Pros & Cons of recruitment outsourcing for smaller organizations
Outsourcing or offshoring is defined as the practice of contracting business processes or functions to a third-party in order to reduce costs and increase efficiency. Traditionally, outsourcing has usually been the primary domain of MNCs with many smaller organizations preferring to keep things in-house. With the rise of “gig-based economy”, outsourcing has been made a lot more accessible to smaller organizations around the world. However, is outsourcing key business functions like human resource and talent management the way to go for smaller organizations? Here, we look at whether outsourcing your recruitment process is the way to go.
1. Lower business expenditures
In a nutshell, outsourcing is one of the simplest ways for an organization to quickly and significantly reduce its expenditure. By choosing to outsource certain aspects of human resource management such as recruitment and payroll management to a third-party agency, the need for investment in software, office space and staff is eliminated entirely. Hence, this significantly reduces the risk of costly, over expenditure which could prove to be fatal to a small organization.
2. Better quality candidates
As smaller sized organizations usually have smaller budgets as compared to their larger counterparts, outsourcing allows such organizations to gain access to top quality talent at a lower price. This situation is compounded as HR professionals in smaller organizations have a much larger set of responsibilities as compared to their counterparts in larger, more established organizations. For example, a hiring manager in an SME may find him/herself having to manage both employee payroll and documentation while still overseeing the organization's recruitment program. Consequently, this leaves the hiring manager with in the unenviable position of having to vet hundreds of job applications with little-to-no time. In stark contrast, professional recruiters in a third party agency are dedicated solely to identifying and hiring quality candidates for their clients.
3. Greater focus
Outsourcing a business function such as talent management can free up vital manpower and funds within an organization. This allows the organization to have a greater degree of flexibility and focus which enables it to take advantage of any opportunities that arise within the market. By streamlining its recruitment process, the organization can very quickly gain access to top quality talent within a short period of time. Hence, this significantly reduces the lead time on any new projects which gives the organization a much needed competitive edge.
1. Incompatible candidates
As mentioned before, HR professionals are defined as the gatekeepers of an organization due to the role that they play in the hiring process. Thus, a drawback of outsourcing an organization's recruitment process is the lack of familiarity that external HR professionals may have with an organization's culture. This lack of familiarity can prove to be detrimental as the hired candidate may not be a suitable fit for the client's organization. Not only does this result in disharmony within the organization, but also a decline in morale alongside an increase in staff turnover. A clear example of this can be seen from the appointment of Bob Nardelli as CEO of Home Depot; a costly mistake which saw an erosion in Home Depot's market share alongside the widespread alienation of many key employees.
2. Security risks
Another risk that organizations face when outsourcing their recruitment processes is the chance that potential employees have not been thoroughly vetted by the recruitment agency. With recruitment agencies typically dealing with thousands of applications on a daily basis, it is unrealistic and illogical to expect each potential candidates to be vetted thoroughly. The recent firing of engineer Anthony Levandowski from Uber is an all too important reminder for HR professionals everywhere on why a strict vetting and recruitment process is crucial in today's competitive world where a single idea can be worth millions.
3. Low quality firms
An unfortunate risk associated with outsourcing is the chance that the organization may have the misfortune of wasting time and money on an incompetent or unscrupulous recruitment agency. Hence, the organization can find itself having to deal with totally incompatible job candidates or worse. Outsourcing an organization's recruitment process has its share of pros and cons. Hence, careful consideration should be taken into account before proceeding on such an endeavor.