Benefits of Third Party Recruitment

Topics: Recruitment, Human resource management, Employment Pages: 5 (1600 words) Published: May 20, 2011
Benefits of Third Party Recruitment
Kainat Siddiqui (M.Com, M.B.A) Asst. Professor KIPM- College of Management GIDA, Gorakhpur Abstract

A third party recruiter or an employment agency acts as an independent contact between its client companies and the candidates it recruits for a position. These firms or individuals specialize in client relationships and finding candidates, with minimal or no focus on other HR tasks. Most recruiters tend to specialize in permanent, full-time, direct-hire positions or contract positions, but occasionally in both. It is followed by middle and large sized organizations and being witnessed by all industries. In India HR processes are being outsourced from nearly a decade now and the industry is growing at a high rate. Does the third party recruitment system has the potential to fundamentally change the recruitment cost structure. Suppose, if hiring patterns are seasonable or cyclical, the fixed cost of maintaining a recruitment function in house during the quiet times, so that it is ready to go when needed, essentially becomes a sunk cost for the business. By establishing a variable cost structure with the provider, it gives the opportunity to establish better value for money, as your recruitment costs are truly paying towards your recruitment outcomes. Objective of study:- The basic objective of this study is to analyse the benefits of the third party recruitment system and whether this system is really saving the cost of recruitment of the organizations. Introduction:- Many organizations have started outsourcing its recruitment process known as recruitment process outsourcing (RPO) i.e transferring all or some part of its recruitment process to an external consultant providing the recruitment services. It involves paying a fee to leasing company or professional employer organization (PEO) that handles payroll, employee benefits and routine human resource management functions for the client company.1 Leasing is specially attractive to small and midsize firms that might not otherwise be able to afford a full services human resources department. But small businesses can expect to save from 15 to 30 percent of benefit costs. Most scholars argue that one of the biggest advantages of external recruiting is that the approach can facilitate the introduction of new ideas and thinking into corporate decision making right from the entry level jobs to the C-level jobs. The present value of the recruitment process outsourcing industry (RPO) in India is estimated to be $2.5 billion and it is expected to grow at an annual rate of 30-40% for the next couple of years. According to a recent survey only 8-10% of the Indian companies are complete recruitment processes.2 However the number of companies outsourcing their recruitment process is increasing at a very fast rate and so is the percentage of their total recruitment process being outsourced.

Outsourcing organizations strive for providing cost saving benefits to their clients. One of the major advantages to organizations who outsource their recruitment process, is that it helps to save upto as much as 40% of their recruitment cost with the experience, expertise and the economies of scale of the third party, organizations are able to improve the quality of the recruits and the speed of the whole process. Also, outsourcing enables the human resource professionals of the whole organizations to focus on the core and other HR and strategic issues. Outsourcing also gives a structured approach to the whole process of recruitment, with the ultimate power of decision making of recruiting with the organization itself. The portion of recruitment cycle that is outsourced range from preparing job description to arranging interviews, the activities that consume almost 70% of the...
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