Thursday, May 5, 2011

RPO – Recruitment Process Outsourcing

What is RPO Means?

After the boom of BPO - Business Process Outsourcing and KPO - Knowledge Process Outsourcing, now it is the turn of RPO - Recruitment Process Outsourcing. The first two types of process outsourcing have been a global phenomenon. RPO is a fairly new process outsourcing that has been gaining grounds locally and aiming to lift out the burden of head-hunting business of the corporate sector.

Why RPO?

With recession having hit every sector of the industry right from banking, IT, finance, retailing, manufacturing, pharmacy and life sciences business houses quickly resorted to downsizing, cost cutting and took to austerity measures by spending less on everything, including the hiring process. So with not much going on hiring front, many organizations went into downsizing their HR team or letting it hibernate. Also, the hiring patterns being seasonal or cyclical, the fixed cost of maintaining a recruitment function within a business house during the quiet times that can go ready when needed would otherwise be unnecessary for the business. Over the last 2-3 years things have started to look up with Asian countries being led countries like India, China, Malaysia, etc performing well. On our home front, the corporate sector in India is steadily growing and hiring has become imminent. With a need for new recruitment, many companies that had downsized HR departments post recession are taking to RPO.

Benefits of RPO

The major benefit exists on the cost front, with the potential to fundamentally change the recruitment cost. By establishing a variable cost structure with the service provider, RPO gives the opportunity to establish better value for money, with the recruitment costs truly paying only towards the recruitment outcomes. Some of the RPO have specialized in the process of hiring candidates from specific domains and verticals. RPO is not just about recruitment agency or a headhunter into short-listing candidates for a business house. It actually goes way beyond this. A RPO firm assumes ownership of the entire hiring process for the business house that includes everything from resource management of putting together the whole employment value proposition, to the sourcing strategy for every element of recruitment. For a business house to hand over this level of responsibility to a recruitment firm sounds like a big risk and nonetheless a big step for the recruitment firm.

With every employee of a company being its numero uno asset, it becomes imperative getting the right people is of critical nature for any business house’s growth and development in the long run. As companies spend a lot on every employee’s training, appraisal, salary, retainment, growth and development, it is critical to outsource the responsibilities to the right RPO firms which act as the specialized consulting firm to recruit the requisite human resource with proper blend of skills and talent.

The upswing in market has slowly and steadily seen many businesses emerge out successfully. The slump in the job market now looks to be a thing of past, with some business houses even giving the first big pay hike to their employees.

RPO in India

With such a scenario, the RPO in India need to improve on the quality of services they are offering. Since the job market is growing steadily, many new HR firms are mushrooming and do not have the right kind of expertise and knowledge to deliver. Most of the RPO in India are very much metro centric. RPO in city like Bangalore are doing pretty well. Since most of the corporate offices are located in Bangalore and there is sudden spurt in hiring, and many HR firms offering their services, it is difficult to pick the right one to outsource the hiring process to. For many companies though the benefits exist in RPO, there are some issues that need to be looked into about your RPO partner. Since this sector has been gaining traction only as early as nineties, the industry has mushroomed, with more vendors competing in the same space. RPO still being a relatively new industry, only few vendors are specialized in providing RPO quality services. Many observers are expecting to see the industry continue, with acquisitions and merger and consolidation activity among vendors, with weaker vendors falling by the way side. In the near future many plan to go to smaller towns to tap the local market as many bigger companies are setting up their units in small towns due to low setup cost and to tap the local talent pool. With the employment scenario taking a healthy turn in India, hiring of RPO firms by companies for their recruitment solutions would certainly play a vital role in near future. And this would certainly ease the burden on the HR operations of a company.

Ultimately there is no correct conclusion as to whether RPO is the right path for a business to tread on for its manpower procurement; the answer will depend on particular business circumstances, and the attitude of individual HR departments towards the value that they can bring by themselves to the process. The key selling point for most vendors in this space is niche expertise. And as the oft-predicted talent shortage begins to take its toll, any company that doesn’t have sufficient expertise in- house, is likely to look to a third party – RPO, for solutions. The established vendors have the regularly updated repository of the talent pool with them that gets updated on regular basis using different tools that exist to facilitate that. One thing seems for sure that RPO in India or RPO in Bangalore is here to stay in the HR executive’s playbook.