Outsourcing is the use of external resources to perform activities that are usually handled by an organization’s internal staff. It’s usually done if the cost of getting someone else to perform the task is cheaper than assigning the task to an organization’s employees.
There are several companies that outsource their IT hiring tasks to external recruitment agencies. In this blog, we’ll discuss outsourcing as a strategy and why your company should outsource IT hiring specifically.
Outsourcing is pretty self-explanatory — a company contracts several of its key functions and tasks to external agencies that specialize in providing that function.
If a company outsources IT hiring, it essentially tasks an external recruitment firm with finding the right IT assets for their team. It’s important to note here that the company doesn’t outsource the IT services but rather the process of hiring IT candidates.
Companies often outsource specific tasks to organizations and individuals overseas because of cheaper labor and lower costs. In fact, Donald Trump’s election campaign in 2016 was founded on the idea of bringing jobs back to the US.
According to Micro Sourcing, outsourcing increased by 57% in the year 2016 and only 9% of the organizations terminated outsourcing contracts to bring jobs back to their organizations. This suggests that outsourcing is an extremely valuable strategy for most companies in the US. The top three countries that jobs are outsourced to include India, China, and Malaysia because these countries have cheap — but specialized and trained — labor.
Outsourcing gained popularity as a key strategy in the 1990s when companies started considering how to cut costs and increase their bottom line. At the time, the processes that were outsourced were important but not central to the company’s offerings. Most of the tasks that were outsourced were related to customer service — tasks that could be handled over the phone from any location in the world. Most of these tasks were outsourced to India.
Industries that favor outsourcing include IT, finance, manufacturing, pharmaceuticals, computer technology, healthcare, retail, and many others. While these are the prime industries outsourcing work, most companies outsource at least some processes to varying degrees.
Now that you understand the basic concept of outsourcing and its brief history, you may ask yourself why so many companies are outsourcing essential tasks. Isn’t it better to handle all of the processes internally instead of paying others to do it?
The following are some of the primary reasons companies prefer outsourcing:
• The biggest driving factor is that outsourcing can drastically cut down and control operational costs.
• Outsourcing allows companies to focus on their prime areas of expertise.
• They gain access to the best and most specialized services from across the globe.
• Internal resources and employees can be used for more essential and central tasks.
• It streamlines all time-consuming functions and makes management easier.
• It allows them to share risks with partner companies.
Even though outsourcing is a very valuable strategy, one must be careful in its implementation. The following are some of the biggest shortcomings and drawbacks of outsourcing:
Despite these drawbacks, the aforementioned statistics suggest that companies still find outsourcing to be a very valuable strategy, which is why they continue with it. So let’s look at why companies should outsource IT hiring specifically.
Recruiting or hiring a new IT member can be an extremely time-consuming and difficult decision. You have to divert hours and vast amounts of resources towards vetting, interviews, and analysis of potential candidates. Once a candidate has been hired, you may also have to spend additional resources to train them.
The entire process can be extremely expensive in terms of opportunity costs — i.e., in trying to hire IT candidates, your employees may shirk from their productive tasks, which can affect your company’s bottom line. The following are some of the main reasons your company should outsource IT hiring.
If your key employees take time out of their regular daily tasks to recruit new employees, they may neglect their own productive tasks. Recruitment can often be a long and tiresome job so it’s not a wise idea to divert your employees’ attention — they should instead continue handling the necessary productive tasks while specialized recruitment agencies handle IT hiring.
Recruitment is a specific art and should be conducted by those who specialize in it. If you get amateurs to handle recruitment, they may miss out on key warning signs and red flags that recruiters would be able to capture. Hiring the wrong candidate can be an extremely expensive mistake as you have to pay them, divert resources towards their training, and then find new IT candidates again if they don’t work out. Furthermore, companies that handle IT hiring on their own often don’t look in the right places. Recruiters, on the other hand, know exactly where to look in order to find and capture the best IT candidates. They also know how to present jobs to the candidates and how to weed out the good candidates from the bad. All of these factors make them far more equipped to produce better recruits.
Hiring is an extremely expensive process. You have to take into consideration the cost of labor, the cost of posting ads, background screening, and so many other tertiary costs. But it’s not just direct cost that you have to worry about. You also have to worry about opportunity cost, i.e., the amount of money your company loses in diverting attention away from productive tasks to recruitment. Every minute or hour that your employees spend on recruitment rather than on productive tasks represents an hour’s work lost, which can severely affect a company’s bottom line. Outsourcing IT hiring can be far more cost-effective in the long run as you don’t lose out on productive business and there’s a lower risk of money lost on bad hires.
Do you need to hire IT candidates often? If so, you may find it hard to keep up with the constant demands for new IT employees. Recruitment agencies have expert teams in place to handle a wide range of recruitment needs on a regular basis — they are far better equipped to keep up with your recruitment demands.
As previously mentioned, you need a good recruiter to weed out good candidates from the bad. A candidate may seem ideal on paper, but they may exhibit personality traits that render them incompatible. Recruiters can watch out for these warning signs and ensure you get the best, most qualified, and most stable recruits — those who will stick to your company. Recruiters will be able to assess which kind of candidate would be best suited to your company or your requirements and then act accordingly. This can drastically lower your turnover rate, which can save a lot of time and resources in training and onboarding new IT staff.
If the aforementioned reasons and factors appeal to you, it’s possible that you’re having a hard time managing your IT recruits. In that case, your company should definitely outsource IT hiring.