Staffing & recruiting is an essential part of growing your company. With business growth comes the need to hire more people to fill up the additional tasks. Hiring the right people is an important decision that you as a business owner will have to make from time to time. But filling up vacant positions can be time-consuming on your part.
While selecting additional members of your team is something you may want to do yourself, it will most likely keep you away from what you should be doing. This is where outsourcing staffing & recruiting comes in. When you outsource, you let someone with knowledge and experience find people for you.
Recruitment process outsourcing (RPO) is on the rise over the years. A recent study by Grand View Research found that the RPO market was valued at $5.48 billion in 2019 and is expected to grow at a compounded annual growth rate of 18.5% from 2020 to 2027. While its benefits cannot be doubted, some businesses are still having second thoughts about RPOs. This article will help you decide whether or not you should outsource staffing & recruiting.
This topic will cover the following:
- Why You Should Outsource Staffing & Recruiting
- Why You Should Not Outsource Staffing & Recruiting
- Benefits of Outsourcing Staffing & Recruiting
- Disadvantages of Staffing & Recruiting
- Factors To Consider When Outsourcing Staffing & Recruiting
Why Should You Outsource Staffing & Recruiting?
Perhaps you are asking yourself this question. Maybe you are telling yourself that the hiring needs of your organization will change from time to time so you are not inclined to consider outsourcing just yet. But at some point, you may need to outsource your staffing & recruiting needs to a third party provider. If you are having second thoughts about outsourcing, here are some reasons you should:
1. It can save you huge costs
Statistics from Capital Counselor reveal that one of the top reasons that 70% of companies choose outsourcing is for cost reduction. Outsourcing helps businesses find or retain high-value recruits at a cheaper price. There are many costs associated with recruitment activities such as posting on job boards, conducting background checks, and investing in tracking systems and recruitment technology.
Working with an outsourcing provider helps streamline the recruitment process. If your hiring system is not that established and isn’t giving you the desired results, it is hard to justify the expenditures you have hiring new employees. How can outsourcing deliver cost savings for your company?
The outsourcing company already has established processes in place like recruitment software which you may not have access to. They will also have an in-depth understanding of the market in your target area and can pinpoint potential candidates at a cheaper price than you generally can.
2. Higher Quality Recruits
If you are planning to expand overseas, the outsourcing provider may be able to help you find a quality workforce to fill up your manpower needs. You may have a thorough knowledge of the job market in your country but it is unlikely that you have the same knowledge of the overseas market.
By hiring quality recruits for your business, you will be able to compete with larger companies and level up the playing field. Outsourcing firms have the ability to sell the opportunity and work with your recruits regarding the possible advantages and disadvantages of your job offer.
3. You Have A High Turnover Rate
Staffing & recruiting is not only about hiring exceptional staff but also selecting staff who will stick around. More than 80% of employee turnover is due to poor hiring decisions. Having a high employee turnover rate can have a negative impact on your business in terms of profitability. It is an indication of some flaws in your recruitment process.
Outsourcing providers are knowledgeable about choosing the right candidate. They know how to implement effective recruitment and onboarding procedures. Partnering with them will help reduce staff turnover.
4. You Can’t Keep Up With Demand
If you have seasonal manpower demands, it may be hard for you to keep up with the demand. You need to hire seasonal staff as quickly as possible. The same is true if you are a rapid growth company which can also find difficulty meeting recruitment demands.
Outsourcing firms can provide your business with the staff you need during seasonal demands. These providers have different recruiting programs geared towards these kinds of situations. This way you will have ready manpower during hectic seasons.
5. Legal and Compliance Issues
With outsourcing, you don’t have to worry about breaking any existing laws. Outsourcing firms are aware of legal and compliance requirements ensuring that your business is operating legally. The provider can also advise or offer assistance on legal, contractual, and compliance issues.
Why Shouldn’t You Outsource Staffing & Recruiting?
While outsourcing may be effective for some businesses, it does not apply to all. In the long run, it might have more of a negative impact than positive. Here are some reasons you shouldn’t consider outsourcing your recruitment needs.
1. Outsourcing is not sustainable
When working with an outsourcing firm, you will pay a convenience fee for the talent you will hire. In most cases, 20-30% of the new employee’s first year salary after 90 days. So if the salary of your software engineer is $100,000 annually, you will pay up to $30,000 in the first quarter they are employed in your company.
Aside from the high premiums, the fees can eat up the Employee Lifetime Value (ELV) or the expected ROI from each employee considering their cost of acquisition, ramp time, and tenure at the company. You could see the ELV of your employees decrease.
2. Outsourcing solves the hire, not the right hire
An outsourcing provider will aim to fill up your open position as quickly as possible. Their goal is to build your team in the soonest possible time and not for the long term. The staff of the agencies has to meet a quota of filling positions.
It is not their fault if they aim to outperform their job but keep in mind that their incentives are not exactly aligned with yours.
3. Learning happens outside your organization
Outsourcing is associated with missed learning and data-gathering opportunities. When you outsource, you miss out on testing outreach and messaging, and hearing immediate candidate feedback.
These missed learning opportunities can help improve recruitment marketing and your employer brand and enhance your entire business’s pulse.
4. It may not be compatible with your company culture
The outsourcing firm doesn’t have a firsthand experience of your company culture so it will be hard for them to communicate your core values and what it is like to work at your company. It could also even become more problematic if the outsourcing company reads your values from a script. With 64% of millennials wanting to work in a company with purpose, you don’t want an outsider reading your core values from a script.
Benefits of Outsourcing Staffing & Recruiting
Outsourcing your staffing & recruiting requirements to a third party offers a wide range of benefits for your business. Let’s take a look at these benefits.
1. Focus on your core business
Filling up vacant positions, interviewing potential candidates, and other staffing functions can be time consuming and may take you away from your core business. Outsourcing these functions means you will be able to do what you do best and focus on your core business. This way, you can concentrate on growing your business and improving your overall effectiveness.
2. Saves You Money
With outsourcing, you can get considerable savings on staffing related expenses like job posting on job boards, tarpaulins, advertisements, and others. Also, you don’t have to worry about paying the wages as it would be the provider who would shoulder it as well as the other benefits.
3. You Get Access To Industry Experts
By outsourcing to a provider, you get access to professionals with expertise in staffing and recruiting. Working with an outsourcing firm will allow you to team up with experts in various areas such as employer compliance, policy development and management, hiring and onboarding, employee relations, benefit administration, and others.
4. You Can Leverage Their Technology
With outsourcing, you no longer have to worry about filing, handling, and maintaining tons of HR paperwork and documents. The outsourcing firm may be using technology that can make your life easier. You can take advantage of the software they are using to simplify data management as well as for handling personnel records.
Disadvantages of Outsourcing of Staffing & Recruiting
While there are benefits of outsourcing, there are also some drawbacks you need to consider.
1. You give up control of some aspects of your company
One disadvantage of outsourcing recruitment functions is loss of control. Your in-house team knows your employees, the dynamics in your workplace, and what makes workers happy. When you outsource, you give up some degree of control over these HR functions.
It is understandable that you become concerned about eventually not having your finger on the pulse and won’t have insight on how to make the best decisions for your employees. But it shouldn’t be a cause of worry because at the end of the day, you will still have the final say on HR matters.
2. Cultural Change
For many employees, the company culture serves as their motivation. It’s what keeps them reporting for work every day. When you place an outsider in-charge of the workplace, it can be hard for employees to accept.
When you outsource staffing & recruitment, the provider could disrupt the current workplace dynamic and impact employee morale. To avoid this, ensure that the outsourcing firm you will partner with will respect your company culture.
3. Risk of Information Leaks
Another possible disadvantage of outsourcing staffing & recruiting is a data leak. When you outsource, you share sensitive information with the outsourcing firm in order for them to provide you with adequate service. This opens up the possibility that sensitive information could leak into the wrong hands.
Information leaks could lead to liabilities for your company and could hurt your reputation. When outsourcing, it is important to ensure that they have data security and that your trade secrets will be protected.
Factors To Consider When Outsourcing Recruitment
When deciding whether to outsource or not to outsource your staffing & recruitment needs, there are certain factors you need to consider. According to the Human Resource Outsourcing Survey Report by the Society for Human Resource Management (SHRM), 58% of organizations outsource HR functions. But just because other organizations are doing so doesn’t mean you should do it as well. There are certain factors that you need to consider before considering outsourcing your recruitment.
1. How much will they charge?
One of the primary reasons businesses outsource is to save money. By partnering with an outsourcing company, you don’t have to worry about the costs associated with having an in-house staff such as salaries and wages, labor costs, and office maintenance.
When outsourcing, you need to consider if the fees for the provider suits your budget. The money you will save can be used for future projects that may require more or less staff.
2. Quality of Service
There are many outsourcing firms that will offer their services to you but not all of them are created equal. According to a 2015 Candidate Behavior Study, 73% of hiring managers said that hiring a bad candidate was more costly than retaining the open position. Choosing the right outsourcing provider will spare you from a bad hire or leaving the position open for too long.
To ensure quality service, come up with a shortlist of providers and talk to their executives. Gather facts and data about the outsourcing firms you have in mind.
3. Control in Selection
With outsourcing, you have to let go of some control over your hiring process. You won’t be involved in the selection of candidates anymore. If you are someone who likes to be in control of things, outsourcing is probably not for you.
However, finding the right candidate to fill up positions can be stressful and 53% of hiring managers concede that their inability to find the right staff is the main reason it takes them long to fill up a vacant position.
4. Learning Curve
The complexity of your company culture and uniqueness of your product or service is another factor to consider when deciding if outsourcing is right for you. Complicated company cultures usually take time to learn, making finding the perfect talent more challenging. It is important for the potential employee to fit with the company culture.
While it may take time, outsourcing can help you find the right candidate for your company. To make it easier for the provider, create a list of values and traits that are most important to your business. Have that list ready when talking to potential providers.
5. Competitive Advantage
Every company aspires to beat the competition. If you only have a small company, you definitely don’t have the same resources as the bigger companies. According to LinkedIn, 87% of businesses said their difficulty to find quality talents stems from the lack of a skilled recruiting team.
Outsourcing to an experienced provider will help level the playing field so you can compete with larger companies. While you only see what’s inside your walls, outsourcing firms have an outside perspective.
Deciding whether to outsource or not to outsource can be an important decision. You need to keep in mind that outsourcing is not for everyone. Knowing the pros and cons as well as the different factors to consider will help you come up with the best decision.
Outsource Your Staffing Needs with airisX
Recruiting new employees for your team is a notoriously time-consuming process. Hiring an external outsourcing provider like airisX allows you to remove yourself from the tediousness of having to go through hundreds of resumes and bad interviews to find the right candidate that meets the criteria of the employee you are looking for, allowing you to focus on what matters in the recruiting process – doing the final interview for the right candidate, and making the final hiring decision.
Our recruiting team sources, filters, and reaches out to candidates as per your hiring requirements, leveraging channels such as LinkedIn, job boards, Indeed, referrals, etc., going through as many potential candidates as possible to help you find the exact talent(s) you need.
We conduct all pre-screening and perform initial interviews for you, shortlisting qualified candidates and making recommendations for potential good fits.
Afterwards, we set final interviews up between you and your desired candidates – allowing you to simply make final hiring decisions without the hassle of all the other recruiting work leading up to it. At airisX, our recruiting team has years of experience helping companies recruit and hire new talent.