From the way we market our brands to the way we communicate at work, and to the way we find and engage with the people we want to work with, shifts are but tell-tale signs of an ever-evolving way of doing business.
In human resource, labor arbitrage is an area where shift is not uncommon and is usually at grander scales. Where and how do we find talent?
From classified ads in the Sunday papers, cold phone calls, employee referrals and the use of the recruiter rolodex — these were common practice in the old days, as was the focus on filling immediate role requirements rather than a strategic long-term focus.
Over time, businesses started growing tired of hiring their people. It’s costly. A bad hire is costly. Keeping an internal recruiting team all year round is costly. Businesses started outsourcing the recruitment process – to save money and to get better hires.“RPO as a business model is only 15 years old.” - RPOA Blog Click To Tweet
And when first established, Recruitment Process Outsourcing essentially did what it said on the tin, it was the outsourcing of recruitment processes to an external provider.
RPO as a service or business model is only about 15 years old. It may be young, in relative terms, but it has quickly grown over the years. In fact, it is currently among the fastest growing section of Human Resource’s Outsourcing (Acatalent, 2018). It may have started in North America, but is now being adopted by countries around the globe.
In the Asia Pacific, it is forecasted to grow the most, according to a research by Everest Group (Everestgrp, 2018). South East Asian country Philippines, with its great and diverse knowledge-based workforce, in particular, is showing potential to be a good RPO hub.
There are debates about what RPO is and what it is not. But there’s a generally accepted, albeit the thinnest, definition of it.
Recruitment Process Outsourcing Association (Reilly, 2018), an online resource that serves as a platform for professionals interested in talent acquisition, defined RPO as:
“a form of business process outsourcing (BPO) where an employer transfers all or part of its recruitment processes to an external provider.”
To put simply, it is a business model (Hire Networks, 2018) wherein a company, medium or large sized, entrusts all or a part of their recruitment process to an outside company, also referred to as an RPO provider.
Ideally, RPO providers’ mission is not only to fill up the available positions in your company, they raise the bar by helping companies improve their overall hiring (Accolo, 2018). Hence, RPO providers and their partner companies tend to get better results than that of staffing services and companies partnership (WilsonHCG,2018).
This is mostly because RPO solutions’ offer cost-saving benefits, has the ability to be customized, has the expertise of RPO provider, and has time-saving advantages. (Talentworks, 2018). With these added values, it is no wonder that the RPO industry has steadily been rising in the past two decades.
From Onshoring to Offshoring
As this industry builds momentum in the market, different variations of it have emerged, with each variation putting more and more emphasis on addressing the companies’ insistent demands for low costs and increased profits. One such notable mutation of it, is offshoring.
In offshore RPO, from the word “offshore”, the client, whether it is the company itself or a staffing firm, relieves all or parts of its recruitment process to an RPO provider based in a different country. Usually, these are countries that offer cheaper labor costs than that of the client’s home country.
At first, it started out with offshore based company owners only transferring some HR functions for its cost-saving advantages, but this has gradually changed as they realize there are more benefits to reap off from offshoring.
Companies now turn to offshore RPO providers for their operational recruitment activities down to finding the right hires (Recruitingblogs.com,2018).
They find that recruitment tasks that can be done virtually such as identifying and locating candidates, reaching these candidates through voice calls, video calls, and emails and setting interview schedules, can be easily performed by partnering with experienced offshore RPO firms.
Reliable offshore RPO firms are also in possession of expert virtual recruiters and sourcers, giving them access to a team specializing in addressing their recruitment needs, and ready to share their database of qualified candidates.
To top it off, because of different time zones, while the company closes at night in its home country, offshore RPO activities can proceed in the daytime, and vice-versa. That way, recruitment activities are happening 24-hours a day. It’s a brilliant scheme, really.
Through this collaboration, speed and urgency may double, saving the company plenty of time. Expenses for unnecessary recruitment staffs and software are avoided, causing the company to get faster results, and they get all of this for a cheaper cost to boot.
The marketplace is forever changing, and so does the recruitment industry. When companies demanded even lower recruitment costs, the market answered, in a form of offshoring. It’s adaptation, and it’s partly due to this adaptability that has made RPO rise in the global scene.
RPO Hubs and Offshore RPO Destinations
The global RPO market in 2016 has shown a 13% growth and expansion with a total turnover of €3.4 billion.
The RPO industry is reported to be the sector that continues to grow year-on-year across all regions, according to 2018 economic report by World Employment Confederation (World Employment Confederation, 2018).
Europe and North America were among the first countries that adopted RPO back in the 2000’s. But in a report published by Markets Insider (Markets Insider, 2017), Asia Pacific is predicted to be the highest growing market for RPO.Asia Pacific is predicted to be the highest growing market for RPO. - Markets Insider, 2017 Click To Tweet
In 2016, Asia Pacific’s RPO market, with Japan, China, and India, among the countries assessed, was reported to grow 16.24% (Recruitment Process Outsourcing Association, 2016).
India, as part of the growing RPO industry, is utilizing its massive 150 billion dollar IT industry (PSG Global Solutions, 2018), by outsourcing its IT resources in offshore recruiting. And by 2022, the RPO market in the Asia Pacific is expected to expand nearly fourfold (GmbH, 2018).
Offshoring RPO in the Philippines
The Philippines is a part of this development as well. It’s a hub, in fact. It’s been placed number 1 trending country as the top outsourcing destination by the majority of global research and data companies, according to ASEAN Briefing (ASEAN Briefing, 2017).
Staff Virtual (Staff Virtual, 2018) boasts that the RPO industry in the Philippines is set to continue to rise in the coming years. Offshoring, in particular, is ripe for the picking. Mainly, this is because offshore RPO firms in Philippines offer low-cost human resource outsourcing solution, reasoned Staff Virtual.
By passing on boring and repetitive recruitment tasks such as gathering resumes, reviewing job requests, and assessing candidates to competent Philippine virtual recruiters and sourcers, offshore companies can focus on working on core business.
As a result, not only do clients save on costs since the Philippines has a significantly cheaper labor rate as compared to other countries, clients also get to save on time and energy, which is, after all, what offshoring RPO is all about.
Sure, saving on time and costs are great incentives, but what about the quality?The RPO industry in the Philippines is set to continue to rise in the coming years. - Staff Virtual, 2018 Click To Tweet
The Philippines is recognized for having a large workforce specializing in different areas. It’s been ranked 1st (Daven Michaels, 2013) in the availability of knowledge-based jobs, according to a survey by US-based Meta group.
What makes it an even better deal is that this labor pool is proficient in English. English based offshore companies are going to feel right at home with the Filipinos’ ease in speaking their language. In addition, their affinity to Western culture gives them insights on Western trends, nuances and work ethics.
And just to make sure everything works out well for this industry, the Philippine government is there to constantly give support by implementing and promoting outsourcing programs and policies(Asian Development Bank, 2007).
The benefits in partnering with an offshore RPO firm does not end there. In the next blog post, we will discuss more of them in detail. Thanks to these qualities, offshore companies are going to have a much smoother and practical working experience with RPO Philippine firms.
Curious. How exactly do staffing firms and businesses work with offshore RPO providers in the Philippines at present? And who are the major players in the country?
Offshore RPO Engagements in the Philippines
In terms of specialization, Philippine RPO firms mostly offer IT, payroll, back office, business consultancy, and HR offshore recruitment process outsourcing solutions.
In terms of how these RPO firms engage their clients, there are a few types of engagement to take into consideration.
Short-Term Project Recruitment
In short-term project recruitment, Philippine firms take on limited recruitment responsibilities. They may only need to do resume sourcing, online screening of candidates, or screening candidates through calls, and let the client take care of the rest of the recruitment process. It also involves a shorter period of time, usually just until the project is over.
It is not much different from that short-term project recruitment but this involves a more specific aspect of the recruitment process.
For example, some Philippine firms offer services wherein the client can hire one recruiter from the firm’s experienced team to find top talents for them.
This works best for companies that already have a working in-house HR team and only needs a supplement in a certain area in the recruitment process.
If you have questions such as, “How can we improve the efficiency of our current in-house HR team? What recruiting technologies are helpful? How does social media recruiting work?”, then you may want to partner with consulting RPO providers instead.
There are PH firms that already have decades of experience in recruiting, and they can pinpoint issues that clients may have overlooked, and offer helpful solutions.
It is important to note that RPO firms in the Philippines engage with clients in various ways and in various terms. Some serve clients directly, while others cater to other staffing firms abroad – sort of an offshore RPO provider for staffing firms.
Generally, these are all the key engagements Philippine firms are currently offering. There are many RPO firms in the Philippines, and it may be a bit overwhelming to sort through all of them.
The Key Players in the Philippine Offshore RPO Industry
There is no authoritative body which ranks offshore RPO companies in the Philippines, nor a generally accepted metric for judging the top performers. The following list is based on general industry knowledge and market visibility.
Sysgen RPO – Sysgen RPO has been around for 27 years and is widely known for its IT staffing services. They now provide full offshore life cycle recruiting, VMS recruiting, resume sourcing, recruitment admin support and remote staffing. They still cater to clients in the Philippines, providing contingency search, retained search, and offshore placement.
Staff Virtual – Staff Virtual offers services for both short and long-term hiring needs. They can provide back office and expert technical recruiters.
Raso Solutions – Raso Solutions offers RPO solutions and business consultations. They boast of over 100 years of combined recruitment background.
Sourcefit BPO – Sourcefit services include offshore staff leasing, with the assurance that it is easy to set up with no risk up-front costs.
24HRPO – 24HRPO handles front-end recruiting, onboarding services, staffing and other RPO services such as resume formatting and data appending.
PSG Global Solutions – PSG is a big player in the RPO scene in the Philippines. It offers offshore RPO and takes on sourcing and screening of clients, VMS recruiting and also full life-cycle recruiting.
Challenges Down the Road
A good number of these key Philippine offshoring RPO players or providers have been around for decades, moving at an increasing pace. Their success is a testament to how the Philippine RPO industry is maturing over time.
Of course, the future isn’t rainbows and sunshine. There are challenges almost at every turn.
Philippine Tax Reforms
TRAIN Law, which is part of Philippine President Rodrigo Duterte’s comprehensive tax reform program, decreases the tax on personal income, estate, and donation (Rappler, 2018). To compensate for this, tax on passive incomes, documents, petroleum products, minerals, cigarettes, and automobiles have increased (Rappler, 2018).
This contributes greatly to the inflation rate increasing and Inquirer.net (Vera, 2018), leading newspaper in the Philippines, is pointing TRAIN law as part of the reason.
As prices hike, the offshore RPO industry is going to be affected by this, and may also raise their labor costs.
The Senate Committee on Science and Technology has already called for an assessment (Orellana, 2018) on the impact of TRAIN law on BPO industry.
Calling for an assessment is a pro-active action by the government, it is a good sign that the BPO sector concerns are given priority in the country.
“Manila is plagued by power failures, chronic water shortages, an antiquated telecommunications system, deteriorating roads and bridges and a subpar airport,” Floyd Whaley (Whaley, 2014), from New York Times reported.
Poor infrastructure is holding back the Philippines from reaching maximum growth (Whaley, 2014). Many industries are, of course, affected by this, including the offshoring RPO industry.
Power shortages disrupt the workflow in offices, defective roads cause traffic resulting in unnecessary delays. The time wasted can pile up and result in less time used for focusing on actual work. Thankfully, there are available remedies for this.
In the metropolitan areas, such as Makati City and Bonifacio Global City, there are offices and real estate projects that provide space and business amenities. Some of these offices can be for lease.
Most RPO providers set up their shops in these locations for their reliable power source, proper roads, more robust telecommunications service, and better security.
Some Exciting Developments to Look Forward To
The country may be facing difficulties in some areas, but the RPO industry in the Philippines is a work in progress. Plans have been made, and they are to be set in motion to overcome these difficulties, with both the government and private sectors cooperating in this endeavor.
Here are some of what you can look forward to in Philippine offshoring RPO industry.
The wave of “New Cities”
The government is currently working on the development of “next wave cities for BPO sector” (Remo, 2018). These cities are identified to be “Baguio, Cagayan De Oro, Dagupan, Dasmariñas, Dumaguete, Lipa, Malolos, Naga, Sta. Rosa, and Taytay,” according to Inquirer (Remo, 2018).“There are new areas outside of Metro Manila that are showing favorable potential for setting up shops.” Click To Tweet
These are areas outside of Metro Manila that are showing favorable potential for setting up shops. With more cities capable of handling fast paced and high functioning IT, RPO firms are able to provide better services for their clients and more investors are going to be encouraged to open RPO businesses in the country, giving the clients more options to choose from.
Positive Outcomes of Tax Reform
The tax reform has also brought forth a simpler way of tax filing and payment.
Now that filing of tax return for final withholding tax has to be done quarterly rather than monthly, while filing of VAT Return and tax payment has to be done quarterly rather than monthly from 2023 onwards, tax compliance has never been easier, according to Moneymax(Financial News and Advice in the Philippines, 2018).
Tax filing, which used to be a hassle, has been sort of a deterring factor for economic growth. It can be discouraging for some, but now that is has been made easy, this may result in more RPO firms to open in the country.
We are also looking forward to the passage of the Ease of Doing Business bill which will, hopefully, ease up the way we do business in the country. It’s a generally known fact, that doing business in the Philippines is a true pain in the neck.
Bringing It All Together
RPO has revolutionized employment. Or should we say, the incessant need for top talent revolutionizes our way of doing it?
Nonetheless, more and more businesses from all over the world are giving up traditional staffing norms to embrace a more strategic and cost-effective solution –recruitment process outsourcing.
The testament to this is the RPO industry’s positive trajectory. RPO providers are increasing in numbers, and as companies want to save even more, smart executives are now looking into countries with more cost-effective talent solutions, with the Philippines being one of them, of course.
It goes without saying, partnering with an offshore RPO firm in the Philippines can be a practical solution for your recruitment problems. The strength of the offshore Philippine RPO firms lies in its arsenal of English-speaking, and highly-skilled professionals who happen to also have a strong affinity to the Western culture.
Doing business in the Philippines? What are your thoughts on talent and Offshore RPO in the Philippines? Let us know in the comment section below.
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