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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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