The need to lower costs while increasing productivity is a constant concern for staffing firms. To overcome these sometimes opposing needs, some staffing firms have turned to outsourcing. Basically, outsourcing can take on many forms such as retaining a U.S.-based outsourcing firm, participating in split-fee networks for recruiters or hiring U.S.-based contract recruiters.
A less expensive option that progressing staffing firms are implementing is partnerships with an offshore recruiting firm. Currently, the cost of hiring an offshore recruiter is approximately half the cost of using a U.S.-based recruiter. By hiring an offshore recruiter, staffing firms can delegate task that are important but time-consuming. The additional time left from screening or sourcing candidates can be used to close open positions and focus on complex tasks.
Offshore recruiting occurs when a staffing firm uses overseas recruiters for either the full cycle or part of recruiting functions. Some staffing firms may open one or more offices overseas and hire recruiters to work for their firm. Others may contract with an existing offshore recruiter and outsource some or all of their work.
Typically, offshore recruiters offer full recruiting services such as identifying and interviewing candidates. They may also provide placement and billing services. Some staffing firms may only hire offshore recruiters for administrative tasks such as cleaning up their database with updates on candidates work and personal information.
Still, other staffing firms find that offshore recruiters are very helpful in prescreening candidates. Offshore recruiters are given a requirements checklist to follow. They enter the information into the staffing firm’s database for further screening. This usually requires staffing firms to share their database with their offshore partner.
This uncomfortable with sharing their database may have the offshore provider to build a new database. As the partnership matures, processes improve and staffing firms may trust offshore recruiters with the complete recruiting cycle. In some cases, firms may align overseas recruiters with a senior U.S. recruiter or branch.
While offshore recruiting can help staffing firms in many ways, it is not a magic tonic for dysfunction. Simply outsourcing duties to an office thousands of miles away will not bring sudden success. This is true whether recruiting functions are given to an offshore or U.S.-based firm.
As with any partnership, management at the staffing firm should closely monitor how the relationship with the offshore firm progresses. Success requires professionalism and consistent delivery of high quality work. However, if things take a negative turn, the problem could be with internal structures rather than the offshore firm. Some representatives might find shifting the blame to an overseas firm easier than taking ownership for poor performance.
Doing business across differing cultures and time zones that are separated by thousands of miles presents its own set of unique challenges. Staffing firms will gain the most benefits by acknowledging these differences and developing a plan that will make the partnership work. They should not, however, expect a different firm to make the necessary improvements to providing better service. Those who understand and master the positive aspects of offshore recruiting will reap not only benefits of lower costs but also in delivering a solid customer service model.
According to industry analysts, staffing firms that serve pharmaceutical and biotech, energy/chemical, telecommunications, technology and government sectors are the heaviest users of offshore recruiting. As with the technological advances the industry creates, IT leads the charge into using this concept.
Whether it is for temporary labor or direct hire for the industry, more technological companies realize the advantages. It helps that there is a huge demand for candidates in overseas markets. Many of the best candidates have geographically diverse backgrounds and are comfortable with working with overseas recruiters.
Research has also shown that increased use of offshore recruiters tracks the growth of the size of most staffing firms. Just 10 percent to 15 percent of U.S.-based outsourced recruiters are used by staffing firms with less than $10 million in annual revenues. An even smaller percentage applies to offshore recruiting firms. Once a staffing firm reaches $1 billion or more, close to half will use outsourced recruiters and 17 percent partner with offshore recruiting firms, according to Staffing Industry Analysts.
While larger staffing firms seem to get the most out of offshore recruiting, industry experts believe that smaller firms can also benefit. Some suggest that smaller firms might think their resources are too limited to build an overseas partnership. However, ignoring the possibility of being successful with an overseas firm could cost valuable business opportunities.
A primary driver for most staffing firms to outsource to offshore recruiters is cost. Generally, staffing firms can see a two-thirds cost reduction when they incorporate overseas operations into their recruiting model. Based on some estimates, monthly fees vary for offshore recruiters can be as low as $1,500; a pay-per-placement model might cost approximately $500 per placement. These fees are much lower than U.S.-based outsourced firms. For staffing firms that are watching the economy squeeze their profit margins, this is a welcome change.
Another impetus for offshore recruiting by staffing firms is using it as a way to pipeline candidates for larger clients. This mainly applies to clients that have predictable job descriptions and need talent in higher volumes. One example of this type of client is call center companies.
When staffing firms use offshore recruiting with vendor management system accounts, they are free to focus high-end resources and experience towards high-end clients. Tactically, staffing firms have an opportunity to use internal recruiters without the additional costs of paying workers compensation or benefits. Most partnerships are contracted on a month-to-month basis. Low demand means fewer recruiters are on the payroll.
Most good things come with challenges and offshore recruiting is one of them. Proponents of this new form of recruiting can wax eloquent about the benefits. At the same time, there are some wary about using overseas outsourcing for core competency functions.
A primary concern is sharing their candidate database with an offshore recruiting firm. Another issue is relying on the proficiency of an outside firm. Whether overseas recruiters can maintain a high level of productivity goes directly to the heart of the staffing business.
Staffing firms that partner with offshore recruiters may face pushback from U.S.-based recruiters. Still, others question whether candidates would be put off from talking to someone with a foreign accent about a job opportunity. All of these valid concerns could slow the momentum of offshore recruiting.
In addition, working with offshore recruiters is a hands-on experience for staffing firms. While offshore recruiters will handle part or all of the recruiting cycle, ongoing coordination will continue. There is work in training offshore recruiters on the recruiting tools used by the staffing firm.
Infrastructure, training and project management will have a significant role in the success – or failure – of the partnership. Some staffing firms may also provide culture training for offshore recruiters so they the right accent for American candidates that might feel uncomfortable with foreign-speaking recruiters. This is necessary to have a seamless process for clients and candidates.
Overall, the use of offshore recruiting appears to have a positive future in the staffing industry for most firms. The number of staffing firms that use offshoring as a recruiting model shows a steady increase. However, this does not negate the obvious learning curve and growing pains for a majority of the industry.
A realistic review of the benefits and challenges to offshore recruiting paints a clear picture of what staffing firms can expect. For certain, offshore recruiting is not a silver bullet to savings in time and money. Neither is it the final answer to finding a stronger pool of candidates.
The final decision to take this route should be strategic and have total commitment from senior management. Done correctly, staffing firms will enjoy the benefits of saving on operational costs and increased business potential that comes in incremental victories from offshore recruiting.