice Tips • A Look in RPO2. • Review of literature 58 • Purpose of the review of literature • Methodology of the review of literature • Summary of Review of Literature3. • Problem Statement 68 • Research Objectives4. • Research methodology 695. • Limitations of the research 716. Data Analysis & Interpretation 727. Summary of Research Findings 918. • Recommendations 92 • Suggestions & Conclusion9. Annexure 9710. Bibliography 9711. Questionnaire 98 M.P.Birla Institute of Management 6
  7. 7. Executive SummaryAs the organizations mature, HR practices also mature. The HR function is at threedifferent states in its evolution cycle where it starts as a Business Function, becomes aBusiness 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 progressivelymore strategic in nature. At higher levels of maturity, the HR function can addtremendous value to the leadership potential, top-line, bottom line and long-termsustainability of the organization.At each stage the attributes & value add by the Human Resources function change andthe tools required vary significantly. M.P.Birla Institute of Management 7
  8. 8. HR as a Business FunctionAt the very least, when an HR function is available in an organization, it isresponsible for managing employee data, takes care of payroll, time and attendanceand the setting of company policies.The role is largely that of Personnel Administration focused on Compliance bothinternal & external, and on Management of employee records.The tools that the HR requires are related to management of employee data andinclude a rudimentary HRIS, Payroll processing software, Time and Attendancesystems (could include time-card readers, swipe systems and associated devices). Ihave found that in many cases organizations even use spreadsheets and shareddirectories to manage their employee data, policy documents and employee leaveapplications, contracts etc. In most cases, paper based employee files are the onlysource of employee data which are managed by the Personnel Administrationdepartment of the organization.HR as a Business PartnerAs a Business Partner, the role of HR is to meet the “existing business needs” of theorganization so that the organization could grow at a measurable rate.At this stage of evolution, the focus of the HR shifts to competency basedRecruitment, Total Compensation, Employee Development, Communication andOrganization Design.The HR function helps in formalizing the organization structure (who does what andreports to whom). Once that is complete, the next role is that of identifying the skillsnecessary for different job roles. HR further helps in defining appropriate trainingprograms that are necessary for developing these skills, recruitment techniques toevaluate the skill levels and benchmarking the skill database against industrystandards and competitors.Total compensation (payroll and benefits) also becomes a focus area where the HRhelps the organization attract and retain skilled employees by becoming a leader in M.P.Birla Institute of Management 8
  9. 9. compensation management.Using the skill database and the organization structure, the HR function iterativelyevolves compensation practices, improves the training function and makes therecruitment function more attuned to the skills needed by the organization.To facilitate the above functionality, HR uses tools such as Applicant Tracking softwaresfor recruitment, Employee Portals for communication, Self Services for employeesempowerment, Learning Management Systems for training & development and anEmployee Database for capturing employee skills & competency profiles. Organizationseven have well defined Job Descriptions with details of qualifications, experience, specialskills 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 automationand are using tools either built internally or procured from vendors. Anothercharacteristic of organizations at this level of maturity is the break-up of the HR functioninto sub-functions such as Training , Personnel Administration, Recruitment andCompensation & Benefits, each being partly dependent on the other.HR as a Strategic PartnerOrganizations that view their HR as a strategic business partner believe in full maturity oftheir HR function. Such organizations are focused on attaining leadership positions ratherthan an year-on-year growth. Bottom-line and top-line growth are expected to beachieved automatically.At this level, HR becomes responsible for identifying core competencies necessary fortheir 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
  10. 10. • 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 routinepractice at their work place. An integrated view of employee’s life cycle in theorganization is visible through appropriate dashboards which are available to the decisionmakers at all levels in the organization.HUMAN CAPITAL IS EVERY ORGANIZATION’S essential DNA. And the root of allsuch DNA is the enterprise’s hiring process, which needs to be nourished rather thanstifled. Why, then, do many organizations delegate the hiring process to an overburdenedand/or understaffed Human Resources Department and to hiring managers who have onlyenough time to be concerned with their own immediate needs? When that happens, activeand passive job candidates are treated more like non-entities, or even intruders, than thecustomers that they, in fact, are. Inevitably, the enterprise suffers serious leaks throughoutits organizational ship. These losses have both tangible and intangible value that can bemeasured in the form of employee attrition, lost productivity, lost opportunity, stuntedgrowth, possible litigation, and excessive third party costs. Eventually, the inability toobtain and retain top quality talent threatens the very survival of the enterprise. Thisreality 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 toomany jobs for the number of qualified people available in the workforce. Industry M.P.Birla Institute of Management 10
  11. 11. responded to this imbalance in very positive ways by making talent acquisition and thehiring process performance a priority, and provided the functions with an appropriatebudget to get the job done. This era came to an end in the form of a steep recession thatbegan in 2001, when management’s primary focus turned to cost cutting. As a result, amovement stressing layoffs and budget cuts replaced the focus on talent acquisition. Butthe 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 theforces, expertise, positioning, tools, technologies and/or budgets to properly launch aneffective and timely offensive attack.Recent surveys of Chief Executive Officers confirm the highest level of concern aroundrecruiting and retaining talent since the year 2000. They also show that CEOs areembracing the concept of outsourcing. Taking these facts into consideration is whatinterested me to do a project in RECRUITMENT PROCESS OUTSOURCING (RPO).The study concludes that the companies prefer outsourcing their HR duties to the RPOwhich they select depending on certain criteria. And the main reason for selecting RPOwould be to improve the service quality and to have an effective time managementsystem 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 robustvalue proposition that goes well beyond economic/cost savings benefits. Serviceproviders 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 andsignificantly increase the ROI for buyers. The firms now shaping the RPO marketrecognize that you need to win the war for talent on two fronts – acquisition andretention. This new breed of service provider is moving towards a true “end to end” M.P.Birla Institute of Management 11
  12. 12. definition of talent acquisition: from outsourcing simple recruiting, to the talentacquisition and management value chain. It starts at the opening of the requisition andextends through initial on boarding, orientation, and training. This end-to-end process isdesigned to deliver maximum value, making a huge difference in lowering costs andimproving business performance.3. The pricing equation is changing. Sophisticated buyers are moving away from per hirefees. They have become smart enough NOT to look just for labor arbitrage or costsavings driven by outsourcing alone. They are moving towards a BPO pricing model withperformance guarantees and performance pricing. They recognize that businesstransformation and performance improvements result in competitive advantage andenduring value.4. It’s all about the process in this changing market. Buyers are looking for newmethodologies. Buyers are increasingly looking to RPO firms that can bring world-classprocesses and change management tools to their organization. The RPO market is beingredefined and extended for the first time with R2R; a well defined structured process thatgoes through the value chain from regulation to results covering 1100 steps. The RPO’sthat understand “business” – marketing, branding, process, supply chain, metrics, etc –will be the ones that thrive.5. The supply chain is growing in importance. In a world where competitive advantagedoesn’t last long, knowledge and innovation – the purview of our people – make thedifference. Almost no one today is thinking of labor based supply chains…the models M.P.Birla Institute of Management 12
  13. 13. simply do not exist. RPO providers with supply chain management expertise will be thebig winners here as they help organizations plan and deploy their total workforce.6. Offshore is adding value to RPO. RPO contracts will begin to contain an offshorecomponent, taking advantage of the time difference and labor arbitrage. RPO’s need tohave refined standardized processes, extraordinary training, quality control mechanismsand global management and technology capabilities to support client’s global needs andextended value chains.7. Corporate culture match is driving solutions. Cost is not the only measurement,corporate culture match will become a legitimate buying point in outsourcing contracts.Buyers are looking for true partners. They want outsourcers to act as part of theirorganization; understand their culture and develop service level agreements that arebalanced in a way that holds buyers and providers accountable for the robustness of thepartnership and the results. Those relationships with the best culture match will have thebest channels of communication, and those with the best communication will be the bestperforming.8. Solutions must include risk reduction. RPO providers must be true experts at processexcellence and internal controls to help their clients manage and reduce risk today. Withintense industry scrutiny, an unforgiving regulatory environment, Some companies andindividuals worry they will “lose control” if they outsource. However, in a properlyconceived and executed outsourced environment, they will have clearer processes andbetter performance metrics than they have ever had.9. CRM is driving talent acquisition. With CRM (customer relationship management)systems allowing one-to-one customer interactions, expect these innovations to translate M.P.Birla Institute of Management 13
  14. 14. to “talent” or “candidate” relationship management. Candidates will not “come runningto you” anymore; their resumes will no longer remain static in your database. You willhave to go to them. RPO’s that are “eBusiness” experts will master the most sophisticated“B to C” technology to win the war for talent. These RPO’s will have significantcompetency in branding and consumer marketing and provide effective results that willhelp their clients win in the marketplace for talent.10. The RPO buyer is shifting to the HR Leader who is seeking industry specificsolutions. Involving RPO is central to winning the war for talent. The evaluation andselection process is so important that the HR Leader has become a key decision makerand is frequently seeking RPO service providers who have the deep industry domainexpertise to support firm wide transformation initiatives. M.P.Birla Institute of Management 14
  15. 15. INTRODUCTIONBefore we try to know the meaning of recruitment process outsourcing, let’s understandhow this recruitment process works.The Recruitment ProcessEverything you need to know about finding the right people.In the earliest stages of an intervention, recruitment decisions often get made on the basisof who is standing in the right place at the right time with the right look on his/her face.As the situation matures, we have to think more carefully about picking the right peoplefor longer-term roles including middle and senior management. The integrity of therecruitment and selection process helps to ensure sustainability by building a strong andbalanced team, demonstrating the organization’s neutrality, promoting its good name andserving as an example for partners. You may find that one of the first roles you need tofulfill is a HR administrator to help achieve these goals.Defining the requirementRequirement is the opening or the vacancy existing in an organization. This need to befilled in. Organizations may adapt different kinds of recruitment processes dependingupon the requirement. If the requirement is for a position which involves a short termduration or of certain period, then the company can go for contract based employeeswhich reduce the cost for the company. Or if the requirement is for any kind of work orprocess which involves a regular and same process then the company can think of findinga substitute which could be of better advantage than having a human being for theposition. M.P.Birla Institute of Management 15
  16. 16. Deciding the existing vacancy .To fill a new role quickly the following would be helpfulto adapt one of the models here:Task analysis: draw up a detailed list of tasks that the person will have to do. This helpsin determining the qualities and qualifications genuinely required for the job.Job description: produce an outline of the broad responsibilities (rather than detailedtasks) involved in the job.Person specification: decide what skills, experience, qualifications and attributessomeone will need to do the job as defined in the task analysis and job description.Attracting applicationsYour file of previous applicants can be a good place to start.Advertising: Phrase your announcement in a way that makes clear what the job involvesand the type of person you need. Avoid any stipulations, which could be seen asdiscriminatory e.g. applying an age restriction, which is not necessary. You can display anotice internally and/or at your gate, in the local newspaper or with a message on thelocal radio station..Application Form: A well-designed form can elicit information about the personsability and willingness to do the job. Do not ask for irrelevant information. Make it clearon the form that applicants should consider the points in the job description and persondescription when applying. Allow enough space on the form for applicants answers, andindicate whether continuation sheets can be used. State clearly on the form the closingdate for applications. For senior positions a supporting letter or CV may also be required;if this is the case indicate the kind of information sought. M.P.Birla Institute of Management 16
  17. 17. Background information: provide applicants with clear, up-to-date and accurateinformation about the organization, its work, its priorities and the job. Clearly indicate theclosing date for applications and the short listing and interview dates.SelectionSelect your candidate. Be objective and unbiased. Choose the person who best fits yourperson specification.Short listing: Assess applications on the basis of the person specification (standard formscan be very helpful at this stage). Guard against bias and discrimination - ensure that youselect for interview those who match the specifications, regardless of age, sex, race etc,and that the specifications are not themselves discriminatory.Interviews: Interview your short-listed candidates. Remember that your job is not only toassess the best candidate for the job, but also to create a great impression of yourorganization. Follow the WASP format as an interview structure: 1. Welcome the candidate and make him/her feel at ease. 2. Acquire information about the candidate. Do these before you tell him/her about the job - youre less likely to get what he/she thinks you want to hear this way! 3. Supply information about the organization and the job. 4. Part, having agreed what steps are to be followed next.The amount and quality of the information that you establish will be largely due to M.P.Birla Institute of Management 17
  18. 18. the effectiveness of your questions. Use open questions (e.g. tell me about...howyou...why did me and probe from the general to the specific.Avoid any questions which could be considered discriminatory e.g. asking only femalecandidates who look after their young children. If you think such a question is relevant -ask it of all candidates who have children.Candidate assessments: The interview will provide you with some information butcheck it out before offering a job. Ways in which you could do this include: 1. Ask the candidate to show you examples of previous work, do a presentation, a case study, some tests or a full assessment. Tests can be done before the interview (either at home, or immediately beforehand) or after the interview. 2. Some agencies, faced with large numbers of candidates with dubious qualifications and no prior experience, have run large-scale tests as part of the short listing process. Inviting 100 candidates to sit a short exam is one way to publicly demonstrate equal treatment and selection for interview on the basis of merit alone. 3. Taking up references. You must have the specific permission of the applicant to do so, particularly if you wish to contact their current employer. If you need them quickly, try phoning. 4. Get others to see your preferred candidate/s. This could be done informally e.g. someone could show them around, or talk to them about their job, or more formally at another interview. M.P.Birla Institute of Management 18
  19. 19. Making a Job OfferFor your successful candidate: 1. Prepare and send the appropriate documentation; 2. Make up the employees personnel file; and 3. Arrange the induction plan.InductionHelp your new recruit to settle in quickly and become productive as soon as possible.Legal ConsiderationsAll documentation should be in an official language of the country in which you areoperating. It is important to consult a local lawyer to ensure that your contracts arecompliant with all applicable laws. Some international NGOs are also introducingpolicies to ensure that national staff conditions of employment closely match standards inthe country where the NGO headquarters is based.Best Practice TipsIf any employee quits from a company the next step of the organization to think about thereplacement of the position. But the best option could be to restructure, redistribute orautomate tasks instead of replacing the position. Should consider giving opportunities tothe current team members of the organization for the vacancy. The existing team may justrequire training, but this could be a better option all round than bringing in someone newto do the job. M.P.Birla Institute of Management 19
  20. 20. The applicants should be given with a balanced and accurate picture. Should point out theterrific things about the job and its less attractive features. Creating a realistic expectationwill help organizations to retain their employees.At interview, candidate should be made comfortable and relaxed then the candidate atease will tell the interviewer more. Should make notes during or immediately after aninterview - to help and ensure that the decision is unbiased. “Halo” effect should beavoided - creating an impression by the look of the candidate and find reasons why theyare suitable - or the horns effect, which is the opposite. It can help to compare andcontrast candidates when asked with a lot of the same questions at interview.Considerpaying travel expenses. Ask some practical questions towards the end of the Acquirestage of the interview:Some methods of recruitment are:Internal Recruitment: existing employees and volunteers are given an opportunity toapply for a new job openingConsiderations: • Rewards the employee/volunteer for past performance • Gives the employee/volunteer an opportunity for career development • Retains the organizations investment in the employee/volunteer • Reduces the amount of time necessary to orient the person to the new position • Reduces the costs of recruitment • Provides a limited number of people to select from • Reduces the opportunity for increasing diversity within your organizationEmployee Referrals: Employees are asked to recommend a person for the job opening M.P.Birla Institute of Management 20
  21. 21. Considerations: • The quality of employee referrals is usually high. Employees usually only refer people that they are confident would be a good match for the position and organization. • People tend to recommend others with similar backgrounds. Therefore it is important to ensure that the practice of employee referrals does not lead to a decrease in diversity within your organization. • People recruited by your staff usually have some understanding of the work of the organization. • There can be a tendency to feel that you must hire someone who is referred by an employee even if your assessment is that the person is not the best match.Print Advertisements: the job is posted in a newspaper or professional journalConsiderations: • You can reach a large audience in a specific area • The content of the advertisement will impact on the number of applicants; if the ad is general you will most likely receive more applications. • If the ad is general, you may receive a significant number of applications from unqualified candidates. M.P.Birla Institute of Management 21
  22. 22. Internet Recruiting: the job is posted on an Internet job site such as charityvillage.comor • Internet recruiting is cost effective • One study has shown that 96% of people looking for jobs use the internet • Internet job postings as available to potential candidates 24 hours a day • You can minimize the number of unqualified candidates by directing people to more information on your organizations website • The number of applications may be overwhelmingInternships/Field Placements: students who come to your organization as part of theireducation are recruited after graduationConsiderations: • You will have a good understanding of the fit between the person and the organization, as well as their abilities • The former student will have good knowledge of your organization and require less time to become productive • Often first jobs are seen as stepping stone and people move on to new challenges after a relatively short period of time M.P.Birla Institute of Management 22
  23. 23. Executive Search Firms: A private company that specialized in recruitment is hired tofind suitable candidates.Considerations: • This is a very expensive method of recruitment • Hiring professional recruiter does not guarantee a positive result • The firm will do most of the preparation for the posting and the preliminary screening • May be an appropriate recruitment method for the most senior positions.Unsolicited Resumes: individual’s interest in working for your organization send inresumesConsiderations: • The percentage of resumes with skills appropriate for your organization may be small. • How you treat unsolicited resumes may have an impact on the image of your organization. It is best to respond with courteous and frank information about whether or not the application will be kept for future reference. M.P.Birla Institute of Management 23
  24. 24. Initiate the Recruitment ProcessYour job announcement should include: • A brief description of your organization, its mission or purpose • The title and a description of the position • Duties and responsibilities • Qualifications • The supervising authority • Mention the salary and benefits attached to the position. Specify the starting salary or salary range, or say the salary depends on experience. • The application deadline • Start date • Request for references • Indicate the format in which you would like to receive the informationGive a contact name and addressA look into RPODefining an RPO:RPO is the complete ‘process’ outsourcing of recruitment. The RPO vendor isaccountable for transforming the client’s processes and is responsible for all areas —tactical and strategic.High attrition rates may be a blot on the great Indian BPO success story, but this problemhas helped spin off a niche industry Recruitment Process Outsourcing RPO which isexpected to grow by a billion dollar this fiscal to about US Dollar3.5 billion. The industryis set for rapid growth with a large number of companies in India and from abroadseeking to outsource their hiring related jobs to third party vendors here in order to save M.P.Birla Institute of Management 24
  25. 25. costs as well as time India has been a hub of global outsourcing activities and RPO is thesunrise segment in this sector, hiring industry umbrella body Executive RecruitersAssociations Executive Director B R Muralidharan said. In India, RPO is already a USDollar 2.5 billion market and is expected to grow at a rate of 30 to 40 per cent during thisfinancial year, he said.This new buzzword is already enjoying taste of success with a number of corporate giantsadopting the RPO model for their hiring needs inside and outside India. The hiring needsof British mobile major Vodafone is taken care of by RPO provider Alexander MannSolutions, which also handled accounts of clients like Credit Suisse, HP, Prudential andCap Gemini.Closer home in India, the BPO arm of the country’s third largest IT firm Wipro hasoutsourced its recruitment process to MeritTrac and aims to reduce its hiring costs by 15to 20 per cent by this move. “Right hiring is the first and most important step towardreducing attrition, with our objective being for a handsfree recruiting process”, WiproBPO CEO T K Kurien said.Kanika Vaswani, Associate Partner at citybased RPO service provider Elixir WebSolutions said, RPOs have been accepted in the mature markets. This allows an HRmanager to focus on other core functions. Elixir started its RPO business about six yearsback, catering mostly to the IT clients. However, the market has expanded considerablyand now its clients come from across the sectors, Ms Vaswani said.We are now hiring in hundreds for many Fortune 1000 companies across sectors and 80per cent of all the hirings we are doing are for US based companies and the remaining 20per cent are for companies from Europe, Australia and Canada, she added.Another Indian RPO service provider Blue Square Consultancy Services CEO MadhuKhanna said “India has managed to get leverage in the business with its rich outsourcingexperience. The future of RPO sector is bright with a chunk of the US workforce retiringin the next 5 to 10 years.” M.P.Birla Institute of Management 25
  26. 26. Hiring processAt present, the US based recruiting and staffing agencies outsource their backendoperations to India on a revenue sharing basis and will continue to do so, but thedifference would be seen with a large number of vacancies coming on board.Besides saving costs and reducing cycle time, RPOs also help companies improve qualityof hiring, industry players believe. While companies had reservations initially aboutoutsourcing their recruitment process, rising attrition rates and expanding sphere ofoverall HR functions have made them accept and welcome borrowed hands to handle thehiring process.All that a firm seeking to outsource its hiring functions needs to do is to provide an RPOwith the details of job openings and the salary range in the offering.From here the RPO takes over, advertising for the position, screening resumes, shortlisting candidates and finally going to the employers with the right professionals. Theopenings can range from a fresher to a very senior employee of a company.Outsourcing service providers are now increasing in number to become niche firmsfocused on HR outsourcing business. Recruitment process outsourcing has also come as anew lease of life for smaller companies with a workforce of around 100 to 150 people,who may not have a HR department.How an RPO vendor is different from other recruitment partners (non-RPO vendormodel)?The difference is actually that between the sky and earth. A recruitment partner is usuallyone of many resume sourcers (contingency hiring organisations) and in some cases mayalso supply contract recruiters to the client. The recruitment partner usually works inconjunction with the client’s existing recruitment teams and other sourcing vendors. Mostoften, the planning, processing and almost all the strategic areas of recruitment are M.P.Birla Institute of Management 26
  27. 27. retained by the client-side recruiter team. In this model, accountability is not passed onfully to the recruitment partner and the commercial model followed will at best be a fixedretainer fee that may or may not have a variable bonus component.RPO is the complete ‘process’ outsourcing of recruitment. This means that the RPOvendor holds complete accountability for transforming the client’s processes and isultimately responsible for all areas — tactical and strategic. The commercial model is afull-risk switchover to outcomes/value-based pricing, a clear departure from thetraditional no-risk retainer fee model.Measuring the effectiveness of the RPO vendorAs defined ,RPO would be relevant to an organisation only if it links its payments tovalue created and/or outcomes achieved. The challenge was to quantify thevalue/outcomes in detail so both parties were satisfied that they were getting a fair deal.At MindTree, it was relatively easy to get here as we had begun measuring therecruitment effectiveness internally before we implemented the RPO model. We haveidentified eight critical-to-quality (CTQ) items that we will monitor in the RPOengagement, namely, the fulfillment index, source mix, no-shows, offer to joiningconversion rate, turnaround time, screening to interview selects, cost per hire and effortper hire.RPO helps in reducing the cost per hire, effort per hire and the overall candidate-job fitSince the RPO vendor takes responsibility for the entire recruitment team and itsactivities, the recruitment team’s direct (salary) costs are first transferred to them. Apartfrom this, there are at least six different cost items such as sign-on bonus, employeereferral payouts, walk-in events, travel and logistics costs, etc, that are transferred to theRPO vendor.Besides the cost-transfers, the RPO team structure ensures optimal usage of resources andthere are incentives to increase productivity and minimize effort-loss. Since the RPO is M.P.Birla Institute of Management 27
  28. 28. accountable for the entire process, there is an incentive to continually innovate andrealize process improvements rather than being content playing the paper-pushers.The RPO vendor handles all hiring requisitions and passes them on to a preferredsourcing vendor. This ensures that there is a deep discount on the industry average of8.33 per cent consultant payout on each joinee, ensuring that the cost per hire issignificantly lower than before.Candidate-job fit which is the ultimate deliverable is the most difficult to achieve asrequisitions from our internal customers are not as clear and unambiguous as we wantthem to be.RPO - JIT (just-in-time) hiring systemRPO enables JIT hiring. The average processing time from receiving a resume to rollingout an offer is 5.6 days. This period includes tasks such as screening, arranging theinterview logistics, taking the candidate through three levels of interviews and rolling outthe offer letter. So, technically, clients have their candidate ready to join us in a week’stime. But the JIT does not work this way as the candidates have to serve their noticeperiods with their previous employers; this is usually 45-60 days.Drawbacks/risks associated with the RPO modelWhile there are many upsides to RPO, like everything else, it also has its share of risks.Some indicative risks are: If the RPO vendor is a wrong choice it translates into a serioussingle point of failure; the RPO vendor in theory should have high process awareness andmaturity to enter the corporate as a change agent. As it stands, there is a lack of this keyability. Like in the IT offshoring business, many first-time outsourcing organisationsthink that they don’t need to stay engaged once the process is outsourced. The client mustwatch for complacency, especially when the RPO vendor gets into the annuity businessframe-of-mind. Then, getting profiles of passive job-seekers is an issue. Besides, there’s M.P.Birla Institute of Management 28
  29. 29. the issue of inadequate training: Since the team is predominantly on-site, RPO vendorsmight not invest in their team’s training.Expanded ServicesUndoubtedly, customization will be the key to a successful RPO relationship.Considering each client’s needs, core competencies, infrastructure, and IT platform, theprovider must tailor its services even as it standardizes practices and processes.In addition to expanded offerings, buyers also want flexibility such as being able to buyservices as a package or a la carte. Some vendors report that a growing number of clientswant the flexibility to change their RPO deals if their market has changed. For instance,having an international reach is especially important to buyers today.Ladd Richland, the CEO of Torrance, CA-based CRI, said overseas hires are on the risebecause many corporations are shifting production to lower-cost locations, forcing themto seek recruitment help in markets such as China, India, and elsewhere in Asia. “Rightnow we’re seeing a large trend toward international help,” he pointed out, adding thatdemand has spilled over from technical positions to non-technical jobs such as data entry,copy writing, and research.With demand for international hires on the rise, the RPO market is evolving to meetshifting needs. Sourcing has emerged as the most important function for overseas marketsbecause clients simply lack the network that some outsourcers have built.“Most RPOs today have to have the ability to globally source,” said Ranjan Sinha,chairman of Summit HR Worldwide, an international RPO based in San Jose, CA withoffices in India. “More and more companies are looking at recruiting across a globalfootprint.”Sinha noted that global RPOs have become particularly attractive to buyers who need tofill positions in numerous markets. Because most international companies have staffing M.P.Birla Institute of Management 29
  30. 30. needs distributed across a number of countries, they require the provider to source andrecruit in just about every corner of the globe.Of course this can be particularly thorny because these needs are never uniform frommarket to market; instead, the provider must be capable of recruiting, for example, 200positions in the U.S., 20 in France, and two in Poland. This is the exact reason why manybuyers are turning to external providers instead of tackling the problem on their own.As more HR professionals consider the outsourcing question, they will undoubtedly haveto make a case for or against it. There are many benefits to be gained, but at the sametime, numerous pitfalls exist if they fail to clearly think through about which functionsare needed internally and which are best left to third parties. There will always be “sacredcow” senior positions filled only by internal hiring managers, but recruiting for thehighest-volume jobs can be made more efficiently through an outsourcer—freeing upmore resources in HR for strategic functions.So by shifting non-core recruitment functions to those who can leverage better processesin a wider-reaching network manned by seasoned recruiters, the HR department mayindeed achieve its strategy goal. And along the way, it may also save a wad of cash at thesame time.1. Build a Solid Case for Change.Adopting RPO in any organization is not a small task, should convince the seniormanagement of the value of outsourcing. To build a case for it, know the costs and cycletimes are under the existing internal infrastructure in the company and compare this withexpected performance and costs when employing a third party. Many HR departmentsusually either underestimate or have no good data of their internal performance so this M.P.Birla Institute of Management 30
  31. 31. nee to be understood well which gives the scope of a third party requirement for thecompany.“It’s important to go through to gather some information, such as a survey ofconstituency groups. It doesn’t have to take a long time or be a bureaucratic process,”said Marks. “You should ask ‘where are we today, and where do we need to be in ourbusiness plan?’”By checking with all stakeholders, gathering data, and setting sights on goals, HRprofessionals can make a compelling case of RPO.In some cases, the support of the chief operating officer or the CEO may be needed toensure executive buy-in. Also, internal champions of outsourcing must take a long-termview of the strategy.2. Ensure a Culture Match.Perhaps the most difficult to achieve, finding a provider with similar philosophies andpractices can help avoid many unpleasant conflicts later on. Without that match, theparties have to resort to numerous rules to define their relationship.Some indicators buyers should look for are if both sides agree on similar approaches forachieving common goals, whether they share similar priorities, and if management fromboth sides is on the same page on how best to implement the outsourcing strategy. Oftentimes, clarity of missions exists.Flexibility also plays a role in culture match. “When the client needs change and therequirements are not addressed, you need to make change for it,”Also, RPOs should be technology “agnostic,” he pointed out. Being able to work with anumber of platforms brings flexibility to the process as well.3. Build Strong Governance.One of the biggest problems with HRO today is the disparity between client expectationsand provider delivery. RPO’S are important tools for ensuring satisfactory delivery of M.P.Birla Institute of Management 31
  32. 32. services, but the parties must have strong governance mechanisms in place to oversee thatdelivery.Dedicated teams from both the buyer and the provider companies are needed to overseethat the contract is carried out to the better. These teams can comprise of as few as fourmembers and as many as 15, said Terry Terhark, president of the The Right Thing, anRPO provider. The larger the teams, he said, the less risk is involved.Buyers need to recognize that good governance also provides flexibility in the on-boarding period. A rigid approach that discounts the expertise of the provider couldcurtail continuous improvement efforts,. “Buyers have to be open to the knowledge,expertise, and experience of who they use as a provider,” adding that in the first 90 to 180days, there will be challenges to the relationship. “When you hit rough spots, you aregoing to listen more and work your way through.”4. Establish Regular and Solid Communication Channels.The analogy of outsourcing relationships are like marriages may be overused, but it stillhas merit. The client and provider must remain in constant contact to keep both sidesapprised of changes in needs and capabilities, More importantly, ongoing dialog helps theparties avoid an expectation gap.“It is not unusual to set up an SLA [service-level agreement], and six months into it theprovider hits every metric, but the client may still not be happy,” “The way to avoid thisis by having very strong communication on both levels. It’s a marriage, and you have tomake it work.”Ensuring robust communications between the two sides is especially important in theearly stages of the relationship, Clark added. “During the program design, you can’t over-analyze, you can’t over-plan and you can’t over-communicate,”5. Don’t Underestimate Change Management.Once the negotiations are completed and the ink on contract has dried, the hard workbegins. Outsourcing can be culturally jolting to any organization, so it’s important forbuyers to take extra care in the change-management process. Don’t underestimate how M.P.Birla Institute of Management 32
  33. 33. much hand-holding both sides will need. “I think it’s impossible to over-communicateand impossible to over-estimate the attention needed to communications and changemanagement. Without that [attention], customers can tend to do things the old way,” saidMarks.Part of that effort includes customizing RPO programs so employees will be moreaccepting of the outsourcing program, said Steve Lindner, CEO of The WorkplaceGroup. “One of the things we think is really important is to have a change-managementstrategy in place. Things are going to change. People need to adapt,” he said, pointing outthat the company evaluates the client’s structure knowledge and conducts skillsassessments as part of that process.An effective change management strategy will also help bolster internal support for theoutsourcing deal. Educating employees about what to expect minimizes surprises and,hopefully, discontent.6. RPOs Come in Different Flavors.Choose wisely. Outsourcing is certainly a way to save money and reduce cycle times, butthis is only possible when choosing the right partner. Unfortunately for buyers these days,the RPO space is chock full of wannabes who might be good recruiters but lousy processoutsourcers. As a result, it can be difficult to separate the wheat from the chaff.Also, some providers are very competent in their core competencies but miserable whenasked to move beyond their comfort zone. For instance, if the RPO provider can onlyrecruit in the U.S. or North America, it might not make much sense to engage it in fillingpositions in South America or Europe.Ranjan Sinha, chairman of Summit HR Worldwide, said a defining characteristic of anRPO company is that it “takes a strategic plan and translates it into a meaningful plan forgovernance. That’s what I see as the fundamental difference between an RPO approachand a non-RPO approach. Without this, you have an unstructured group that doesrecruiting.”Often, true RPO providers have their employees working from the client’s site. “Ourhiring managers don’t even know they are [from] an RPO,” Tom Valerius, VP of M.P.Birla Institute of Management 33
  34. 34. recruitment services at UnitedHealthcare, said of vendors based at his company’sfacilities.7. Get Comfortable with Metrics.How do you realize the true benefits of outsourcing? The only way HR departments canreap them is to measure before and after results, and there are many metrics to consider.What’s the time to fill for exempt and non-exempt positions? How many resumes mustbe processed before a hiring manager is involved in the final interview? What is the costper hire? These might seem simple metrics to measure, but often the true costs are hiddenbecause not all components are identified. Moreover, the HR department may be soshort-handed that there just isn’t time to compile the data.Even more challenging are soft metrics—indicators of not only how quickly or howcostly it is to hire, but also the quality of the employees. According to Jill Zoromski ofthe Capital H Group, both the provider and buyer communities have failed tocomprehensively measure and analyze important metrics. “It’s easy to measure cost-per-hire and time to fill. That can be really misleading,” she said. “Framework of RPOAgility, scalability and adding real value are critical for successful organizations intoday’s fiercely competitive environment. For thriving businesses, outsourcing hasbecome one of the essential ingredients in their strategy, allowing them to maximize theirreturn on investments, while setting the pace in their market sectors. ‘Recruitmentprocess outsourcing’ (RPO) has become an integral part of the outsourcing mix. But M.P.Birla Institute of Management 34
  35. 35. having made the most of the innovations and cost cutting opportunities this offered,companies need a fresh approach to meeting their future recruitment challenges.‘Resource Transformation Outsourcing’ (RPO) offers companies the strategic vision tocreate agile organizations with both regional and global scalability, and an effective RPOsolution will offer a clear and focused strategy, as well as maximising returns on labourinvestments across the organization.As the Western economies slow and organisations increasingly focus on their globaloperations, the relationship between supplier and customer will need to be more intimate,with closely coupled alliances operating as a basis for innovative commercial success.This will be especially true in ensuring that organisations capture and retain the skills tocompete effectively in their global markets.In terms of recruitment, RPO business partnerships will work like joint ventures, and betruly strategic alliances. They will have to deliver dynamic resource managementsolutions through highly integrated systems and processes, balance internal and externalresources for cost and skill optimization, and build co-dependant business relationshipsfor joint commercial ventures, sharing both the risks and rewards.The evolution of Recruitment Process OutsourcingThe origins of RPO were in the ‘preferred supplier list’ (PSL) that companies created inthe 1970s. These required suppliers to provide margin reductions in return for a largerslice of the organization’s business, and worked well in the economic context of the day.For many HR departments the PSL was their first foray into outsourcing. However at thetime most recruitment companies were unable to cover multiple professional and non-professional skills and geographic locations, so HR departments still had to maintainlarge supplier databases and continue to recruit themselves.Then the boom times of the 1980s and early 1990s saw a more flexible labour market andderegulated business environment, which encouraged a mix of permanent and contractemployment. The use of relational databases and the Internet enabled recruitment M.P.Birla Institute of Management 35
  36. 36. companies to expand the scope of skills they covered, and grow their services to otherregions within the UK.Tactical outsourcingOrganisations embraced outsourcing as a tactical tool to reduce costs and fix internalservice delivery problems. HR became one of the early outsourcing success stories,particularly in payroll and pension processing, and was considered both innovative andhugely effective at fulfilling its original function, whilst ensuring operating costs werereduced.Many companies consolidated their recruitment suppliers and developed managed servicecontracts for permanent and contract staff. Generally these contracts tended to be vendorneutral, whereby two suppliers - one each for permanent and contract - would managemultiple other suppliers under a master contract with agreed service levels and margins.However back then, the contracts were often transactional in nature, very commodityorientated and re-negotiated annually. The relationships between client and suppliertended to mirror the contract, with little value being added beyond the filtering andsupplying of candidate CVs.Strategic outsourcingThe late 1990s threw a few shocks into labour markets worldwide, from which manybusinesses never recovered. The IT downturn forced many companies and individualsinto bankruptcy and markets saw the emergence of the global labour movement with offshoring of services to Asia, South America and Eastern Europe. To survive the economicdownturn organizational strategy became increasingly obsessed with cost-reduction.Within lean service markets, companies found desperate suppliers prepared to offerpreviously unheard of margins and prices in order to remain in business. Many M.P.Birla Institute of Management 36
  37. 37. unfortunately did not sustain these margins and quickly closed down leaving clients andcontractors financially exposed, and at best, at a major competitive disadvantage.Costs and the security of long-term strategic partnerships became paramount in thisdifficult economic environment. It saw the influential expansion of the procurementfunction within companies leading to larger and more complex service contracts. Theseaimed to drive down costs through economies of scale, and offset or shared commercialrisks, and cut the number of suppliers an organization needed to manage.Value added RPOAs a result, RPO agreements emerged focusing on a supplier’s cross-border managementand delivery capabilities, and value-added services such as consolidated reporting,continuous improvement and transition management.As the complexity of the deals increased so also did the level of capital investmentrequired to develop and provide services. Contracts were often for three years to enableorganizations to achieve the planned business benefits and for suppliers to recover theirinvestment. Although not as punitive as earlier ones, these contracts were still structuredon the premise of a client/vendor relationship offering little strategic value. The principalof strategic RPO in a cost effective, long-term alliance or partnership was still some wayoff. M.P.Birla Institute of Management 37
  38. 38. Overview: A total RPO process with its four pillarsRTO – the next generation RPOIn today’s highly competitive and price sensitive times the goals for RTO are clear. Morethan ever before, the objective has to be to offer organizations the ability to staystructurally agile to meet the uncertainties of the business environment, while continuingto make cost savings. Most organizations have had to apply vicious cost cutting strategiesin order to stay in business and compete in an economy that is slowing down. Wringingthe next round of cost savings from their strategic approach to resourcing is the majorchallenge for many organizations. Of course at the same time they have to ensure theycan remain responsive to market needs and flexible enough to cope with peaks andtroughs. M.P.Birla Institute of Management 38
  39. 39. Significance and need of RPORecruitment Process Outsourcing (RPO) is a form of business process outsourcing(BPO) when an employer out sources or transfers all or part of the staffing process to anexternal service provider.A true or total RPO solution involves the outsourcing of the entire recruiting function orprocess to an external service provider. This provider serves to provide the necessaryskills, tools, technologies, and activities to serve as their clients virtual "recruitingdepartment".HistoryWhile many temporary, contingency, and executive search firms have provided a form ofRPO for many decades, the concept of an employer outsourcing the entire recruitingprocess wasnt truly realized until the mid-to-late 1990s when the dot-com boom resultedin significant talent shortages. Many companies lacked the internal expertise andresources to acquire the talent needed to remain competitive.In addition, the generation arriving to the labor force in the 1990s began bringing a shiftin career pathing. Rapidly changing markets and industries now forced people to considershifting employers when beneficial to them as opposed to staying with the same companyover the course of their career. This combined with the arrival of Internet technologiesand job boards such as, Career builder, and HotJobs resulted in greaterattrition and heightened competition for talent.The concept of an employer outsourcing the management and ownership of part,or all of their recruiting process, wasnt first realized during the late 1990s. However,it is literally permeating through Corporate America like the smell of freshly bakedapple pie. It is claimed that the cause for RPO was a shortage of skilled laborcreated by the late 90’s dotcom boom coupled with the Y2K crisis. RPO wascreated to fill the gap. M.P.Birla Institute of Management 39
  40. 40. from a larger staff of recruiters focusing on individual clients rather than jumpingfrom one assignment to the next; a continuous population of a customized databases ofcandidate resumes, investment in peer to peer networks, associations and educationalaffiliations, capital investments in sourcing tools, as well as high volume buying power ofhiring and selection tools.While RPO was first coined as a term in the late 1990s, several companies now claim toprovide RPO services. HRO Today, a trade magazine specializing in human resourcesoutsourcing, credited Recruitment Enhancement Services (RES) as the inventor ofrecruitment process outsourcing. More recently, in 2004, HRO Today credited RPOprovider Hyrian with "Bringing a new acronym (RPO) to the HRO dictionary" and"Reinforcing that RPO is a rising trend".Recruitment process Outsourcing Reasons and benefits sought:RPOs promoters claim that the solution offers improvement in quality, cost, service andspeed.RPO providers claim that leveraging economies of scale enables them to offerrecruitment processes at lower cost while economies of scope allow them to operate ashigh-quality specialists. Those economies of scale and scope arise from a larger staff ofrecruiters, databases of candidate resumes, and investment in recruitment tools andnetworks.RPO solutions are also claimed to change fixed investment costs into variable costs thatvary with fluctuation in recruitment activity. Companies may pay by transaction ratherthan by staff member, thus avoiding under-utilization or forcing costly layoffs ofrecruitment staff when activity is low. M.P.Birla Institute of Management 40
  41. 41. Advantage RPO:1. Top notch Talent PoolCompetition for the most talented individuals is increasing. Organizations need to securethe best people quickly and efficiently to help them build competitive capability.2. Cost reduction and removal of workload from the HR AdministrationRPO providers take on the burden of operational recruitment activities, allowingorganizations to focus on core value-creating and strategic activities. By transformingprocesses, utilizing best practice, and replacing a fixed cost base with a variable chargingstructure, RPO can significantly reduce the cost of recruitment. In regular staffing, youinvest in salary, incentives, overheads, infrastructure cost and more. By outsourcingrecruiting functions to Recruiting Junction, all you need to pay is a fixed monthly retainerfees (which is lesser than the salary of one in-house recruiter) along with a negligiblecommission. You can reduce up to 50% of your cost by offshore outsourcing.3. Better Productivity and QualityThere are many stakeholders in a recruitment process; through improving processes andevaluating the right metrics and KPIs, RPO providers can provide highest qualityservices. By outsourcing your recruitment process to Recruiting Junction you getdedicated recruiters for each client, while in regular staffing, one recruiter handles manyclients. In regular staffing the focus is lost, as recruiters serve bigger clients better. Ourrecruiter can provide undivided attention to your all your clients – big or small. M.P.Birla Institute of Management 41
  42. 42. 4.Reduce operational risksRisks come in many forms, and the expert knowledge of an RPO specialist can helporganizations reduce the risks associated with an inability to scale their businessoperationally to meet changing demand, and the risks of non-compliance to legislativeand regulatory change .And the other four benefits which are considered from an RPO are: Streamlining of the Recruitment Process, Offering Best Practices recommendations, Developing an Employment Brand, and Using Recruitment MarketingPotential Concerns with RPOOutsourcing of company recruitment processes may fail if not implementedcorrectly and with the right mindset. An improperly implemented RPO couldreduce the effectiveness of recruitment. Additionally, the costs charged forrecruitment transactions may total more than the cost of the internal recruitmentstaff, if the internal staff is now using agencies and tools that increase theiroverhead. Additionally, an RPO solution may not work if the service provider hasinadequate recruitment processes or procedures to work with the client.RPO may not resolve difficulties that organizations have hiring staff when they areperceived negatively by potential employees. This instead requires improvedbranding and an adjustment of image.Organizations with efficient hiring processes that are viewed as employers-of choiceby potential staff may stand to gain negligible benefits from RPO. M.P.Birla Institute of Management 42
  43. 43. Getting partnerships rightHowever, like in any other area of business, outsourcing the recruitment function isunlikely to be a magic bullet, and indeed there are several pitfalls that can beencountered along the way. And given the importance of recruitment to most businesses,this is not an area that you want to get wrong.The first issue is of course the quality of your RPO partner. Since this sector startedgaining traction in the late nineties, the industry has mushroomed, with more and morevendors competing in the space. But this is still a relatively new industry, and obviouslynot all vendors are created equal. Many observers are expecting to see the industrycontinue, with merger and consolidation activity among vendors, with weaker vendorsfalling by the way side.This risk is compounded by the fact that RPO partnerships by their nature suit long-termrelationships. Ideally you want your recruitment partner to get to know your businessculture and style, in order to best match candidates to your needs. A poor organizationalfit between you and your vendor is likely to produce poor results, and chopping andchanging vendors is clearly not the path to enlightenment and better cost-per-hire ratios. M.P.Birla Institute of Management 43
  44. 44. The process of an RPO includes the following aspects:PEOPLE • Implementation Team • Relationship Management • Recruiting Teams • Sourcing Teams • Project Management • Administrative supportPROCESS • Implementation and Launch Consulting • Hiring Process Design or Reengineering • Development of selection criteria • Development of screening questions • Candidate Response Management • Online ERP Functionality • Online IMS FunctionalityTOOLS • Internet Mining and Research • Strategic Sourcing • Recruitment Marketing • Career website development & hosting • Interactive sourcing tools including: o Email Blasts o Alumni Cards o Relationship Marketing o Recruiting Event Management o College campus strategies M.P.Birla Institute of Management 44
  45. 45. o Diversity Media/Internet Strategy Planning o ReportingTECHNOLOGY • Hodes iQ • HRIS Integration • Third Party Integration (Drug, Background, Skills Testing Vendors, etc.) • Automated Online Scheduling • Temporary ATS for transition to full ATS, or short term projectsPOSITIONING • Branding Strategies Internal and External • Careers Website Redesign • Media / Employment Marketing design and deployment • Employee/Candidate Survey & Results/Solution ConsultingProblems in RPOIf a company failed to define its overall recruitment strategy and hiring objectives, thenany recruiting program may fail to meet the companys needs. This is especially true foroutsourced programs like RPO: RPO can only succeed in the context of a well-definedcorporate and staffing strategy.As with any program, a company must manage its RPO activities. A company mustprovide initial direction and continued monitoring to assure the desired results. Overall,providing guidance to external activities can present a significant management challenge.Outsourcing of company processes may fail or prove a poor organizational fit.Improperly implemented RPO could reduce the effectiveness of recruitment.The costs charged for outsourced recruitment transactions may total more than the cost ofthe internal recruitment department. M.P.Birla Institute of Management 45
  46. 46. RPO service providers may fail to provide the quality or volume of staff required by theircustomers.Placing all recruitment in the hands of a single outside provider may discourage thecompetition that would arise if multiple recruitment agencies were used.An RPO solution may not work if the companys existing recruitment processes areperforming poorly. An RPO solution may not work if the service provider has inadequaterecruitment processes or procedures to work with the client.RPO may not resolve difficulties that organizations have hiring staff when theorganization is perceived negatively by potential employees. This will instead requireimproved branding and an adjustment of image. The perception is that very few RPOscan successfully integrate their clients brand and therefore do not represent their clientsbrand as well as a retained search or internal recruiting resource may drive brandrepresentation and or marketing.Further, most RPOs perform their staffing functions and service offsite, furtherdisconnecting the clients growth & recruiting strategy from the actual workforce withinthe client company. This is important because during a period of rapid recruitmentgrowth, one of the many positive effects that a company typically enjoys is an increase inthe workforce wellness or an overall workforce positivity of sentiment of optimism thatcomes with personnel additions... this may be lessened with an offsite recruiting function.Organizations with efficient hiring process that are viewed as employers of choice bypotential staff may stand to gain negligible benefits from RPO. M.P.Birla Institute of Management 46
  47. 47. THE BAKERS DOZEN - TOP 13 RPO PROVIDERS1. KENEXAEmployees Placed Through RPO: 28,000Kenexa is a global provider of employment process outsourcing (EPO) offeringoutsourcing, employee research, and software to help companies hire and retain aproductive workforce. Kenexa manages staffing operations and recruiting campaignsfor Fortune 500 and mid-sized companies, managing some of the employment processor the entire staffing processes. Kenexa provides single-source accountability ratherthan partnering with external sub-contractors, avoiding potential issues that can arisefrom the use of multiple providers. Kenexas EPO strategy reduces operating costs,focuses on the core of the business, creates a variable cost structure, improves quality,expedites speed to market, fosters innovation, and accesses best in class expertise andtechnology.RPO Client(s): Schering Plough, StorageTek, Corning, Microsoft, TevaPharmaceuticals USAServices: Requisition Development, Sourcing, Screening, Process Management,Administration, Skills Testing, Behavioral Assessment, Applicant Tracking, EmployeeReferral Program Administration, Employment Advertising Strategy, EEO ProgramDevelopment and Reporting, On-Boarding and Ongoing Retention Programs.Most Common Metrics: Time to fill, cost per hire, diversity indices, sourceeffectiveness, employee referral, funnel ratios, compensation metrics, and workforceplanning metrics. M.P.Birla Institute of Management 47
  48. 48. 2. KELLY HRFIRSTEmployees Placed Through RPO: 15,000HRfirst, a Kelly Services company, is a recruitment process outsourcing andconsulting company that provides flexible, innovative recruitment strategies andtechnologies that improve and accelerate the hiring process, saving clients time andmoney.RPO Client(s): Large companies in a number of different industries including aninternational beverage distribution company, a Fortune 100 financial servicescompany, and a pharmaceutical giantServices: End to End Hiring Programs--appointment of a dedicated program team;design and install a customized candidate sourcing strategy; hiring process re-engineering; recruitment technology assessment and recommendations; integratedapplicant tracking and requisition approval processes; management of all candidate andhiring community communications; candidate offer management; conduct all post-offer screening activity; establishment and management of hiring program partners;and complete ongoing management of client hiring program. Customized MissionCritical Hiring Projects--augmenting the clients internal recruitment function;outsourcing of hiring for specific skill sets or geographic regions for clients (usuallyfor a specified time period involving volume hiring conditions); consulting andprogram management services; technology consulting; workforce planning consulting;assessment consulting; management of client employee referral programs;management of campus recruitment programs; management of leadership developmentprograms; and design and management of employee retention programs.Most Common Metrics: Cycle time to hire, requisition span, aging, diversity ofapplicant flow, cost per hire, effectiveness of hiring source, and client and new hiresatisfaction. M.P.Birla Institute of Management 48
  49. 49. 3. SPHERIONEmployees Placed Through RPO: 12,000Spherion is a publicly traded corporation with more than 2,150 recruiters operatingthroughout 700 locations in the United States and Canada. Their broad-basedexperience in staffing, recruiting, and workforce management is founded on an in-depth understanding of the workforce and the issues that drive performance. It is thesecore competencies that Spherion offers to clients who want to more effectively plan,acquire, and optimize talent to improve their bottom line. Spherion has the ability todeploy various RPO delivery models, ranging from low-touch engagements based onstandardized sourcing and recruiting workflows, to co-sourced and high-touch modelsconsisting of customized hiring processes, Spherion or client-specific technology, andpotential full ownership of an end-to-end hiring process. Their flexibility is furtherenhanced by the ability to work within multiple technology environments, includingBrass Ring, Peoplesoft, eRecruit, Taleo, Recruitmax, and others. Spherion has beendelivering clients BPO since 1990 and RPO solutions since 2001.RPO Client(s): Eastman Kodak, Agilent, Citrix, 180 Connect, W. W. Grainger,Capital One, CiscoServices: Solution Consulting Methodology and Business Case Development, DueDiligence and Implementation, Sourcing and Pre-recruitment Pipeline Services,Screening, Assessment Testing, Behavioral Interviews, Scheduling and InterviewAdministration, Background Investigation and Compliance Management, Offer andOn-boarding Management and Orientation Training, 24/7 Report and AnalysisPlatform, Process and Performance Management, Applicant Tracking System (ATS)Technology Integration Policy, Total Workforce Acquisition, Account Governance.Most Common Metrics: Source effectiveness; time to fill; interview to hire ratio;offer acceptance rate; time to start; diversity; pay rate analysis; usersatisfactionresponsiveness, addressing problems, documentation, slate quality,candidate experience; business relationsease of doing business, account management,account support; and cost containment and cost reduction goals. M.P.Birla Institute of Management 49
  50. 50. 4. HYRIANEmployees Placed Through RPO: 8,300Hyrian provides nationwide, end-to-end, long-term RPO programs exclusively toFortune 500 and Global 1000 companies. Hyrian covers the entire recruitment processfrom job design, requisition management, sourcing, applicant screening, backgroundchecking, and on-boarding, and even post-hire employee retention. Their programs aretransformational rather than transactional in nature, allowing companies to improve thequality of hires as well as service levels to hiring managers and candidates, whilereducing cost. Hyrians Distributed Recruiting model combines supply chain, capacityplanning, assembly line, and quality-control practices adapted from the manufacturingindustry for a scientific and proactive approach to large-scale, complex recruitment.Because Hyrians programs are all large and long-term, they are all custom-built,seamless, and branded for the client.RPO Client(s): UnitedHealth Group, American Express Financial AdvisorsServices: Strategy, Sourcing, Screening, Selection, and Start. Represent approximately30 discreet steps in the hiring process.Most Common Metrics: Overall cost (staffing efficiency ratio), cycle time(requisition approval to offer acceptance), offer-toacceptance ratio, sourceeffectiveness, hires per month, and requisition agings. Additionally, Hyrian maintainsan internal quality assurance department to measure the quality of processes. Qualityassurance staff gather satisfaction data from the end-user (hiring managers) forreporting on recruiter responsiveness, professionalism, speed, flexibility, and overallservice level. M.P.Birla Institute of Management 50
  51. 51. 5. YOH HR SOLUTIONSEmployees Placed Through RPO: 5,350Yoh HR Solutions is a unit of Yoh, a leading provider of high-impact talent andoutsourcing services in the United States with more than $415 million in total sales.Operating from more than 80 locations in North America and Europe, Yoh deliverslong- and shortterm temporary and direct placement of technology and professionalpersonnel, as well as managed staffing services, for the telecommunications, scientific,information technology, and engineering communities.RPO Client(s): General Electric (Yoh currently supports five business clustersrepresenting nine major business units in more than 200 domestic locations), AndrewJergens CompanyServices: Recruitment Strategy Design, Job Posting, Sourcing/Mining/Networking,Advertising, Recruiting, Slate Development, Interview and Travel Logistics, CandidateData (EEO-1) and ATS Administration, Visa Processing, Job Folder/CandidateDisposition, On-boarding/Orientation, HRIS On-boarding, HRIS Administration, andCo-op and Intern Program Management.Most Common Metrics: Cost per hire, cycle time to fill, and percentage of candidatediversity per slate.6. STRAIGHTSOURCEEmployees Placed Through RPO: 5,200Entrenched in recruitment process outsourcing for more than 10 years, StraightSourcebrings a tradition of success to the recruitment processfrom pre-hire to post-hire. Thecompany fortifies the HR function with increased value, reduced costs, improved hires,and more control. Their flexible service delivery model is designed to consistentlyexecute a high-quality recruitment process so that client organizations aresynchronized to meet ever-changing recruitment and hiring needs.RPO Client(s): UnitedHealth Group, Express Scripts Inc., Allstate InsuranceCompany S M.P.Birla Institute of Management 51
  52. 52. ervices: Recruitment Strategy, Job Analysis, Selection Process Design, SelectionProcess Validation, Candidate Generation, Applicant Processing/Selection, Search,Recruitment Management System (RMS), Recruitment Administration,Background/Drug Screening, EEOC/DOL/OFCCP Compliance and Reporting, WOTCTax Credit Reporting, Contingent/Temporary Labor Consulting, Metrics/Analysis.Most Common Metrics: Financial, retention, hire quality, fill rates, cycle time, hiringratios, and channel effectiveness.7. THE RIGHTTHING, INC.Employees Placed Through RPO: 4,150The RightThing, Inc. has provided end-to-end recruitment, staffing, and employmentprocess solutions and recruitment process outsourcing services in the HR marketplacefor more than 15 years. The RightThing was founded in 2003 by the original SelectiveStaffing team, which was acquired by Aon Consulting in 1988. The RightThing isfocused on assisting organizations in accomplishing their hiring goals and objectivesthrough streamlining the administration of the front end of the hiring process throughoutsourcing or providing staffing process re-design work. They work as an extensionof the clients HR team to meet hiring demands. The RightThing provides exclusivehiring services to Fortune 2000 companies for a wide-range of hiring needs. They haveworked within more than 10 industries for 200 client companies to process more than12 million candidates in North America.RPO Client(s): Cyberonics, Merck & Co., Abbott Labs, Waste Management, GE,TAP Pharmaceuticals, U.S. Steel, Sky Financial, Cardinal Health, PfizerPharmaceuticals, VelcroServices: Staffing, Process Consulting, Candidate Recruitment/Sourcing, ApplicantIntake, Screening, Testing, Interviewing, Candidate Correspondence, DataManagement/Reporting.Most Common Metrics: Candidate satisfaction, overall cycle time, hiring managersatisfaction, and interview-to-hire-ratio. M.P.Birla Institute of Management 52
  53. 53. 8. RECRUITMENT ENHANCEMENT SERVICES (RES)Employees Placed Through RPO: 4,000Headquartered in Houston, Texas, RES is the recruitment outsourcing division ofBernard HODES Group. RES was an early adopter of RPO and entered the fields ofrecruitment outsourcing and applicant management in 1983. With outstanding talent,innovative processes, powerful creativity, and state-of-the-art technology, RESproduces exceptional results for a wide variety of clients. Whether utilizing RES as acomplete recruitment services outsourcing provider, or choosing from an array ofproject options, buyers are assured of customized, quality service based on bestpractices.RPO Client(s): The Hershey Company, Comerica, Hexion Specialty Chemicals(formerly Borden Chemicals)Services: Hiring Process Re-Engineering, Staffing Technology, RecruitmentMarketing/Branding.Most Common Metrics: Quality, speed, efficiency, cost per hire, time to submit, timeto fill, fill ratio, and customer satisfaction.9. ADECCOEmployees Placed Through RPO: 4,000This global HR Services company is active in temporary and permanent staffing,outplacement, career services, and HR outsourcing. The Adecco Group operates frommore than 6,000 offices in 70 countries and territories, servicing hundreds of thousandsof clients and around 4 million temporary associates each year. In 2004, Adeccogenerated revenues of 17.2 billion euros. The Adecco group is comprised of threestaffing and career management services divisions: Adecco, Ajilon, and Lee HechtHarrison. M.P.Birla Institute of Management 53
  54. 54. RPO Client(s): General Electric, Renault, Robert Bosch, Citicorp Services: Screening, Testing, Candidate Administration, Requisitions, Hiring, Datab Database Management, Sourcing, Training, Supplier Management.Most Common Metric: Success rates, attrition rates, process efficiency, usersatisfaction, and candidate satisfaction. 10. FUTURESTEP, A KORN/FERRY INTERNATIONAL COMPANY Employees Placed Through RPO: 3,500 Futurestep provides specialized services to clients looking to outsource some or all of their HR recruitment functions worldwide. With fully integrated, single-source solutions, Futurestep leverages its proprietary Enterprise Recruitment Methodology, world-class technology, and international brand to transform the clients current processes. Operating as the clients internal recruitment function, Futurestep will work closely with the client to improve the recruiting efficiencies of quality of hire, speed of delivery, and cost containment. Improvements are measured and monitored through real time metrics then tied to strict service level agreements. On an ongoing basis, Futurestep will act as a strategic partner in continuously recognizing best practices to tactically elevate the client internal processes and to promote the company as an employer of choice. RPO Client(s): Confidential Services: Consulting, Project Recruitment, Professional Staffing, Mid-Level Search. Most Common Metrics: Time to fill with four distinct cycles, candidate ratios throughout hiring process, and hiring manager feedback. M.P.Birla Institute of Management 54
  55. 55. 11. CRI, INC.Employees Placed Through RPO: 3,400CRI is a nationwide recruitment process outsourcing service provider dedicated tohelping Fortune 1000 companies build talent-driven organizations through identifying,hiring, and retaining exemplary staff. Founded in 1997, CRI is a rapidly growingcompany that is new to the list. CRI integrates best-practice processes and flexiblyscalable resources into the HR function of clients. This newcomer has an approach thatsupports the efforts of clients looking to transform their human resources activities intovalue-added channels, branding their companies as employer-of-choice in theirrespective industries. CRIs consultative approach is aimed at designing, implementing,and operating proven hiring processes; and seamlessly integrating people, systems,experience, and technology with each clients existing recruiting function. As an RPO,CRI delivers a comprehensive and customized suite of recruiting and staffingsolutions, which can dramatically increase the quality of hires.RPO Client(s): GE Capital, Genworth Financial, Edward Jones, KB Home, Deloitte,Disney, General Dynamics, H.J. HeinzServices: Workforce Planning, Workforce Attraction, Workforce Selection, WorkforceHiring, On-Boarding.Most Common Metrics: Days to fill, costs per hire, offer to hire, recruiting efficiencyindex, candidate aging, client scorecard, and candidate scorecard.12. TALENTTRACKEmployees Placed Through RPO: 2,800Headquartered in Toledo, Ohio, TalentTrack is a national provider of comprehensive,end-to-end talent management solutions. They provide a unique blend of high-touchand high-tech talent applications that deliver RPO in three ways: HR back office (staffaugmentation); 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
  56. 56. 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 SavingsServices: HR Back Officeoffer an effective staff augmentation strategy, placing highlyskilled, 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. M.P.Birla Institute of Management 56
  57. 57. RPO Client(s): CISCO, Stanford Linear Accelerator Center, Sun, KLA Tencor, LSILogicServices: Source; Interview; Test; Background Check; Talent Community Building;Headhunting; Resume Database Building; RPO IT systems; Designing, Building, andRunning Recruiting Shared Service Centers; International Recruiting; India-basedRecruiting.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, andnumber of manager reschedules. M.P.Birla Institute of Management 57
  58. 58. REVIEW OF LITERATUREPurpose of Literature ReviewThe purpose of the literature review is to identify the problem statement, understand thesecondary data that has been gathered in the field of study and to make new finding onthe problem statement.RPO Is the Next Generation Of HR ServicesRamandeep Nehra, EFY News Network(Wednesday, April 11, 2007 8:22:55 PM)With more companies looking to streamline their internal HR functions, offeringend-to-end recruitment services is an alternative that the RPO service providers cantap intoWednesday, April 11, 2007: With the costs of payrolls and payroll taxes, health-care andother expenses associated with full-time workers shooting up day by day, outsourcing hasnow become an essential solution for businesses of all sorts. Moreover, access to superiorcompetency typically emerges as a motivator for outsourcing; the external serviceprovider offers a degree of sophistication that in-house specialists cannot match. In anutshell, outsourcing is resorted to with a view to reducing firm costs and achievingimprovement in four key areas – quality, cost, speed and service. How does a companyenhance these core areas during the recruitment process? The answer is outsourcing andtransferring all or parts of the staffing processes to an external service provider throughRecruitment Process Outsourcing (RPO) or Employee Process Outsourcing (EPO). It is amore specific department for HR personnel and a new subset of Business ProcessOutsourcing (BPO) and emerging as a key outsourcing demand from the clients.As Pam Berklich, Global SME and thought leader for RPO Kelly Services Inc definesRPO, “In my experience, and in the world of true pure play RPO providers, this practiceinvolves end to end responsibility for the recruitment/hiring process. There are really M.P.Birla Institute of Management 58
  59. 59. only two forms of RPO, namely the Enterprise RPO and Project Based RPO.” In theEnterprise RPO, a client organization decides to outsource their entire recruitment/hiringfunction for all hiring needs including all skill sets and all job families within theorganization. Here the RPO partner becomes the seamless extension of the HR functionand serves as the recruitment/hiring department. In the second type of RPO, a clientorganization decides to outsource certain job families and skills to the RPO partner, or itoutsource 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 istaking full responsibility for the entire function. Therefore, it also becomes significant foran organization to know when and what parts of the recruitment process need to beoutsourced. The organization needs to be aware of its requirement vis a vis businessgrowth and expansion plans. As Shailja Puranik, COO, Xansa BPO points out," It is mostappropriate to outsource when an organization has achieved stability and maturity ofprocesses and looks to outsource those components that are well-defined, repeatable andreproducible."Being a viable, strategic and cost effective solution, RPO has turned out to be a growingglobal trend. “RPO should along with its cost effective feature also be given its dueimportance for hiring the " right candidate from a wider pool of talent available," addsRahul Goyal, CEO, Ma Foi, UK. The emergence of RPO solutions is growing at a verysteady pace. No matter how you slice the share from the HRO market worldwide, it stillremains substantial. The trends in growth vary on the basis of geographical location andthe acceptance of outsourcing solutions within country cultures. Era, a recruitmentindustry 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 figuredoes not include the market size which gets added through overseas business and otherrecruitment 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