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• 7 OUTSOURCING CASE STUDIES THAT YOUR BUSINESS CAN LEARN FROM

7 Outsourcing Case Studies That Your Business Can Learn From

Outsourcing is becoming a popular business strategy for companies looking to streamline their operations and increase efficiency. Whether it’s to save costs, increase efficiency, or access specialized expertise, outsourcing can offer a range of benefits to companies looking to grow and succeed.

Businesses can focus on their core capabilities while reducing expenses by outsourcing specific tasks or projects to specialized service providers. However, not all outsourcing efforts are made equal, and it’s essential to understand the best practices and potential hazards of outsourcing.

In this blog post, we’ll explore 7 outsourcing case studies that showcase real-life examples of considerable outsourcing efforts. By taking a closer look at real-life examples of outsourcing partnerships, businesses can gain useful insights into both the best practices of outsourcing and its potential pitfalls.

Table of Contents

What is outsourcing?

Why do you need to outsource, when do you need outsourcing, what should you outsource.

Outsourcing is the practice of hiring a third-party company or contractor to perform services that are traditionally handled in-house by a business. Outsourcing has grown in popularity in recent years thanks to technological improvements and globalization.

Because of the pandemic, the industry expanded even further. At a compound annual growth rate of 9.4%, the worldwide outsourcing market might expand from about $262 billion in 2022 to $525 billion by 2030 .

Your business may be large and have strong commercial acumen and technical abilities, but you cannot manage a business on your own. You’ll need a hand from a talented team; that’s when outsourcing practice comes into play.

Here are some reasons why you should outsource certain functions or tasks in order to grow your business:

Access to specialized expertise : Businesses can use outsourcing to gain access to specialized knowledge and expertise that they may not have in-house, such as software development, digital marketing , or accounting.

Cost savings : Outsourcing can be a cost-effective choice for organizations because it reduces the requirement for new staff recruitment and training. It also helps companies to avoid the expenditures of providing benefits and office space.

Boost efficiency : Businesses can focus on their core capabilities and enhance overall efficiency by outsourcing non-essential company services. It also permits staff to concentrate on higher-level duties that are more strategic and vital to the company’s success.

Scalability : Outsourcing allows organizations to grow their teams up and down as needed without the long-term commitment of hiring full-time staff. This enables firms to respond swiftly to market developments or changes in demand for their products or services.

Enhance quality : Outsourcing can increase the quality of work by giving you access to specialized expertise and resources that your business might not have in-house. It also enables organizations to benefit from the outsourcing provider’s best practices and experience.

The time to outsource can be a challenging one for some businesses. The stage at which a company needs to outsource is different; some businesses must outsource at the initial stages, while others may prefer to outsource when they have established a firm foundation.

The situations in which your company needs to outsource might include some of the following:

Lack of in-house expertise : Outsourcing can provide access to specialized knowledge and skills if a company lacks the competence or resources to execute a specific activity or project.

The need to increase in workload : If a company’s workload or demand for its products or services suddenly increases, outsourcing can assist manage the burden and guarantee that deadlines are reached.

The economic condition of the company : Businesses may be more likely to outsource during moments of economic uncertainty in order to minimize costs and manage risks.

Outsourcing can be a cost-effective solution for firms suffering financial difficulties because it eliminates the need for hiring and training new staff as well as the costs involved with providing benefits and office space.

• Lack of specialized technology in-house : Outsourcing can provide access to specialized technology and software that may not be available in-house, allowing businesses to stay competitive and on top of industry trends.

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Outsourcing is determined by the company’s needs and goals. There are many platforms that businesses can outsource such as IT, product development, human resources, etc. However, here are a few things that businesses often outsource:

• Special skill set required at a specific point in time

Businesses that outsource a certain set of abilities for a specific project or activity can save money by avoiding the expense of hiring and training additional staff. In addition, businesses might benefit from outsourcing by gaining access to specialized skills and resources that may not be available in-house.

• Expertise knowledge

By giving firms access to the most recent industry trends, best practices, and technology, outsourcing specialized knowledge can help firms stay competitive in fast-paced industries or markets.

• Performing repetitive tasks

Businesses can enhance their overall efficiency and productivity by outsourcing monotonous tasks. Additionally, quality control procedures are often in place at outsourcing providers to guarantee that repeated tasks are executed accurately and to a high degree.

Outsourcing case study examples

Google is a multinational technology corporation best known for its search engine, ad platforms, and cloud computing services. While Google is well-known for its cutting-edge technology, the firm has also relied on outsourcing to support its operations and achieve its goals.

Google has effectively outsourced its business operations and a variety of activities. Within their company, they have been aggressively utilizing the technique of software development outsourcing.

In 2016, Google stated that it had teamed with Wipro, an India-based outsourcing company, to support its cloud computing services. Wipro would provide technical support, cloud infrastructure management, and other services for Google’s cloud platform as part of the cooperation.

Google’s collaboration with Wipro enabled it to leverage Wipro’s experience in cloud computing and gain access to a larger pool of skilled individuals to support its operations. Wipro also benefited from the partnership by having access to Google’s cutting-edge technology and expanding its client base.

Alibaba is a global Chinese technology corporation specializing in e-commerce, retail, and cloud computing. The company is well-known for its creative business model, which mainly relies on outsourcing to support its operations and meet its objectives.

When Jack Ma founded the company in 1999, businesses were progressively shifting to the Internet for customer support, and he made the right decision to outsource everything.

Alibaba’s relationship with Cainiao Network, a logistics company specializing in package delivery and warehouse management, is one example of its outsourcing strategy. Alibaba stated in 2013 that it had purchased a controlling stake in Cainiao Network. The goal is to improve its logistical capabilities and the customer experience on its e-commerce platform.

Thanks to this partnership, Alibaba has been able to tap into specific skills in logistics and have access to a wider pool of trained individuals to support its business.

The collaboration has also aided Alibaba in expanding its logistics network and improving delivery times, which have been critical to the company’s success in China’s highly competitive e-commerce sector.

With over 2 billion active users globally, WhatsApp has become ubiquitous in modern communication. With a limited cash reserve, creators Jan Koum and Brian Acton concluded that outsourcing was the best product creation method.

WhatsApp’s success can be attributed to the use of Russian offshore developers. Outsourcing allowed the company to concentrate on core operations and reduce operating costs while developing a successful product.

When a company grew in reputation among its peers by personally assisting potential consumers, it garnered brand-loyal customers. This is also the case for WhatsApp. The company outsourced the app’s development to another company in order to make it cross-platform and gain more iOS users.

Later in 2014, Facebook paid $19 billion for the company. Despite the fact that it relocated its third-party contractors to the United States, offshore outsourcing was critical to the company’s growth and profitability.

Slack has its own exciting story among the success stories of businesses that have benefited from outsourcing. Slack is a cloud-based team collaboration software enabling real-time communication and collaboration.

Outsourcing has played a significant role in Slack’s phenomenal growth. The creator of Slack, Stewart Butterfield, wants to grow the business. But due to his lack of design skills to build the app, brand, and marketing website, he opted for outsourcing to achieve his goal.

MetaLab, a Canadian design team, was hired by the company to assist in developing a product from the beta version. Thanks to MetaLab’s feedback, the Slack team created a useful tool that acquired 15,000 users within 2 weeks of its launch.

The company raised a total of $5 billion in July 2017 and is still growing. According to Statista, Slack had over 10 million daily users in 2020 and was expected to reach around 80 million by 2025. Slack is a prime example of a top IT outsourcing success story that many businesses should learn from.

Skype is a telecommunications tool specializing in video and phone chats between devices via the Internet. While the business has acquired a good reputation in online communication, it relies on outsourcing to support its operations and achieve its goals.

One example of Skype’s outsourcing approach is its partnership with Luxoft, a worldwide IT services provider. This collaboration enabled Skype to leverage Luxoft’s software development skills and get access to a broader talent pool of trained experts to assist its operations.

This outsourcing effort also helped Skype reduce its development costs and improve the quality of its software. Skype has been able to scale its operations rapidly and efficiently by working with a specialized partner and outsourcing key functions.

To begin with, Github is a web-based version control and collaboration platform popular among software engineers and developers worldwide.

The company outsourced its backend activities, which were critical for GitHub sharing. The outsourced contractor was Scott Chacon, a Get specialist. Chacon was able to help the business with the development of the Gist backend.

This was an example of GitHub’s outsourcing approach to growing the company and achieving its goals. Over time, GitHub has become a prominent platform for open-source projects and collaboration, and its outsourcing model has contributed significantly to its success.

WaitWhile is a cloud-based tool for managing client lines and appointments. WaitWhile began with a base app that was well-liked by its early users, and scaling became inevitable. However, due to the limited technology, the company had to outsource the work to NeoITO, a global software development company.

WaitWhile has partnered with NeoITO to develop and maintain its platform. They also added new features and enhancements to the user experience. By outsourcing its software development needs, WaitWhile was able to accelerate the development of new features and functionality for its platform while also reducing its development costs.

In a nutshell, outsourcing has become a popular business technique that can give numerous advantages to businesses of all sizes and industries. The outsourcing case studies presented in this blog show how outsourcing may assist organizations in scaling their operations, gaining access to specialized skills, and improving the customer experience.

The success of these outsourcing case studies emphasizes the significance of choosing the proper outsourced partner. By learning from these real-life outsourcing case study examples, businesses can make informed decisions about their outsourcing strategy. They can also take into account the pitfalls of outsourcing that need to be avoided.

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Topics: Offshore Recruiting, Offshore Recruitment Services, Offshore RPO Services

Offshore Recruitment Success with QX Global Group: Case Study Analysis

Posted on October 18, 2023 Written By Sakshi Sharma

Moving to offshore recruitment solutions can be a transformative strategy for staffing companies seeking growth and efficiency in talent acquisition. Here’s a compelling case study, highlighting how offshore recruitment services catalyzed the success of an engineering staffing company, illustrating the immense potential for scalability and excellence.   

Beyond the success story, we share invaluable insights and smart tips to guide any company aspiring to opt for offshore recruitment services. Discover how the synergy between offshore expertise and savvy outsourcing strategies can drive unprecedented success in building high-performing teams.  

Tips for Smart Offshore Recruitment 

Offshore recruitment services offer a strategic advantage to organizations seeking efficient and cost-effective solutions in the dynamic landscape of talent acquisition. To ensure a successful offshoring experience, consider the following tips:  

• Clear Communication Channels : Establish transparent communication channels between onshore and offshore teams. Clearly articulate expectations, project requirements, and key performance indicators. Regular meetings and updates foster collaboration and alignment.
•   Thorough Training and Onboarding : Invest time in comprehensive training for the offshore team. Ensure they are well-versed in your company’s processes, values, and specific role requirements. Effective onboarding sets the stage for a seamless integration into your workflow.
•   Define Key Performance Indicators (KPIs): Set measurable KPIs to track the success of your offshore recruitment efforts. Metrics such as time-to-fill, candidate quality, and cost per hire provide insights into the efficiency and impact of the offshore team.
•   Cultural Sensitivity and Alignment : Understand and appreciate cultural differences. Foster a culture of inclusivity and ensure that the offshore team aligns with your company’s values. This not only enhances collaboration but also contributes to the overall success of the partnership.
• Data Security Measures : Prioritize data security and implement robust measures to protect sensitive information. Clearly define data access levels and ensure compliance with relevant regulations. A secure data environment builds trust and mitigates risks.
• Flexibility and Adaptability : Embrace flexibility in your offshore recruitment strategy. The ability to adapt to changing needs and priorities is essential for success. Ensure that your offshore partner can scale resources up or down based on demand.
• Invest in Technology: Leverage technology to streamline processes and enhance collaboration. Implementing advanced recruitment tools and applicant tracking systems (ATS) facilitates a more efficient and data-driven recruitment process.
• Regular Performance Reviews : Conduct regular performance reviews to assess the effectiveness of the offshore team. Solicit feedback from both onshore and offshore stakeholders to identify areas for improvement and continuous optimization.
• Risk Mitigation Strategies : Develop robust risk mitigation strategies to address potential challenges. Having contingency plans in place ensures that you can navigate unexpected issues without significant disruptions to your recruitment goals.
• Cultivate a Long-Term Partnership: Approach offshore recruitment as a long-term partnership rather than a short-term solution. Building a strong relationship with your offshore provider fosters trust and allows for continuous improvement over time.

By implementing these tips, staffing businesses and companies can navigate the complexities of offshore recruitment services easily. Success stories like the one with a specialist Engineering Staffing Company and QX Global Group (one of the best offshore recruitment agencies ) are a testament to the transformative impact of strategic and well-executed offshoring initiatives. Read the detailed analysis of how our offshore recruitment services helped the client company succeed in its recruitment business.  

CASE STUDY: Engineering Staffing Agency Secures 654 Placements In 10 Months With Outsourced Offshore Recruitment Support  

Client : Engineering Staffing Agency  

Client’s Challenges :    

• Hiring Delays: The engineering staffing agency faced significant delays in filling open roles, impacting project timelines and delivery.  
• Limited Onshore Bandwidth: The onshore recruitment team had limited bandwidth to cover all open roles, leading to a backlog in the hiring process.  
• Candidate Pool Limitations: For locations with high open roles, the client struggled with a limited pool of qualified candidates.  
• Missed Hiring Deadlines: Critical hiring deadlines were consistently missed, affecting the company’s ability to meet project demands.  

Solutions Provided by QX Global Group :  

• Offshore Recruitment Team Setup: QX Global Group identified the challenges and set up a dedicated team of 15 experts to provide offshore recruitment services, addressing the client’s specific needs.  
• Rapid Team Training: The offshore team underwent intensive training, bringing them up to speed with the staffing company’s processes, systems, and role requirements in under 30 days.  
• Strategic Weekly Progress Reviews: Weekly progress review calls were established with the hiring manager to discuss urgent hiring needs, focus areas for the coming week, upcoming roles, and overall strategy.  
• Swift Job Coverage: New job openings were covered within 24-36 hours, ensuring a rapid response to the client’s hiring requirements.  
• Pipeline Building for Repetitive Roles: The team strategically built pipelines for roles with repetitive requirements, ensuring a continuous flow of qualified candidates.  
• Strategic Job Advertisements: Open roles were advertised on relevant job portals and social media platforms, expanding the reach and attracting a larger pool of candidates.  
• Streamlined Candidate Application Process: QX Global Group streamlined the candidate application process, integrating it seamlessly into the client’s Applicant Tracking System (ATS).  
• Continuous Optimization: Best practices identified from successful cases were applied to other openings as part of a continuous optimization process, ensuring efficiency and effectiveness.  
• Performance Tracking: QX Global Group closely monitored interview offers, success cases, submittal rates, and turnaround times to gauge the effectiveness of the recruitment process.  

Results and Impact:  

Our client, a leading staffing company offering engineering recruitment solutions, experienced a transformative shift in their recruitment process. With QX Global Group’s offshore recruitment services, they successfully filled 654 positions within a span of 10 months, overcoming hiring delays, bandwidth limitations, and candidate pool challenges. The partnership not only met critical deadlines but also contributed to the overall growth and success of the Engineering Staffing Company.  

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Originally published Oct 18, 2023 02:10:55, updated Oct 18 2023

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Outsourcing Case Studies Businesses Can Learn From

The rise in outsourcing and remote working opportunities is possibly one of the only bright spots among the dismal clouds cast by the COVID-19 pandemic. Many people were uninformed in the early phases of the pandemic, and many outsourcing organizations saw a drop in production.

Now, however, according to Gartner, around 74% of CFOs want to shift at least 5% of previously on-site personnel into permanently remote employment once the epidemic is over. 

However, as people became acclimated to the situation and accepted new technical solutions, outsourcing capabilities and economic opportunities, they found new avenues to explore.

A global IT outsourcing market analysis predicts that the industry would increase by 98 billion USD by 2024, with a compound annual growth rate (CAGR) of 5%.

Though outsourcing is a highly profitable and effective approach to develop your business, there are a few things to consider before implementing it. Learning from the experiences of companies that have done this successfully can be a simple approach to get started.

To this end, we’ve gathered 10 outsourcing case studies to help you get a better grasp of outsourcing.

1. CuriosityStream

Curiosity Stream is a global independent media firm and video-on-demand streaming service that experimented with outsourcing in 2019.

They employed six programmers to assist them in developing the video component that increased the number of hours watched. This aided them in increasing overall productivity while also lowering the cost of developing the software.

The CuriosityStream team drew inspiration from the many achievements of other companies and learned how to build a successful outsourcing program.

According to interviews with Andre Silva, CTO of CuriosityStream, his advice to other entrepreneurs is to work out how to combine the offshore crew with the on-site staff.

2. StudyTube Hires

StudyTube is a Dutch-based online education portal that relies on nearshore programmers. In the beginning, they worked with part-time engineers but quickly realized it wasn’t going to work.

As a result, they employed Ukrainian developers, and this nearshore outsourcing solidified their chances of expanding their firm. With a secured investment of €1,500,000, they are continuing growing at a rapid pace.

We’ve all heard of Skype, a telecommunications tool that specializes in video and phone chats between devices via the internet.

The majority of the software was developed by European web developers. Skype asserted that competent web development was required for its product concept, so it chose outsourcing as a solution.

The 300 million monthly active users and nearly 1 billion downloads attest to their success through outsourcing.

Slack has its own growth story among the success tales of organizations that have benefited from outsourcing. MetaLab, a Canadian design firm, was engaged by the company to assist in producing a viable product from the beta version.

In July 2017, the company raised a total worth of $5 billion, and it is still increasing. By outsourcing website design and mobile app development, the corporation increased its investment.

Slack’s rise from rags to riches is a prime example of outsourcing success. MetaLab offered crucial feedback to the Slack team, allowing them to design a solution that reached 15,000 users within two weeks of its launch.

GitHub hosts Git for version control in software development. This Microsoft subsidiary provides Git’s version control and source code management (SCM) functions as well as its own features.

One of the companies that outsourced its MVP is GitHub. They recruited a backend developer to build the product’s backend.

6. Whatsapp

Whatsapp has over 1.5 billion active users in over 180 countries, and the corporation is no stranger to outsourcing. With a limited cash reserve, creators Jan Koum and Brian Acton concluded that outsourcing was the best method to create the product.

As a result, they employed Russian software developers to reduce operational costs while obtaining highly experienced workers. 

Whatsapp is the third most downloaded Android app on the Google Play Store, with over 2 billion active users.

7. Waitwhile

Waitwhile, created by two ex-Google employees, solves a prevalent problem for people who are waiting in line for a phone call. We all despise getting held at “receiver point” for hours on end with an annoying tone that rings intermittently. Waitwhile is fixing that problem with the assistance of artificial intelligence; it will wait for you while you do whatever else you need to do.

Waitwhile began with a base program that was warmly appreciated by its early users, and scaling became inevitable. However, they were limited by their technology, so they outsourced the work to NeoITO.

They improved their previous framework, which was built with AngularJS, and added the functionality required to handle high scaling. Waitwhile has established its market position with over 2 million hits.

8. Widget Brain

Widget Brain is a startup company established in the Netherlands that is a pioneer in AI-driven labor management. It is one of the Netherlands’ hottest startups.

Outsourcing altered the game for them when they employed five Ukrainian developers; the high-quality labor they acquired at a reasonable cost aided their company’s growth.

Widget Brain has received a $2 million investment to develop globally thanks to software outsourcing.

9. Oktopost

Oktopost is a social media management platform that was launched in 2013. They operated in Israel, Ukraine and the US, with 22 employees.

Oktopost hired software developers through Daxx in 2018, which helped them extend their roadmap and scale their business. The offshore development team has undoubtedly assisted them in developing services that they struggled with in the early stages. Outsourced work assisted them in improving their company roadmap and attracting additional investors and consumers.

10. Alibaba

Alibaba is unquestionably one of the most successful outsourcing cases. Alibaba Group co-founder Jack Ma is a staunch supporter of an open and market-driven economy.

Initially, Jack Ma outsourced his software development job to the United States. This was done to appeal to a bilingual audience and to employ experienced computer specialists that he couldn’t locate locally.

This was not in vain, as Alibaba today controls 60% of the Chinese e-commerce market.

There is a rather prevalent misunderstanding that outsourcing results in weak management techniques and subpar customer service. To gain the benefits of outsourcing, you must first hire the right people who can match your needs.

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Reengineering the Recruitment Process

The skills needed in many roles are continually changing—and sources of talent are too.

The Covid-19 pandemic has upended many traditional business practices. When it comes to recruiting, the crisis has not so much disrupted as accelerated shifts in the talent landscape that were already under way, leaving many companies poorly served by their current hiring practices. In a period of steep unemployment, it might seem that companies looking to add workers would be in the driver’s seat. But job openings have also been rising in recent months, meaning that competition for top talent remains keen—and in uncertain times, bringing on the right people is more important than ever.

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Outsourcing

Recruitment process outsourcing (RPO) is when a company hands over its recruitment and staffing functions to an organisation like Page Outsourcing. Common RPO services include screening, interviewing, and onboarding candidates. When this process is applied to both permanent hiring and temporary recruitment, it’s often known as total talent acquisition or TTA.

Page Outsourcing has an outstanding track record of providing permanent and temporary hiring solutions to our partners, ranging from supermarket chains and luxury fashion retailers to global investment banks and pharmaceutical manufacturers. This section profiles some of these clients and the complex recruitment challenges that led them to partner with Page Outsourcing.

These case studies span the globe, reflecting the fact that Page Outsourcing offers RPO services across all major markets and sectors. 

Contact us today and talk to one of our consultants to find out how we can help you with your permanent, temporary or total talent sourcing hiring needs.

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Case study No. 1. RPO (Recruitment Process Outsourcing)

Our client was an American company that operates within the field of broad marketing. These are, primarily: marketing analytics, personalization, marketing automation, experience and content management, as well as customer experience analysis. The core of the client’s business is digital and mobile marketing. This service is modern yet demanding. The company has branches in many countries, and one of them is located in Poland. After separating a distinctive department from the IBM structure, the company decided to open a 300-person branch in Gdańsk. Therefore, the client chose to use our RPO (Recruitment Process Outsourcing) service.

What was the main goal of our cooperation within the RPO service? It was to present the client’s brand as an employer in the local market. And, subsequently, to employ specialized high-level staff and necessary professionals.

Our responsibilities included preparing the entire recruitment process along with relevant documentation that met formal requirements. We completed the recruitment project successfully, which strongly affected customer satisfaction.

A new employer branding

Our client needed a large number of professionals due to the launch of a new branch. And the RPO service provided by our recruiters proved to be 100% effective. Our specialists have created a recruitment team of eight, and, working together, operated under the client’s name and brand. Thanks to this move, we improved its Employer Branding already at the stage of preparation for the recruitment process.

The client’s brand has not been a well-known employer in the labor market in Poland. The recruitment team helped promote the company’s brand and business focusing mainly on social media and video materials. Using new media within the promotion process, we have gained the confidence of reaching a large number of recipients. Video marketing has enabled us to create valuable films and promote them on the web throughout all distribution channels. This way we’ve made it possible to meet the company – for its potential employees, partners, and customers.

RPO – the specialists’ main tasks

The recruitment team’s task was to develop in every detail the entire process of finding candidates for work. Besides, its members have prepared the mandatory documentation following the formal requirements of our country. Together with a team of employees from the United States, they also developed proper data processing policies and clauses. Ones that comply with the provisions of the GDPR (RODO) and European Union standards.

Why it is so great to use the Recruitment Process Outsourcing (RPO) service when looking for job applicants? It ensures that all stages of recruitment are carried out correctly. Cooperating with us, the client gained confidence that the recruitment specialist would perform all duties with due diligence. Our recruiters have created a recruitment plan and strategy, prepared job offers, and developed a candidate profile. They searched for employees actively and represented the company properly from the first days of cooperation. It resulted in the improvement of the client’s company image and its recognition in the Polish professional market.

The distribution of activities over time

For the first two months of the cooperation, our consultants lent the client their own ATS (Applicant Tracking System). Thanks to using the RPO service, the client’s company has gained a professional tool for managing job applicants. The implementation of ATS helped organize the entire recruitment process and ensured order in the client’s candidate database. Next, Sowelo Consulting specialists took care of the secure transfer of all acquired data to the new client system. All Hiring Managers have also received training in operating the new ATS platform. As a result, they gained knowledge about the advantages of software solution for the recruitment process.

As far back as in the first six months of our cooperation, we provided the client with 400 candidates. There were 70 people the client decided to employ among them. This result gives us a high hit ratio, the important effectiveness indicator, of 17.5%. This level was possible to achieve thanks to the best tools engaged in preparing and conducting the recruitment process. We filled vacancies quickly, employing the right specialists – programmers, testers, technical support engineers, DevOps, and automation testers. What’s more, those who gained employment in the client’s company was the specialized and highly qualified managerial staff. Among them, there were managers of programming teams (front-end, back-end, DevOps, QA) and technical support managers.

See other case studies :

Case study No. 2. Interim Recruitment

Case study No. 3. Executive Search

Case study No. 4. Direct Search

Case study No. 5. Direct Search

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Personnel Review

ISSN : 0048-3486

Article publication date: 1 August 2016

The purpose of this paper is to provide insights into the conduct of recruitment process outsourcing (RPO), based on a real-life case study of one company in Malaysia. The paper analyses the company’s process of recruitment outsourcing from beginning to end, in three sections: RPO decision, RPO implementation and RPO outcome.

Design/methodology/approach

The case study was carried out through semi-structured interviews with relevant respondents, including the country HR manager, the HR staff and operation managers in the organisation, plus with the RPO provider.

The key findings, from a theoretical and academic viewpoint, are that RPO decisions and implementation cannot be fully or properly explained by one theory, but are better explained by integrating transaction cost economics, the resource-based view and the Agency Theory. The study also highlights the importance of involving end users in the RPO process.

Research limitations/implications

While this single case study gives a clear, in-depth insight into the issues in this particular instance, future research extending to a wider range of organisations would serve to expand the findings and provide more generalisable results.

Practical implications

Practitioners and service providers should be able to draw valuable lessons from the experience of Tech-solution, particularly from the different perceptions and levels of satisfaction about the service provider’s performance between internal HR and the internal end users (operation managers).

Originality/value

This paper provides a specific and detailed analysis of RPO implementation in practice. It also addresses the call for more RPO outsourcing-specific research in the extant literature.

• Qualitative
• Human resource outsourcing
• Recruitment process outsourcing
• RPO decision
• RPO implementation
• RPO outcome

Acknowledgements

Special thanks to Associate Professor Dr Avvari Mohan, Associate Professor Dr Maniam Kaliannan and the late Associate Professor Dr Mohamed Khaled Omar from the Nottingham University Business School Malaysia for their encouragement.

Siew-Chen, S. and Vinayan, G. (2016), "Recruitment process outsourcing: a case study in Malaysia", Personnel Review , Vol. 45 No. 5, pp. 1029-1046. https://doi.org/10.1108/PR-10-2012-0172

Emerald Group Publishing Limited

Copyright © 2016, Emerald Group Publishing Limited

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Getting business process outsourcing right in a digital future

As recently as a decade ago, companies outsourced business processes primarily as a cost-saving strategy. While technology was used to optimize processes, it was limited mainly to basic task automation. Today, that approach is giving way to a smarter one, in which companies can outsource to capitalize on more sophisticated provider offerings. These include customized industry solutions and advances in digital technology, such as AI, analytics, and machine learning.

The experiences of pioneering organizations increasingly show that the time has come for the outsourcing industry’s focus to evolve from traditional right-shoring and basic automation to fully digitized operations through business-process management (BPM). These types of outsourcing deals  are not yet common, creating an opportunity for both service buyers and providers to leapfrog ahead by generating differentiated advantages in operations and significant bottom-line value. However, the window of opportunity to capitalize on those advantages is closing. In several years, these deals will likely be table stakes. Companies can seize the initiative—starting today.

Digital outsourcing: Growing fast

Worldwide, companies spend an estimated $230 billion on managing business processes. These range from customer-service functions, such as call centers, to back-office processing in applications such as claims, payments, finance, and procurement. To date, outsourcing deals that explicitly call for next-generation technologies account for only a small share of the total spend. But that share is growing quickly.

A detailed analysis of 53 business-process-outsourcing deals that closed between 2016 and 2020—a sample taken from a pool comprising more than 200 such transactions—shows that about one-quarter included at least one digital component (social media, mobile applications, analytics, automation, cloud, or Internet of Things). But the number of such deals almost doubled over the five-year period. That potential opportunity stands in sharp contrast to the overall outsourcing industry’s single-digit growth rates.

An analysis of total contract value (TCV) shows a similar trend. Over the five years from 2016 to 2020, digital services grew from 30 to 70 percent of TCV, and the number of new deals with a digital component has steadily increased to almost 50 percent (exhibit).

Companies report several reasons for such rapid growth of digital in BPM deals. One is that customer demand for digital products and services has grown exponentially. Another is the worldwide adoption of cloud technologies , across industries. In 2020, our analysis shows that cloud-enabled deals peaked at 67 percent of TCV in the private sector and 63 percent in the public sector.

In turn, cloud platforms and services enable the adoption of further digital and data technologies. For example, many BPM providers are leveraging cloud-based systems in specific applications, such as for accounting and credit and cash management—to reduce cycle times for data-intensive processes. Last—and probably most important—is that digital-based outsourcing yields high-quality results. BPM buyers and providers report that incorporating digital into an outsourcing contract can deliver two to three times more impact than under traditional models, while also improving the experience for buyers and their customers.

Overcoming the challenges

Yet digital also poses several clear challenges. The first is achieving executive support. Digital sourcing programs require a heightened level of aspiration from the chief procurement officer and other senior leaders, along with explicit endorsement of the change, oversight during the transition, and focus.

These steps are essential to overcoming the cultural challenges inherent in any change program. Even when times seem relatively calm, organizational inertia, painstakingly built relationships, and an understandable desire for stability can lead procurement teams to stick to current suppliers. Moreover, digital sourcing doesn’t just represent a new provider but a new way to work with all providers. Given the radical changes most organizations now face on multiple fronts, some working teams may argue that they don’t have the bandwidth to support a digital procurement program as well.

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Perhaps the biggest challenge is weak sourcing capabilities. Some organizations may not have the in-house capabilities to source providers for next-generation digital services. Doing so calls for a different kind of business case—based on outcomes and innovation rather than straight cost savings. For instance, some clients are now expecting providers to achieve dramatic improvements in end-user experience metrics, such as faster service and call times, or positive feedback for AI-based digital tools. Other clients want providers to deliver on transformation initiatives, measured by the percentage of automation initiatives delivered on time or the success rate for digitization projects. This evolution also means considering a different set of providers, structuring contracts to foster collaboration and shared accountability, and partnering with the provider in a much more direct, integrated manner. It is not the turnkey outsourcing that companies could apply in the past.

Moreover, sourcing processes themselves increasingly need to incorporate digital and automation—a marked upgrade from the current, and largely manual, processes that remain in place at too many organizations today. In other words, to access digital from external providers more effectively, companies need stronger skills in using digital internally.

Building these capabilities can take up to a year. Yet there is a clear reward for implementing smarter procurement processes. Our analysis has found that using digital and automation in the renewal process for outsourced contracts can unlock three times the financial impact of traditional outsourcing arrangements, while also improving the experience for internal customers.

Four success factors for digital outsourcing

Our analysis of the deal landscape, reinforced with the experiences of major outsourcing providers and buyers, highlights four critical elements to next-gen outsourcing deals.

A focus on transforming operations through digital. The traditional approach to outsourcing was a straightforward transaction aimed at generating marginal efficiencies. Companies handed off a set of well-defined tasks, and providers were paid based on a straight rate for time and materials. That is giving way to a new model: outsourcing to radically transform operations through digitalization with providers taking on more complex processes and being paid based on the outcome they deliver and the range of technology solutions they deploy (such as natural-language processing, robotic process automation, or AI).

Shared incentives aligned to innovation. Because these technologies and applications are still evolving, the potential value they can unlock is in flux as well. As a result, companies can structure deals to incentivize innovation through the full contract term, through arrangements such as gain sharing. For example, if a provider suggests a process change that reduces working-capital requirements or decreases days-sales-outstanding figures by several days, the provider may negotiate to retain some share of that value. Ideally, the innovation agenda aligns with the organization’s overall priorities and covers all dimensions: efficiency, effectiveness, and experience.

Redesigning digital journeys end to end. Because processes are increasingly being redesigned to capitalize on digital, companies can no longer outsource a single, fragmented slice of a process and hope to see much improvement in results. Instead, for the highest impact, the provider usually needs to own—and transform—the entire end-to-end process, through optimization, digitization, automation, and the elimination of manual processes and work. For example, a provider tasked with automating invoice processing could experience initial issues due to nonstandard formats and, as a result, suggest upstream format changes to the invoice submission process for suppliers. Over time, this expanded perspective helps build a broader continuous-improvement mentality, enabling the provider and buyer to collaborate in generating further value as the business and technological landscapes evolve.

Because processes are increasingly being redesigned to capitalize on digital, companies can no longer outsource a single, fragmented slice of a process and hope to see much improvement in results.

Joint accountability for digital transformation and adoption. Rather than the hands-off arrangements of the past, in which a company and provider often worked at arm’s length, digital sourcing calls for a joint governance structure. Dedicated teams with representatives from both organizations develop and monitor a comprehensive set of KPIs, including customer experience. Providers need to be empowered to make some decisions on their own, and they need to coordinate more closely with customers as partners, in areas such as access to the technology stack or allaying data-loss concerns to the chief information-security officer.

Three success stories

To see how this outsourcing approach looks in the real world, consider the following three case studies.

Telecom. A large telecom player that wanted to modernize its business operations and evolve away from highly manual, inefficient processes launched an 18-month digital sourcing program, which ultimately would identify a single external provider that could increase automation and digitization across the company’s operations.

The provider offered a variety of advanced analytics– and AI–related technologies, such as robotic process automation, machine learning, and natural-language processing—together with platforms that could support organization-wide process revamps, from business units to call centers, service assurance, and other functions. But perhaps even more important than the technologies themselves was the way in which the company and provider agreed to deploy them.

Rather than focus on cost cutting alone, the two sides negotiated yearly price reductions and performance improvements, along with incentives through which the provider could share in the value of any promising new ideas it implemented. That created powerful support for continuous improvement. Further reinforcement of the collaborative approach was achieved through a joint governance structure, together with a comprehensive set of KPIs, service-level agreements, and related metrics—including ones focusing on customer experience. These were all agreed to in crafting the contract between the two sides, a process that built trust and helped align long-term interests.

Slashing the number of outsourcing providers the company uses to just one strategic relationship across business units has generated major scale efficiencies—including, for example, giving machine-learning algorithms more data to learn from. And the cost advantage was still substantial: the new outsourcing relationship led to a 60 percent reduction in operational costs.

Industrial. A large industrial manufacturer wanted to partner with a BPM provider to transform its legacy processes and business-support functions using next-generation platforms and solutions. It engaged a global BPM player to help redesign its shared-services operations through a combination of business-process reengineering, robotic and point automation, and lean principles. One of the most effective steps was the automation of billing and invoice payments from end to end; in addition, optical-character-recognition systems eliminated manual effort where possible, and a business-intelligence engine fed insights and executive-level reporting to dashboards.

Overall, the program reduced transport inventory backlogs by more than 80 percent, while productivity increased by about 40 percent, and end-customer satisfaction rose by more than 35 percent. And automating almost all billing processes revealed more than $10 million in duplicate payments.

Managing change: What lies behind G&A spend transformation

Consumer packaged goods. A large food and beverage company had a well-established shared-services function, with consolidated finance and HR to support global operations. But costs were still very high, and integrating new business in the existing setup was becoming tedious. The organization asked a global BPM leader to transform its existing setup to make it scalable and cost competitive.

The provider brought in a proprietary human–machine operating engine that optimizes people, technology, data, and intelligence. Through that tool, the provider redesigned and standardized hundreds of HR and finance processes, implementing automation and analytics along the way. The new capabilities were first rolled out in Europe and expanded to North America, Australia, and New Zealand over the next year.

In finance, half of the company’s journal entry processes were automated, boosting real-time postings from about 90 to 100 percent. In HR, error rates in employee correspondence declined to less than 1 percent, the turnaround time for onboarding letters dropped by two-thirds, and compliance deficiencies fell by 85 percent. Across both finance and HR, the transformation boosted productivity by more than 30 percent and saved more than $5 million.

The COVID-19 pandemic has significantly accelerated digital disruption to the BPM industry, with the potential to unlock sizable financial and operational benefits for well-prepared organizations. Overcoming the internal and external challenges and reimagining each step of the sourcing journey will be challenging, but digital represents the new normal for large outsourcing deals. We believe companies have a choice—they can seize the initiative and capitalize on this shift, or they risk ceding a significant advantage to the competition.

Abhi Bhatnagar is a partner in McKinsey’s Atlanta office, Dany El Khoury is a consultant in the New York office, Stawan Kamani is an alumnus of the Boston office, and Amit Vashisht is a senior knowledge expert in the Waltham, Massachusetts, office.

The authors wish to thank Rahil Jogani, Jibak Sahu, and Monica Vlaicu for their contributions to this article.

This article was edited by Christian Johnson, a senior editor in the Hong Kong office.

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Recruitment process outsourcing (RPO) is when a company hands over its recruitment and staffing functions to an organisation like Page Outsourcing. Common RPO services include screening, interviewing, and onboarding candidates. When this process is applied to both permanent hiring and temporary recruitment, it’s often known as total talent acquisition or TTA.

Page Outsourcing has an outstanding track record of providing permanent and temporary hiring solutions to our partners, ranging from supermarket chains and luxury fashion retailers to global investment banks and pharmaceutical manufacturers. This section profiles some of these clients and the complex recruitment challenges that led them to partner with Page Outsourcing.

These case studies span the globe, reflecting the fact that Page Outsourcing offers RPO services across all major markets and sectors. 

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