The necessity to attract and retain better employees relative to competitors is for many organisations a longstanding strategic priority. Recruitment is an organizational process which can help companies in attracting skillful prospective employees, the process itself includes testing, evaluation and the selection of potential candidates. With time recruitment achieved great importance for organizations seeking to be leading performers where the competitive advantage is delivered by their employees.
Recruitment process outsourcing (hereinafter: RPO) is a form of arrangement where the service provider undertakes the entire recruitment process or a part of it depending upon the agreement between the vendor and the client. Moreover, RPO may be defined as a type of business process outsourcing, in which the company transfers the responsibility of conducting various phases of the recruitment process to the external agency. The recruitment process basically consists of four main stages: job advertisement, pre-selection of candidates, telephone interview and in-person job interview.
The RPO may not necessarily include the whole recruitment process, in many situations only a part is outsourced to the contracted partner. Among the HR areas, recruitment and selection is the second most popular to be outsourced after training and development. It is a strategic instrument to reduce costs per hire and time to hire and to manage hundreds or thousands of applications per year more effectively and efficiently.
Although RPO represents a profitable solution to reduce unwanted HR costs, it also comes at a price for quite a few issues. Some of the most frequently occurred problems using services of RPO are the lack of monitoring of the provided service by vendors, frequent contract violations by the RPO vendors and the lack of understanding of the corporate culture of the client firm. Besides that, clients are sceptical of sharing all their information with their service provider, which often leads to miscommunication between the two sides. In case the supplier of outsourced products and services underperforms or fails to perform the duties assigned, the client company will find themselves in a great risk as they, in most cases, do not have a backup plan to deal with the problems and depend on a single vendor. The characteristics such as the ability to adapt to the company’s culture, identification with the values of the company, being the part of a team are equally important as the experience and knowledge of a worker in determining overall employee effectiveness. The risk of the recruitment process outsourcing is that employees sourced and recruited through RPOs may not present a person-organization fit. While most of the RPOs tests are meant to check the formal requirements of a person-job fit such as expertise and experience, cultural value compatibility of the candidate can be accurately assessed only by the internal HR department of the client.
David, Banerjee & Ponnam (2016) were researching risks of RPO using the semi-structured face-to-face interview method with stakeholders of leading RPO staffing companies in India. They identified several risks. Desecration of the initial contact: During the interviews, both applicants and employers attempt to make a good impression on one another, applicants hope to get job offers while employers hope to attract top-quality employees. With RPO, the initial contact takes place between the applicant and the vendor, and not between the applicant and the client. Probability of contract violation: The RPO contract typically has many terms and conditions that are meant to be fulfilled by both the vendor and the client company. RPOs often encourage clients to sign a standardized contract form drafted by vendor, where these contracts usually do not adequately include performance standards and penalty clauses if the vendor does not fulfil the clauses of the contract. Failure to meet the performance standards must ideally result in penalties, such as a reduction in the payments to the vendor. Unfair practices by the vendor: It is mentioned that a few vendors ask the candidates to modify their resumes according to the job description of the client company, even if the candidate’s profile is not in sync with the stated job profile. Such practices are often done so as to fulfil the target on the part of the vendor. Reduced quality: One danger with RPO is that the vendor may have a vested interest in standardizing all parts of its service to achieve economies of scale across clients. Standardization may lead to loss of the client company’s unique organizational characteristics. Outsourcing in general may lead to degradation in the quality of the services provided. When the quality of services provided by the vendor is not good enough, the cost of an alternative solution, such as replacing vendors, attaining a long-term contract with the new vendor, or bringing the service back in-house, may arise substantially. Vendor’s lack of understanding of client’s organizational culture: Outsourcing can lead to the dissolution of an organization’s culture. Instead of empowering and valuing employees, an outsourcing decision alienates and deskills employees. Many problems can arise if there is a mismatch in culture of the client company and service provider. It is difficult for the vendor to understand the basic assumptions and beliefs that are shared by the majority of the people in the client organization. Mismatch in the placement of human resources: It is observed that because of heavy competition in getting jobs and due to various other reasons pertaining to the labor market, job seekers are compelled to retain their jobs, even if those jobs are not of their domain or interest. Differential treatment by client organization’s management: When HR functions are outsourced, the internal image of HR may degrade, as there is less interaction with internal customers, and minimum HR work is performed by the HR department. Outsourcing manpower resources may result in the loss of trust and commitment of the contract workers on the parent as well as the host organization. Low morale of contract employees: Most of the contract employees are recruited through RPO owing to low-cost economies. Further, as contract employee is supposed to work with the organization only for a limited period, companies do not see a strategic advantage in hiring these employees directly.
In conclusion, stakeholders indicated that if the client firms are more strategically involved with the RPO recruiters from the very early stage of the recruitment process, the latter may be in a better position to understand the profile of the candidate desired by the client. Furthermore, clients should take a more reasonable approach while putting pressure on the recruiters from the vendor and should provide continuous feedback to help them refine their candidate sourcing process.
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