Offshore outsourcing is a growing trend in almost all developed countries, and each country seems to be intent on developing its own niche outsourcing markets, specializing in different fields, such as information technology and recruitment.
At first, companies jumped on the offshore-outsourcing bandwagon with their hiring needs still not completely defined, but that quickly changed as companies became more strategic. Offshoring of services transformed “from an exotic and risky strategy to becoming a routine business decision”.
Offshored outsourcing may have been relatively new for all types of industries in the 1990’s up to the early years of the 20th century, but now, offshore outsourcing is the new normal.
Offshored Outsourcing— The New Normal
Offshore outsourcing became the new norm as executives tried a more holistic approach. They evaluated their core objectives to reap off their expected benefits out of offshoring and to mitigate the risks in outsourcing, through the practice of defining the services they want to outsource and specifically choosing geographic locations that can best deliver the offshored outsourced services.
Offshore outsourcing activities have begun with IT infrastructure, but companies gradually learned to outsource business processes that are not part of core functions, meaning no matter how efficient they are in delivering these activities, it still cannot offer a competitive advantage for the company.
Offshore outsourcing trend has become even more of a go-to strategy when companies became proficient in modularizing almost any of their processes, allowing them to segregate their activities, and passing on all or sections of their non-core business activities to an external provider.
This offshored outsourcing trend is now joined by more than half of the world’s top 500 companies, with Asian countries leading as great offshore destinations. Here is an infographic showing the statistics of the top countries in offshore businesses services in 2017.
Statistics taken from AT Kearney
The infographic clearly indicates how big the global offshore industry has become. It shows the offshoring landscape in 55 countries on three categories: financial attractiveness, people skills and availability, and business environment. Six Asian countries are in the top ten, which only proves just how offshore outsourcing is currently performing in this side of the world. It’s on the rise and is expected to keep a positive trajectory. Philippines’ offshore-outsourcing industry, most specifically, is quoted to be “unstoppable” by BussinessMirror.
Different business processes are now being offshored. One sector that’s currently making noise is recruitment process outsourcing. 10 years ago, offshore RPO gained its popularity among multinational and medium-sized corporations as a strategy to focus more on core functions.
Offshore RPO— Now Used By All Types of Companies
Human resource is a valuable asset for every organization, hence companies have to invest big in acquiring top talents, which may be why offshore RPO quickly caught on. Currently, offshore RPO as a business strategy is now being utilized by all types of companies, and in all sizes.
As more and more companies engage in offshore RPO, more offshore RPO providers have also emerged in the market. Just ten years ago, offshore RPO was only widely used by developed nations to cater to their clients, but now, offshore RPO firms from all over the world are capable of providing customized recruitment solutions to all types of clients.
Staffing firms are just one of the companies that can benefit from an offshore RPO engagement.
As we mentioned before, non-core functions are better off outsourced. In the case of staffing firms, recruitment activities that can be done virtually, such as sourcing of resume, screening of candidates, interviewing candidates, and VMS recruiting support activities, are more efficiently done by offshore recruiters, especially now with the current global setting.
But what exactly makes offshore RPO a necessity for staffing firms now?
Offshoring RPO—Why You Should Do It Now
Staffing firms are often busy with a ton of recruitment jobs, and having to do repetitive tasks is only going to take up their time, pulling them away from doing important core business functions.
These past years, staffing firms are seeking the help of offshore RPO firms, now more than ever. offshore RPO firms are working on making their services more reliable, quick, and easily accessible, making offshoring RPO a valuable strategy for staffing firms interested in getting ahead of their competition.
There are a bunch of reasons why offshoring your RPO is extremely beneficial for your firm, but why does it need to be now?
Here are some factors that you need to take advantage of now.
The Emergence of Supportive Government Programs
Asian governments, in particular, are currently going all out to support the offshore-outsourcing industry. They are taking up measures to liberalize their economies to serve as an attraction to foreign investors and to give incentives to multinationals to outsource to their countries.
India gives tax exemptions on the export of IT-enabled services and regards IT as one of the country’s top priorities. Software technology parks have been created, with state-of-the-art IT infrastructure and telecom facilities that serve as “single window clearance” for all legal compliances.
With the participation of both large businesses and the public sector, India is also working on getting larger bandwidth availability.
Meanwhile, in the Philippines, Information Technology and E-Commerce Council, with its main objective being to develop the country as an E-service hub, have been formed. Philippine Cyberservices Corridor has also been launched. It was created to provide a variety of BPO services. And in 2006, the government provided education grants for training of BPO applicants.
The Department of Information and Communications Technology held a training program on Information Technology-Business Process Management planned for the purpose of improving the qualifications of the local talent pool.
Staffing firms who are not offshoring to these ideal offshoring locations are going to miss out on the perks granted by governments towards outsourcing, such as tax exemptions.
They also can not take advantage of the offshore RPO providers’ more efficient and modern IT-related technology, which are results of government efforts towards developing IT services.
Also, these staffing firms can not have the assistance of virtual recruiters who are now better equipped at analyzing a great amount of data, creating dashboards and summary reports, and pinpointing patterns for quick managerial decisions based on the information gathered.
Development of New Technologies
Offshore RPO is able to provide businesses with effective recruitment solutions. This is made possible by the emergence of new technologies. As the technology keeps getting better and better, these RPO firms are also going to be able to offer even more high quality but still cost-efficient recruitment services.
Currently, offshore RPO providers from Asia such as India and the Philippines are already working on improving cybersecurity. India’s government has taken the initiative by implementing laws that are going to strengthen the country’s resilience against cyber attacks.
The Philippines, which is among the offshoring hub in Asia, has also taken steps towards modern IT data protection. During IT & Cyber Security Forum, digital government programs meant to create stricter cybersecurity programs have been revealed. It aims to make the country a hub for local and offshore business.
Along with the improvement of data privacy, experienced offshore RPO providers are also now resigned to the fact that social media is a game changer, especially in the recruitment industry. RPO firms have become social media-savvy, able to find passive top talents.
Not all qualified candidates have their resume posted on job boards. In fact, the ones who are the best in their fields do not bother posting their qualifications online. But they may own social media accounts such as Facebook that can give the recruiter a clue about the candidate’s work experience.
Again, as we mentioned earlier, small sized staffing firms have limited resources. Recruitment process sometimes involves a lot of data, hence it is always better if their RPO firm is capable of cloud computing. This way, the staffing firm gets to further save on hardware costs, data centers, software, and the personnel required to set up the technology.
Cloud computing also allows for improved business collaboration between the company and the staffing firm through standardizing the system, and also increases the data security surrounding those files due to impenetrable cloud systems.
Sharing data through a cloud server also makes it possible for a 24-hour business activity. Staffing firms who are under VMS arrangement, wherein time is of the essence, are going to find this setting most favorable.
By outsourcing some of the recruitment activities, such as identifying candidates, and reading resumes, staffing firms get to save time on doing repetitive tasks and enable them to focus on working on core business.
While the foreign staffing firm sleeps at night, the RPO provider in the Philippines can continue with the recruitment processes, as usual. Their combined efforts result to double the work being done, giving them recruitment velocity.
By not choosing to offshore their recruitment processes, staffing firms are going to be at a losing end, especially in terms of advantages brought about by having modern technology.
They are going to miss out on the newly improved data privacy technology of these offshore RPO providers, which are specifically designed to protect outsourcing industries, and they are going to be deprived of virtual recruiters who are going to scour the social media for qualified but passive candidates.
Most importantly, they can’t have the perks of having a cloud computing, which is capable of saving them dramatic costs in terms of hardware, software and data centers. Staffing firms who are under VMS recruiting but not offshoring their recruitment process are also going to lose to their competitors who do offshore.
In the past, it was difficult to get information about the policies and contracts on the offshore outsource transaction. The client’s employees were often not thoroughly informed about the technology, plans, and other processes.
But now, the outsourcing providers have worked on increasing its transparency and make it a point to reveal their policies, contracts, and pricing. A high level of transparency is now expected to maintain the trust between the client and the RPO firms, resulting in better partnerships.
Getting Ahead of Competition
This last reason as to why you should offshore your RPO now is a culmination of all the other reasons that were mentioned.
Because of the governments currently being supportive towards offshore outsourcing industry, the quick advancements of technology in the forms of cloud computing, VMS recruiting, and social media, and the increased transparency between the client and the RPO provider, staffing firms are encouraged to take the way of offshoring RPO.
This means that your competition may already be taking advantage of its benefits. By refusing to offshore some or part of your recruitment activities, you are unintentionally giving your competition the head start that they need.
It’s not enough to just level the playing field by also engaging with an RPO firm, it’s even better if you can get ahead of your competitors. You can do this by partnering with the best RPO providers in the industry. In the next articles, we are going to be discussing how to select the right RPO partner to engage with. Stay tuned for that.
Offshore outsourcing has come from being unknown in the 1990’s to becoming a go-to strategy for businesses all over the globe. Countries are working on developing their own niche offshore outsourcing market to cultivate economic growth. This especially goes for countries in the Asia Pacific.
Offshore outsourcing is now the new normal for various industries. One such industry that is thriving under offshore outsourcing is the recruitment sector. This business strategy is most advantageous for staffing firms who have to do repetitive recruitment processes.
By passing on the non-core essential functions of your recruitment to your offshore recruitment firm, your organization can be more focused towards the expansion and innovation of your brand. For the big scaled staffing firms, offshoring RPO can help them work on the massive amounts of candidates they have to find, also during times wherein they are under VMS recruiting.
With the current situation we have right now, wherein governments are implementing supportive offshore outsourcing policies, technologies are fast evolving, and transparency is promoted, staffing firms are in the best position to offshore all or part of their recruitment processes.
For those staffing firms who do not offshore their recruitment processes, they are going to find themselves left behind by their competitors who do engage with RPO providers.
Are you already offshoring your recruitment process? What sort of competitive advantage has it given you? Share your thoughts and write a comment down below!
This was originally published in Sysgen RPO website.
Lewin, A., Massini, S. and Peeters, C. (2009). Why are companies offshoring innovation? The emerging global race for talent. Journal of International Business Studies, 40(6), pp.901-925
Neogroup.com. (2018). [online] Available at: http://www.neogroup.com/PDFs/Whitepapers/Challenges_in_BPO.pdf [Accessed 9 Sep. 2018].
Statista. (2018). Offshoring: leading countries 2017 | Statistic. [online] Available at: https://www.statista.com/statistics/329766/leading-countries-in-offshore-business-services-worldwide/ [Accessed 9 Sep. 2018].
Diversify OSS. (2017). Offshoring Predictions for 2018: Part 1 | Diversify OSS. [online] Available at: https://diversifyoss.com/newsroom/offshoring-predictions-2018-part-1/ [Accessed 9 Sep. 2018].
BusinessMirror. (2018). Defending the PHL outsourcing industry. [online] Available at: http://businessmirror.com.ph/defending-the-phl-outsourcing-industry/ [Accessed 9 Sep. 2018].
Sysgen RPO. (2018). Offshore RPO Services | Offshore Sourcing and Recruiting | Sysgen RPO. [online] Available at: http://sysgen-rpo.com/ [Accessed 9 Sep. 2018].
Courses.cs.washington.edu. (2018). [online] Available at: https://courses.cs.washington.edu/courses/csep590/04au/clearedprojects/Dorwin.pdf [Accessed 9 Sep. 2018].
Asian Development Bank . (2018). [online] Available at: https://www.adb.org/sites/default/files/publication/28359/wp093.pdf [Accessed 3 Aug. 2018].
Newsbytes Philippines. (2018). DICT produces first batch of business analysts for BPO sector. [online] Available at: http://newsbytes.ph/2018/08/06/dict-produces-first-batch-of-business-analysts-for-bpo-sector/ [Accessed 11 Aug. 2018].