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Outsourcing is the process by which an organization contracts with another individual or company to get some of its work done. Viewed this way, most organizations go for some kind or other of outsourcing. Generally it is non-core aspects of the business that are outsourced.
The firms that offer the services thus required are called service providers or third-party providers. Businesses may thus tie up with service providers for either individual processes or whole projects or operations.

Need for Outsourcing:

1.      Cost cutting

2.      Cost restructuring

3.      Improve quality

4.      Knowledge

5.      Contract

Types of Outsourcing:

Outsourcing can be divided into two broad categories. They are BPO and KPO. Let us examine how each differs.


In BPO (Business Process Outsourcing), a particular process task is outsourced. BPO work could be either back office related or front office work. By front office functions we mean customer oriented work like marketing, answering calls, technical support and so on, whereas internal work like billing and purchase come in the back office category.


KPO or Knowledge Process Outsourcing typically calls for work that needs higher levels of involvement from the worker. The worker has to employ advanced levels of research, analytical and technical skills and has to make decisions of a higher order than BPO work. KPO industry is less older and mature than the BPO sector.

Apart from BPO and KPO There are some other categories -

1.      Outsourcing financial accounting

2.      Outsourcing HR , IT , payroll, sales

3.      Outsourcing offshore

4.      Outsourcing telemarketing, training

5.      Outsourcing customer services.

Recruitment Process Outsourcing- RPO

Recruitment Process Outsourcing (RPO) is a form of business process outsourcing (BPO) where an employer outsources or transfers all or part of its recruitment activities to an external service provider. To quote the Recruitment Process Outsourcing Association, "Recruitment Process Outsourcing is when a provider acts as a company's internal recruitment function for a portion or all of its jobs”. RPO providers manage the entire recruiting/hiring process from job profiling through the on-boarding of the new hire, including staff, technology, method and reporting. A properly managed RPO will improve a company's time to hire, increase the quality of the candidate pool, provide verifiable metrics, reduce cost and improve governmental compliance.

On the other hand, occasional recruitment support, for example temporary, contingency and executive search services are more analogous to out-tasking, co-sourcing or just sourcing. In this example the service provider is "a" source for certain types of recruitment activity. The biggest distinction between RPO and other types of staffing is Process. In RPO the service provider assumes ownership of the process, while in other types of staffing the service provider is part of a process controlled by the organization buying their services.


·         RPO's promoters claim that the solution offers improvement in quality, cost, service and speed.

·         RPO providers claim that economies of scale enable them to offer recruitment processes at lower cost.

·         RPO solutions are also claimed to change fixed investment costs into variable costs that vary with fluctuation in recruitment activity.


·         If a company failed to define its overall recruitment strategy and hiring objectives, then any recruiting program may fail to meet the company's needs.

·         As with any program, a company must manage its RPO activities. A company must provide initial direction and continued monitoring to assure the desired results. Overall, providing guidance to external activities can present a significant management challenge. Outsourcing

·         The costs charged for recruitment transactions may total more than the cost of the internal recruitment department.

·         RPO service providers may fail to provide the quality or volume of staff required by their customers.

·         Placing all recruitment in the hands of a single outside provider may discourage the competition that would arise if multiple recruitment agencies were used.

·         RPO may not resolve difficulties that organizations have hiring staff when the organization is perceived negatively by potential employees.

·         Further, most RPOs perform their staffing functions and service offsite, further disconnecting the client's growth & recruiting strategy from the actual workforce within the client company.

·         Organizations with efficient hiring process that are viewed as employers-of-choice by potential staff may stand to gain negligible benefits from RPO.
Arun Rajesh
I MBA , Jansons School Of Business
Arun Rajesh,
Sep 21, 2009, 9:42 PM