It’s a well-known fact that staffing firms approach RPO providers to gain a competitive advantage by eliminating fixed recruitment costs. They can expect as much as 20-30% operational savings through an RPO partnership.
But fixed costs aside, the recruitment process can also have unforeseen costs in terms of cost centers and line items, according to Cielotalent. These can be in the forms of recruitment team overhead, software and hardware fees, technology fees, agency fees and so on.
Having a dedicated expert recruitment team can help mitigate these fixed and unforeseen costs. Just to give you an example of how unpredictable the market can be, here’s an interesting story from Workforce.
On 2008, Weatherford International Ltd., a global oilfield services company, had an urgent need for 1,800 positions, before the recession struck. Initially, they had a plan to build an in-house recruiting department, but they thought about partnering with an RPO firm instead.
Only six months after that, recession hit the market and all those open positions had to be canceled. According to the recruiting manager of Weatherford International Ltd., they made the right decision to take the RPO route.
If they had not done so, they’d have “spent a lot of money hiring and training in-house recruiters, and then had to lay them off, with all of the associated costs”.
Taking the point of view of the RPO provider, unforeseen events in the marketplace can sometimes affect the hiring demands of their clients, causing an implode and explode in their recruitment, such as the case of Weatherford International Ltd..
Hence, it’s better for RPO providers to outsource some of their recruitment processes. This way, they can take full control of what they have to pay for.
Staffing firms have been using this strategy in the past years. To further cut on costs, they went from onshoring to offshoring RPO, a strategic move considering how PSGglobal Solutions found that onshore recruiters are typically 45% higher in terms of labor burden and program costs compared to offshore recruiters.
In the previous articles that we’ve published, we’ve shared tidbits of our insights on offshore RPO’s cost-effectiveness. This time around, we are going to break down into parts how exactly offshore RPO can help you cut on recruitment costs.
How Offshore RPO Companies Lower Recruitment Costs
Perhaps one of the greatest features of an offshore RPO partnership is its scalability. Whether the economy is in an ideal environment for acquiring more hires or replacement hiring, staffing firms can reduce recruitment costs by partnering with offshore RPO firms that are able to utilize innovative recruiting strategies, rich database, competent recruiters, and latest recruiting technology.
1) Shared Risks
From the previous discussion about the Weatherford International Ltd., and its relationship with its RPO provider, it’s safe to say that RPO providers have to take precautionary measures for the ever-changing hiring demands of their clients.
One way to do this is through an offshore partnership. Staffing firms can relieve the costs of the resources to the offshore RPO provider, enabling them to efficiently adjust the number of resources they need.
For example, instead of hiring more recruiters to cope with the high hiring demands of their clients, staffing firms can outsource recruiting tasks, such as resume sourcing and candidate screening, to an offshore RPO provider.
This way, they eliminate the risk of having unnecessary recruitment staff, if ever the time comes when the economy goes downhill and clients start demanding for fewer hires.
2) Reduced Software Costs
In relation to shared risks, recruitment software, such as Application Tracking System, can be very costly, and having to invest in these kinds of technology, with the volatile market that we have right now, can be too risky for the staffing firm.
According to Recruitment Process Outsourcing Association, acquiring an ATS does not end just by getting the software, it also involves being familiar with the system, and the most effective way to do this is by training a group of people who are going to be experts in using ATS as a tool and can align it with the recruiting process. This training, however, can mean additional expenses for the company.
But if the staffing firm chooses to offshore their ATS capabilities, they save themselves the training and software costs, and they can have an external team whom they can call on for their services only when they need to. Also, by outsourcing ATS and a team of ATS experts, the staffing firm can expect a quicker turnaround time.
A functioning ATS aligned with the recruiting process of the staffing firm can help create an effective talent acquisition, according to Recruitment Process Outsourcing Association.
3) Faster Time-To-Fill Leads to Reduction of Costs
The faster the search ends, the lesser the recruitment costs the staffing firm has to shoulder. By repeatedly performing recruitment functions for different staffing firms, offshore RPO providers gain expertise in their fields.
They already have designed methodologies to spot quality talent through interviews and figure out if that candidate is compatible for the staffing firm’s clients.
They keep in touch with the right crowd and the right companies to gain knowledge of people and companies to figure out what they are experts in. They also have a rich database which they can use to quickly produce a list of candidates.
Their database can be composed mostly of employed individuals. This is because quality candidates are usually already working for top companies. With an offshore partnership, staffing firms can have an external dedicated team that can immediately poach these candidates for them if the need calls for it.
With their rich database, dedicated recruiters, effective technology, well-tested methodologies, offshore RPO providers can increase the time-to-fill record for the available positions and ultimately lead to a reduction of costs.
4) Recruitment Velocity for Staffing Firms Under VMS Recruiting
Partnering with an offshore RPO is cost efficient in the way that it allows for 24-hour recruitment activities. Staffing firms under VMS arrangement, wherein time is of the essence, can find this advantageous for them.
While the foreign staffing firm sleeps at night, the offshore RPO provider can continue with the recruitment processes.
It’s also interesting to note that offshore recruiters are able to match the performance of the staffing firm’s in-house recruiters, but at a 68 percent reduction in loaded cost per recruiter, according to a series of case studies published by one of the leading offshore RPO providers in the Philippines, with the participation of their client under VMS recruiting.
This shows that not only does offshoring double the work being done through a 24-hour recruitment activity, giving them recruitment velocity, and putting them at a competitive advantage, but staffing firms also get to enjoy the offshore recruiter’s services at a much affordable price.
5) Streamlined Hiring Process
Partnering with an offshore RPO forces staffing firms to look internally at their company’s recruitment processes, giving them a good in-depth review of their companies’ performance, and a clear vision of their hiring needs.
Understanding hiring needs, by determining which areas of their recruitment process can be improved, which areas are already functioning well, and which expertise is needed, can help them create a better framework for their organization.
Offshore RPO providers can evaluate these frameworks to accurately understand the scope of the staffing firms’ hiring needs, and plan the recruitment services and strategies that can best address these hiring problems.
It also allows them to review which areas are creating unnecessary costs and practicing inefficient tasks, and offer a plan that aims to cut on the overall costs of the staffing firm.
6) Reduced Cost Per Hire
Cost per hire is one of the most important metrics when it comes to assessing whether the recruitment strategy of the staffing firm is working properly or not. The best offshore RPO providers are able to provide services that can dramatically cut the costs per hire.
In fact, according to a study by a leading offshore RPO firm in the Philippines, staffing firms are able to save up to 31% on their cost per hire by partnering with an offshore provider. This is made possible by offshore RPO providers offering cost-efficient services.
One of these services is offshore administrative support. Offshore RPO providers have become so well-equipped with these recruitment processes that according to a study by a leading offshore RPO provider from the Philippines, one of their clients was able to save 700 thousand dollars annually by offshoring administrative duties.
7) Reduced Advertising Costs
According to RecruitShop, the cost to advertise a job on the bigger job boards can start around $400 each.
But then again, there can be hidden costs involved in the recruitment process. You are going to have to pay the employee for his time searching for the best job boards to advertise in, for posting the job advertisement, and for monitoring the job advertisement.
The worst part of this ordeal is that there’s no guarantee that a qualified candidate can show up from these job advertisements. The job advertisement may have to keep going for months, which of course, has to be paid monthly too.
But by partnering with an offshore RPO provider, instead of the staffing firms spending additional costs on advertising job placements, they can take advantage of offshore RPO provider’s expertise in resume sourcing.
Offshore RPO providers’ sourcing services can include ATS and database resume sourcing, finding and attracting passive and active candidates from social media and focus groups and boolean string sourcing. This allows staffing firms to collect qualified candidates but without having to resort to posting on legitimate but paid for job boards.
Talent acquisition is relative to the market’s environment, but the marketplace can be unpredictable. And as the executive of your staffing firm, it’s your job to prepare for whatever economic situation you have to face tomorrow.
A part of that job is to take into consideration your company’s recruitment costs. You make it your mission to reduce your fixed costs, prepare for hidden costs, and earn more revenue, so you take the offshore RPO route expecting to get the best results.
Offshore RPO’s strongest asset—scalability—gives you the ability to quickly adapt to the demands of your clients, whatever the economic situation may be at that time.
You get to take control of your software costs, advertising costs and share recruitment risks. On top of that, you reduce costs by having a faster time to fill and enjoying the competitive advantage of recruitment velocity.
In the end, talent acquisition is always going to be a costly process. But partnering with an offshore RPO firm can make the best out of your recruitment costs.
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