You need the best talent on-boarded and retained to fulfill your ambitions. Do you hire them by your own team or get a service provider to do the job? Or you take a combination approach? While it could be safe to go for a combination or hybrid approach, let us have a formula that determines when to do it in-house and when to outsource. There are multiple factors: cost, efficiency, returns on investment, expertise, capacity, focus on core business, flexibility to match the peaks and troughs of hiring demand. Can we organize these factors into a simple format that facilitates easy decision-making.
Do you have a talent strategy?
This is not a rhetoric question. Talent strategy gives a clear idea of the roles and the number of people for each role they need to hire during the year. And for each role, they should know what competencies they require, the budgets, timelines and where the desired talent is available. They must also have a path for each role to develop and progress further. Not many organizations have this clearly defined and agreed among their top management.
Ideally, you should know the roles which give a competitive edge to the organization. These need not be the senior-most roles in the company. Depending upon the strategy, the competitive advantage of your army could be the foot soldiers or in some cases, it is the Generals; and in some other cases, it could be the mid-level managers like Captains and Majors. Irrespective of the level, the roles which give you the edge in the market, need to be the focus of the Board. Specialists must be deployed to fill these roles. Even when you have a team in-house sourcing talent, you get internal references and you have your own database of candidates, you outsource the activity to an expert organization to deploy one uniform method.
There are roles which are essential for the day to day functioning of the organization. You look for efficiencies in this case. Most often, you would have outsourced these roles to a Staffing company. A well-oiled machinery can service these requirements well. Do you run this machinery in-house or outsource?
The answer lies in the cost vs benefits. Typically, the fully-loaded cost of a recruiter in India is 1.0 to 1.5 million INR per annum for a company. This figure does not consider the opportunity costs. These are just the direct costs such as wages, tools, infrastructure and the cost of supervision. Many organizations fail to see the hidden costs associated with a full-time employee, let alone the opportunity costs. If the cost savings by in-sourcing recruitment are higher than the direct costs, it is a no-brainer to set up an in-house team to acquire talent.
How confident are you in attracting talent by yourself?
Top talent is not easy to come by. Depending upon the skill-set being hired, the depth of experience being looked for and the demand-supply situation for that kind of talent, candidates behave differently. When your target market for talent is experiencing extreme levels of demand (too high or too low), candidates are likely to have many questions regarding the opportunity. They feel at ease in asking questions to a third-party than the potential employer. Hence, such queries are best addressed by your recruitment partner rather than by your own team. If you haven’t outsourced recruitment in such cases, you are missing out on the best talent.
Sourcing candidates is just one of the many steps in the recruitment process. However, this is one of the most crucial steps. How confident are you about the expertise and capacity of the in-house team in attracting the best from the market? Depending upon the role that you are trying to fill, your Recruiting partner deploys the recruiter who regularly fills such roles. It is most likely that the agency will be able to do a better job in attracting the best than your in-house team.
You may have an in-house team filling a set of roles which are non-strategic but essential for day to day functioning. Let us assume that the cost vs benefits equation is in your favour and hence, you are happy to run the engine under your direct supervision and control. What do we do to ensure that the best talent is being picked up and at the optimum cost? We need to benchmark our processes to ensure that they are fit for the purpose.
Do you have the intent?
Leadership intent and belief plays an important role behind the decision of outsourcing. If your context is short-term, the answer is simple : you have to do everything hands-on, fight multiple battles at the same time, minimize cash outflows and ignore the opportunity cost. If you think in the long term, you have to decide what is strategic and what is not; secondly, you need to evolve a talent management strategy and execute it accordingly. Often leaders do not find the bandwidth to define the strategy for the talent attraction, assessment and development. Hence, their execution steps in recruitment become haphazard and hence, inefficient.
Leaders in HR, Procurement and Finance negotiate with a service provider on aspects like replacement guarantee, ownership of candidate, scope of work, MIS, penalties and so on. Unfortunately, they do not find the time to discuss talent strategy, employee value proposition and market trends. In-house team or an outsourced team, both need investment of time and efforts to co-create talent attraction ideas and fine-tune talent acquisition processes. That calls for not only an intent but also deep commitment.
In summary, ask yourself the 3 questions and decide what you should outsource. Needless to mention, these are strategic and deeper questions than the run-of-the-mill ones such as hiring plan timelines, numbers and expertise to hire. Outsourcing or doing it in-house is an important decision. The questions which help making this decision better be tough!