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The recruitment outsourcing evolution: Are you keeping up?
July 11, 2005
Mark Anderson
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Evolution: n.: A gradual process in which something changes into a different and usually more complex or better form. *Source: dictionary.com

Where it All Started

While outsourcing in the U.S. in general dates back to the 1800s, when wagon and ship sail production was outsourced to Scotland, the outsourcing of business services, such as staffing, really started in the 70s and 80s as IT companies began to grow rapidly. This initial outsourcing of services such as payroll processing quickly led to the outsourcing of accounting services, billing, payroll, collections, word processing, and finally staffing.

While IT companies blazed the trail, other companies quickly jumped on the bandwagon as the growth of the economy quickly outpaced the capacity and scalability of corporate recruiting teams. In addition, as the professional labor market tightened, it became increasingly difficult to find highly qualified candidates in the time frame that was demanded by business managers.

Before the development of the Internet and the subsequent boom in E-connectivity, the outsourced staffing industry was mostly a universe of order and uniform standards. There were contingency firms, retained search firms, temporary staffing firms, and contractor management agencies. While there was some crossover between these services within the staffing firm community, there was very little differentiation. The fees were fairly well fixed, the markups were fairly standard, and in the end, it usually came down to which vendor would be selected rather than which type of service was the best fit for the client.

Enter… The Internet

In the mid to late 90s, as Internet access exploded into people's homes on a wide scale, services like Online Career Center (now Monster), Career Path (now CareerBuilder), Career Mosaic (later Headhunter, now CareerBuilder) and HotJobs (now Yahoo! HotJobs) emerged along with systems for sorting, tracking and searching for candidate profiles. When this happened, staffing companies began to thrive.

At this time, companies had not yet started to embrace the Internet as a recruiting tool. As a result, staffing firms were able to maintain their business models, while recognizing huge increases in efficiencies gained by having easier/less costly access to candidates. During that time, client corporations continued to pay traditional fees while the staffing firm's cost to serve plummeted. As a result, margins soared and the staffing industry became an extremely profitable business.

Like so many other area of business, the widespread use of the Internet turned what was once order and standardization into a very complex arena. This hyper-transformation shattered all prior paradigms about when, where, and how outsourced recruiting could be used to assist in supplementing corporate recruiting efforts.

More Evolved Solutions

What used to be essentially four types of outsourcing has now spun off a slew of variations from the traditional staffing models. The end result is that companies now have a great number of options available to them. While the traditional models are still the primary models offered by most of the large, well-known staffing firms, the increased competition has been a windfall for companies looking for more scalable solutions for meeting their staffing objectives.

Though the traditional models of retained search and contingency staffing still make sense in some instances, more often than not, there are alternatives which are more tailored to the specific needs of an individual corporation or even an individual position. In addition, increased competition and increased options have helped to significantly drive down costs.

Like any other business, when new programs, products, or services are released into the market, the initial price point is very high. Then, as the market grows more saturated, and production techniques are stream-lined, the cost to produce drops and consumers realize the benefit of plummeting prices. A VCR in the mid-90's cost $500 and up, and you can now get a combination VCR/DVD Player for less than $75.

In the same vein, where outsourced staffing for a position used to cost 25 to 30percent of first year salary, you can now get a search (depending on how comprehensive the sourcing efforts) starting at under $1,000. And while cheaper isn't always better, there are now extremely flexible and scalable solutions on the market that provide clients with a tremendous value at a fraction of the historical price points.

If your cycle time is much higher than you would prefer, or your recruiters are juggling more requisitions than they can keep up with, there are cost-effective solutions in the marketplace that can help. You no longer have to do a quick mental calculation of 1st year compensation multiplied by the number of positions multiplied by 25 percent when looking to outsource your recruiting needs. There are offerings that can provide the level of service that is right for you, at a price you can afford.

Finding the Right Fit

When a company is considering its alternatives on managing a particular recruiting challenge, they are faced with many different decisions: Should I hire another recruiter? Should I bring on contractors? Do I need to go out to search?” Before answering these questions, it would be very wise to solicit ideas from a few Recruitment Process Outsourcing companies (RPOs). The responses you get back might surprise you.

For every hiring challenge, there are many different ways of going about the process of delivering qualified candidates. Most involve some combination of the following: proprietary resume database, access to a variety of additional resume databases, advertising expertise, creative know-how, a relationship network, and/or expertise in competitor targeting, Internet Web-mining, etc. RPOs counsel companies on the most effective tools and technologies to leverage for each project, and offer a set of pricing models to fit the client’s budgetary requirements.

This differs from the traditional recruitment outsourcing models because it allows the client company to pay for candidate sourcing, narrowing, and qualification on an a la carte basis without any loss of quality. Clients can reclaim control over the recruiting process, receive realistic value-based pricing, and still enjoying the benefits of outsourced workflow.

Being truly introspective, doing your research, and seeking guidance from experts is the key to leveraging newly available outsourcing efficiencies. Figure out which competencies you must outsource to recruit effectively, and then find a recruiting partner whose modern approach and capabilities were designed to meet your needs - instead of a prepackaged, one size fits all solution.

Evolution: n.: A gradual process in which something changes into a different and usually more complex or better form. *Source: dictionary.com

In Conclusion

Market changes over the past 10 years have been anything but gradual, and the process has certainly become more complex. Fortunately for corporations, the complexity has created a better market with strong, focused solutions to meet any given recruiting challenge.

Whether you are currently utilizing staffing firms and are trying to get away from them, are currently considering supplemental recruiting use, or are simply ensuring that you will be prepared as needs increase and capacity is stretched, make sure that you find a recruitment partner that has learned from the evolution of recruitment outsourcing. You will be pleasantly surprised by what the market has to offer.

Mark Anderson is the Director of Business Development for TruStar Solutions. He can reached at  888-547-4472.


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