Companies outsourcing talent acquisition to third parties,
MUMBAI: A couple of months ago automaker Tata Motors outsourced its talent acquisition, barring CXO and top management hiring, to a leading recruitment process outsourcing company.
Financial services giant Citigroup’s shared services centre in Pune moved to recruitment process outsourcing (RPO) in October, and based on its experiences at the Pune centre the company plans progressive strengthening of the model.
Others like Mahindra, Wipro, Honeywell, L&T Technology Services and HDFC Life are among an increasing number of companies in India that are embracing RPO to get an edge in securing top talent.
In most cases, companies are disbanding their internal recruitment teams and outsourcing talent acquisition to third-party specialists who have larger bandwidth to secure talent, said companies and RPO firms.
This also frees up time for the internal human resource team to focus on strategy while end-to-end recruitment is taken care of by a specialist.
“The idea is while our talent acquisition team focuses on talent acquisition strategy, brand-building etc., our recruitment processing partner brings in skills in widening the funnel and increasing the reach,” said Gajendra Chandel, chief human resources officer, Tata Motors.
This helps in building predictability and scalability on the one hand, and improves candidate experience on the other.
Tata Motors has 15,000 employees.The shift in strategy is boosting the country’s RPO market. Leading domestic companies in this segment, including PeopleStrong, Randstad, TeamLease Services, FlexAbility (RPO unit of ABC Consultants), said there’s been a 40-50% increase in business in the last 12-18 months.
For employers, the benefits are manifold, including a 20-25% reduction in total cost of ownership through significant reduction in costs like sourcing costs, salary hikes and cost per hire; 15-20% improvement in time taken to fill a position, and an improvement in selection ratio by almost 40%.
Anuranjita Kumar, chief human resources officer, Citi South Asia, said, “To address the hiring volume for complex skill sets (in big data, micro strategy, etc.) in a time-bound manner, we entered into the RPO.”
Wipro declined to comment on the matter. Most of the contracts are for about Rs 100 crore for an approximate duration of five years while some are Rs 50-100 crore.
The cost of hiring significantly falls over a period of two-three years as RPO replaces internal talent acquisition cost in a variable fashion, taking care of the fluctuation and unpredictability in hiring volume.
“We are doing one permanent hiring every minute in 365 days a year and have picked up five large clients in the last six months,” said Pankaj Bansal, chief executive officer of PeopleStrong. Vinod Subramanian, head of FlexAbility, said several companies in India which are seeing growth are coming to specialists for volume hiring and quality is one of the reasons.
As the developed markets of North America and Europe mature, human resources outsourcing (especially in multi-process human resources outsourcing and recruitment process outsourcing) is pivoting towards the faster growing markets in Asia Pacific, according to the latest Everest Group research report. India has one of the fastest-growing markets worth $660-700 million and is expected to grow at a cumulative annual growth rate (CAGR) of 24-26% from 2015 to 2020.
In India, the RPO demand is being driven mainly by banking and financial services, technology, pharma, healthcare and telecom sectors. RPO firms have been prompted to increase their team size to meet the increase in demand.
TeamLease has, over the last couple of years, set up a dedicated RPO team, said Rituparna Chakraborty, executive vice-president, Team-Lease Services. PeopleStrong has increased its team size by 50% in the last one year.