Recruitment Outsourcing’s Future

 Recruitment Outsourcing’s FutureWe know that the recruiters are facing the challenges of how to adapt to a fast changing talent management environment, which is being reshaped by technological change.

Social media and applicant tracking systems are ‘automating’ parts of the recruiter’s typical functions, and job seekers and employers no longer rely on the recruiters’ black book to reach new networks. Recruiters will have to take on more strategic roles in talent procurement.

We also predict there will be significant changes to recruitment outsourcing.

We believe companies will continue to wrest greater control over their relationship with job candidates and bring more and more recruiting activities in-house.

After all, if some portion of your recruitment team is engaged in longer-term relationship-building with candidates, then it makes sense that it’s an internal function. The problem is that many companies simply don’t have the skill sets in place to master the end-to-end recruiting function, particularly in specialized fields or dispersed geographies.

We see two interest trends evolving in relation to recruiting outsourcing.

Agency outsourcing: In the past, companies would engage agencies to fill 80% of open positions (a wide array of repeatable positions) and use internal recruiting teams to source the more specialized 20% (scarce but strategically-critical talent such as developer or engineers.)

In fact the situation should be reversed. Companies should hire agencies to source the niche, high-demand roles, where access, speed and domain experience are critical. In-house recruiters could be used to source general administrative and operational roles.

We predict generalized recruiting agencies will struggle to compete against niche players with unique access to specialized talent. For example, a niche player might employ a retired automotive engineer to recruit a highly specialized type of engineering talent within a specific geographical location. The margins for such engagements are much higher than generalized recruiting, and a small player can compete against the largest agencies if they’ve built relationships in these micro-communities.

By the same token, the largest agencies which employ recruiting generalists find strong competition from in-house recruiters because the level of expertise needed to achieve general administrative and operations recruiting is lower.

Recruitment process outsourcing: A second model is the RPO. As companies try to pull more recruiting responsibility back in-house, RPOs offer companies an intermediate step between outsourcing 80% of recruiting efforts and bringing the same percentage in-house (which may take eight to ten years to complete). Like agencies, RPOs help companies develop critical competencies such as effective processes and procedures, and regulatory and risk-management expertise.

For more on the changing roles of recruiters, download the e-book, The Tru Files: New Role of the Recruiter.

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Innovation » future of business