Outsourcers say they do better than in-house recruiters

Many firms are better at screening out, rather than screening in, candidates
By David Brown
|Canadian HR Reporter|Last Updated: 05/21/2004

Barry Siegel likes to give a little test to HR and business leaders responsible for recruitment and staffing.

“Every company has at least one position they have a tough time to recruit for,” he says. “I challenge people to pick up the phone and call (their) organization and say they have every one of those attributes for that position and see what happens. I bet them they can’t even get an interview.”

That’s a sign of a fundamental flaw in the recruiting philosophy and system, one that likely means the organization is not attracting and retaining top talent, says Siegel, the president of Recruitment Enhancement Services. The organization has been credited by HR outsourcing magazine

HRO Today

as being one of the pioneering recruitment outsourcing agencies.

Why do good candidates fall through the cracks? “Because companies are not candidate friendly,” Siegel says. “They are good at screening out and not screening in.”

Many organizations retain an old-school philosophy of screening out candidates rather than creating a process to actively seek out and attract top talent. What’s more, even if they do adopt a more proactive philosophy, most organizations would not have the capability to turn that philosophy into practice, he says.

They simply lack the tools, technology and processes. Even if they have great recruiters in-house, they inevitably get pulled into other tasks or asked to do HR-related things outside of recruitment. “Our people are strictly dedicated to recruiting,” he says.

Most companies do some form of recruitment outsourcing, whether it is a temp agency, or screening or assessment, he says. But he believes a growing number of organizations will take the next step to completely outsource the entire recruitment function. “Recruitment outsourcing is when a company allows a third party to take over their people processes, tools and technology to perform everything from requisition to hire. That is what I call total outsourcing.”

While outsourcing is getting a lot of attention as a solution for HR departments looking to reduce time spent on administrative activities, recruiting, in the minds of some, is too strategically important to hand over to a third party.

The demand for outsourced recruitment has really taken off in the United States, and it’s likely the Canadian market will follow suit, says Bruce Ferguson, vice-president of talent acquisition for HR outsource services provider Exult, the firm that signed a major deal to take over much of BMO’s HR last year.

“My sense is that it is growing,” he says. “Three years ago firms said ‘We will outsource our back office transactional stuff like payroll — but not recruiting because it is too strategic.’ That has totally shifted, I would say, in the last two years.”

Not only do most HR business process outsourcing deals now include recruitment, there is more interest in outsourcing recruitment on its own, he says. “There are a number of U.S. companies, from a single process perspective, looking at outsourcing recruitment,” he says.

“Two years ago it was us going out to try and sell the process. Today we are receiving requests for RFIs and RFPs. They are coming to us now.”

There are a number of reasons for the increased interest.

“Companies have divided the recruiting pie into two pieces: high-end executive recruitment which companies are retaining and do view as strategic, and lower levels where there can be a number of efficiencies that can be garnered through an outsourcing solution,” he says.

Going from economic boom to recession in such a short period of time made it clear to many organizations that recruitment needs ebb and flow, sometimes dramatically, he says.

From an operational perspective, more business leaders now feel it doesn’t make sense to have permanent in-house staffing functions when the demand for staffing services change so much. It’s excess capacity they don’t want to carry.

The business case is the same as for any outsourcing arrangement. Economies of scale enable the recruitment provider to perform highly repetitive tasks — the administrative elements of recruitment — more efficiently and at less cost, he says. For example, Exult gets a better deal from applicant tracking system provider Deploy for its top-of-the line software because it has such a high use rate. Similarly, outsourcers can buy space on job boards in bulk or do background checks in mass. All of this helps drive down the costs of recruitment.

While skeptics may be concerned about outsourced recruiters being able to find people to match corporate culture, Ferguson maintains this isn’t a problem. There is no reason a recruiter can’t have a thorough knowledge of the client’s workplace culture. Exult will often actually hire the best recruiters from the client organization, he says. A core group of recruiters is then assigned to the new client to ensure consistency in contact between the two organizations. Those recruiters may have to work with other clients, but only when their primary client doesn’t need them. In this way, recruiting resources can fluctuate with demand while still ensuring consistent service with recruiters who are very familiar with the hiring organization.

One of the other reasons Canadian employers may balk at the idea is that the model works best for organizations filling a large number of positions, he says.

“We are talking about pretty high volumes. We are not talking about 20 or 30 hires a year. We are talking about 1,000 or more a year.” But as providers sign up more clients, and the model improves, outsourced recruiting will be more feasible for smaller organizations making fewer hires, he says.

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