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Outsourcing: The Internal Value of the External.

The last few years have seen two contradictory trends impacting on the world of outsourcing. On the one hand the open talent economy has led to the increasing employment of contingent workers and an impulse towards more varied and flexible working practices, a medley of approaches in which outsourcing is an attractive option. On the other hand, politicians have used offshore outsourcing as a scapegoat when discussing job shortages, a way to shift responsibility for job shortages from their own policies and onto those of corporations, making a reduction in outsourcing a good PR move for many companies.

In this climate, do the benefits of outsourcing outweigh its challenges and costs? And if so how can it best be managed?

A huge case for outsourcing

The value of outsourcing is demonstrated on a vast scale by the success of Bharti AirTel Limited. The largest telecoms provider in India, serving a market that is growing in both size and wealth, Bharti’s work is almost entirely carried out by outsourcing. None of the technical work is provided by the core company, with both software and hardware needs being outsourced. Bharti itself focuses on branding, creating the connections between services and ensuring a smooth customer experience. From 2003 to 2010 its sales revenues grew by 120% per year and its net profits by 282% per year. By any financial measure, Bharti AirTel is a huge success.

But you don’t have to build your business around outsourcing for it to work for you. Specialist firms can often provide highly efficient services that fulfill a job better and more cheaply than trying to do everything in house. And if an outsourced resource fails to deliver then you can go to another provider rather than face the challenges of firing and hiring anew.

Learning from outsourcing mistakes

We can all learn from our own mistakes but it’s far less painful to learn from those of others. Nowhere is this truer than in outsourcing.

Boeing’s 787 Dreamliner was an infamous outsourcing disaster for the firm, failing to live up to its promise in nearly every way. But it was the way the outsourcing was done, not the fact that it was done, that caused the problems. Keen to get the 787 up and running, the company broke the project down into separate parts, many of them provided by different companies. Because this was done too early in the process there was a lack of design integration and the parts didn’t work properly together. Outsourcing at the right stage in your process, and knowing exactly what you want from the outsourced resource, is vital to success.

The case of Blackberry, as discussed by Michael G. Jacobides, is another useful one. Blackberry ran its value chain in a way that allowed other companies to gain ground in the sector, rather than in a controlled fashion. By ensuring that you remain a dominant actor (a true partnership) in an outsourced value chain, one who helps shape the customer experience, you ensure your own place in the eye and the budget of customers.

And if you think that you will receive bad publicity, whether externally or within the company, for your outsourcing then have a defense prepared. If you have a strong case for outsourcing, and there is indeed a strong case to be made, and you are ready to defend it, then you can avoid being stalled by awkward challenges.

Making the most of your tools

Outsourcing is just one more tool in a manager’s toolbox, but it is a very valuable one. Used right it can bring great benefits. So look at where outsourcing can benefit you and plan to use it well.

Ready to start a discussion regarding the value of outsourcing and strategic partnerships? We have over a decade of experience and are ready when you are!

 

Image credit: natis76 / 123RF Stock Photo

Recruitment Process Outsourcing Association (RPOA) Announces 2013-14 Board Members

Method3 is pleased to announce that Mark Lukens, one of our Founding Partners, has been named to the Board of the Recruitment Process Outsourcing Association (RPOA), for 2013-2014.

“Method3 has a history dating back to 1998 and played a role in shaping the RPO market as we know it today,” emphasized Mark Lukens. “It is an honor to serve on the Board of such a dynamic and impactful organization. What a great opportunity to help define and elevate the entire recruitment process outsourcing industry going forward.”

About RPOARPOA

RPOA, a nonprofit 501(c)(3) organization, recognizes that Recruitment Process Outsourcing (RPO) is a unique industry requiring a common set of requirements and standards. Its membership is comprised of RPO service providers committed to educating the marketing about RPO, promoting its benefits, incorporating common metrics and comparative information, and developing and enforcing certifications. Member companies benefit by better understanding the benefits and risks of recruitment process outsourcing, having access to a variety of tools to support the decision to consider RPO, access to certified service providers through an organized RPO process, and direct connection to other members to learn from their experiences.

Link to the Press Release.

For Immediate Release

Method3 Recruitment Process Outsourcing Acquires Augustine RPO

Embarks on strategic innovation strategy

Camp Hill, PA. – October 31, 2012 –  Method3, today announced that it is acquiring Augustine RPO, a leader in the Recruitment Process Outsourcing industry. Based in Harrisburg, PA, Augustine is a long time player in the RPO industry.  Augustine is the first in a series of planned strategic initiatives by Method3 aimed to supercharge its RPO ecosystem.  Terms of the transaction are undisclosed.

Augustine was founded in 1998 as an early pure play RPO Company.  Since their inception, Augustine has enjoyed a strong thought leader position and a solid track record of recruitment excellence and financial performance.

“I am very excited to welcome Augustine and their associates to the Method3 family,” said Mark Lukens, founding partner of Method3.  “Augustine has demonstrated world class RPO delivery capabilities and strong financial management disciplines with a track record of over 14 years of innovation. With this initiative we are gaining strong talent, innovative technologies and processes, and an impressive client portfolio thus broadening our human capital capabilities. As a result, we have strengthened our position as a leading provider of RPO and human capital solutions, helping our clients keep pace with innovation to lead their organizations into the future.”

“By uniting our proven RPO delivery approach with Method3’s human capital experience, our new practice will offer clients a broad array of human capital services ranging from RPO and technology solutions to HR transformation,” said John Laporta, Founder of Augustine.  “We are thrilled that by bringing leading talent from both teams we can help our clients get even more from their human capital investment.”

The Augustine acquisition exemplifies Method3’s “build, buy and partner” innovation strategy to move quickly into new markets and capitalize upon key market transitions.

About Method3

Method3 is an industry-leading provider of Recruitment Process Outsourcing and HR Transformation services to companies of all sizes.  Through great people, proven process, and leading technology, Method3 delivers comprehensive solutions that drive innovation and help people and businesses realize their full potential. Information about Method3 can be found at https://www.method3.com.

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Press Contacts:

Mark Lukens, Method3
+1 518 314 9114

You have done a fantastic job of building your business. You have hired some former co-workers to help you grow your business. They referred some folks from their network that you hired to expand even further. Now you are continuing to grow and your network is tapped out and the steady flow of employee referrals has slowed down to a crawl. Additional work is being sold and contracts need to be delivered on but the pipeline of quality candidates is dry. Does this sound familiar?

Small and medium sized businesses do many things well but recruiting is not one of them. Most companies that are under $50 million dollars in annual revenue do not have a sufficient number of openings to build a dedicated internal talent acquisition capability. Some of these companies rely on their in-house Human Resources person or department to meeting their hiring needs and experience predictable frustration acquiring key talent.

Recruiting talent today is an extremely costly, time-consuming, and scientific process performed by highly skilled professionals using extremely specialized tools. According to the US Department of Labor, Bureau of Labor and Statistics in 2010 the unemployment rate among Americans with a Bachelors degree was 5.4%, those with a Masters degree was 4.0%, a Professional degree was 2.4%, and a Doctoral degree was 1.9%. In a labor market this tight, competing for top talent requires much more than a business owner, department director, or human resources generalist has the capacity to do.

CareerXroads publishes an annual Source of Hire report, http://www.careerxroads.com/news/SourcesOfHire10.pdf, which analyzes the source of hire for all external full-time hires; both exempt and non-exempt employees are included in the report and all contingent hires are excluded. Of the many data points in the report there are two which make an undisputable case that small and medium companies should outsource their talent acquisition needs.

The first point is how dramatically sourcing talent has changed. In 1998, 28.7% of all new hires were sourced using print advertising. In 2010, only 2.5% of hired candidates were sourced using print advertising. One can safely assume that the percentage of exempt hires sourced from print advertising is much lower than 2.5%. This change is dramatic and is the single biggest trend affecting the small company’s ability to attract talent. Surprising, business owners and HR generalists still strongly rely on print advertising to attract talent. Strong, educated candidates rarely look for jobs and when they do they generally never would turn to their Sunday paper.

The next telling data point is the fact that hired candidates originated from twelve different sources; many of which involve web-based tools like job-boards, career sites and social media. These tools require a dedicated commitment for predictable success, a commitment that a business owner or HR generalist is unlikely to undertake usually because of time constraints.

These are just some of the reasons that a Recruitment Process Outsourcing (RPO) partner may be the answer for you. RPO providers give you a best-in-class approach to talent acquisition that is on-demand and scalable. And when your hiring needs go away, most of your costs go away as well.

A good RPO provider will develop a recruiting brand for you, have access to all of the relevant on-line tools, they will assign a skilled staff to fill your positions, they will apply a scientific process to your needs, they will manage the relationship with you, and they will give you constant updates and feedback.

Perhaps the biggest benefit of partnering with an RPO provider is the paradigm shift from reactive recruiting to proactive recruiting. You know what types of people that you hire you just can not always predict when you will need to hire. Usually, you will recruit only when a position has opened. A good RPO provider will help you identify what your recurring needs are and help you develop a recruiting brand to take to the market. They will then create a presence for your company on the major job boards and on social media which will develop into connections with passive candidates that you will be able to build a relationship with so when the time comes to hire, you will have a meaningful pipeline of qualified candidates to begin your search with.

As a business owner, you are conscious of all expenditures so you are certainly wondering what this service costs. An RPO provider will customize a plan for your specific talent acquisition needs. The plan they present to you should contain timelines, service level agreements, and specific costs. You should expect the total costs to be roughly 8-12% of first year annual compensation depending on the type of positions, location of the positions and volume of positions.

If you just have just a few or even one key opening you may think that RPO is not a viable option however that is not necessarily the case. Some RPO providers will customize a solution for you no matter how few needs you have. So whether you anticipate hiring one key individual in the next year or several hundred, consider outsourcing; it will save you time, money and lost opportunity.

Blogger: John Laporta