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RPO is BPO’s new
billion-dollar-baby
High attrition rates may be a blot on the great Indian BPO
success story, but this problem has helped spin off a niche
industry - Recruitment Process Outsourcing (RPO) - which is
expected to grow by a billion dollar this fiscal to about $3.5
billion. The industry is set for rapid growth with a large
number of companies in India and from abroad seeking to
outsource their hiring-related jobs to third-party vendors here
in order to save costs as well as time.
“India has been a hub of global outsourcing activities and RPO
is the sunrise segment in this sector,” hiring industry umbrella
body Executive Recruiters Association’s Executive Director B R
Muralidharan said. “In India, RPO is already a $2.5 billion
market and is expected to grow at a rate of 30 to 40 per cent
during this financial year,” he said.
This new buzzword is already enjoying taste of success with a
number of corporate giants adopting the RPO model for their
hiring needs inside and outside India. The hiring needs of
British mobile major Vodafone is taken care of by RPO provider
Alexander Mann Solutions, which also handled accounts of clients
like Credit Suisse, HP, Prudential and Capgemini.
Closer home in India, the BPO arm of the country’s third largest
IT firm Wipro has outsourced its recruitment process to
MeritTrac and aims to reduce its hiring costs by 15-20 per cent
by this move. “Right hiring is the first and most important step
toward reducing attrition, with our objective being for a
‘hands-free’ recruiting process,” Wipro BPO CEO T K Kurien said.
Kanika Vaswani, Associate Partner at city-based RPO service
provider Elixir Web Solutions said: “RPOs have been accepted in
the mature markets. This allows an HR manager to focus on other
core functions.” Elixir started its RPO business about six years
back, catering mostly to the IT clients. However, the market has
expanded considerably and now its clients come from across the
sectors, Ms Vaswani said.
“We are now hiring in hundreds for many Fortune 1000 companies
across sectors and 80 per cent of all the hirings we are doing
are for US-based companies and the remaining 20 per cent are for
companies from Europe, Australia and Canada,” she added.
Another Indian RPO service provider Blue Square Consultancy
Services’ CEO Madhu Khanna said India has managed to get a
leverage in the business with its rich outsourcing experience.
“The future of RPO sector is bright with a chunk of the US
workforce retiring in the next 5 to 10 years.”
Hiring process
“At present, the US-based recruiting and staffing agencies
outsource their back-end operations to India on a revenue
sharing basis and will continue to do so, but the difference
would be seen with a large number of vacancies coming on
board,” Khanna added.
Besides saving costs and reducing cycle time, RPOs also help
companies improve quality of hiring, industry players believe.
While companies had reservations initially about outsourcing
their recruitment process, rising attrition rates and expanding
sphere of overall HR functions have made them accept and welcome
borrowed hands to handle the hiring process.
All that a firm seeking to outsource its hiring functions needs
to do is to provide an RPO with the details of job openings and
the salary range in the offering.
From here the RPO takes over, advertising for the position,
screening resumes, shortlisting candidates and finally going to
the employers with the right professionals. The openings can
range from a fresher to a very senior employee of a company.
Outsourcing service providers are now increasing in number to
become niche firms focused on HR outsourcing business.
Recruitment process outsourcing has also come as a new lease of
life for smaller companies with a workforce of around 100 to 150
people, who may not have a HR department, Vaswani said.
Companies involved
Initially, the RPO business was limited to the IT sector and
only recently non-IT companies have begun outsourcing their HR
functions, domestic IT and outsourcing firm Birlasoft’s global
HR Vice President Narendra Puppala said.
However, the industry players are not worried about the BPO
sector’s current nemesis in form of high attrition rates denting
the growth story. This sector will not feel the heat of
attrition so much as the BPOs as in this process they get the
satisfaction of using their minds as well, Mr Puppala said.
--Matt Preston
Monday, 24 September 2007.
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