Build or Buy?

VIEW POINT– Amit Somaiya, CEO, IMS People on how recruitment companies can offshore services.

Offshore working in the recruitment industry is now a permanent feature. Forward thinking staffing companies see adopting an offshore working model as a way of focusing their resources and time on their core activities. It allows for lower operating costs and increased productivity and efficiency. In addition, process improvements and expanded talent pools enable job orders to be filled faster.

Deciding to go offshore is however just the first step in achieving results, as the inherent risks of an unsuccessful offshore project can compromise the anticipated benefits.

The real question is: Do you establish your own offshore office which requires long-term investment and offers the many challenges of launching a business in another country? Or do you take the option of partnering with an experienced offshore recruitment services partner (ORS) who can offer immediate benefits without a large investment? In order to make the decision, it’s essential to explore some of the factors involved with the setting up of an offshore office and the associated challenges:

1: Location. If you are planning to set up an offshore office, one of the first steps you will have to consider is the location, typically India or the Philippines. Either one of your employees, or an expert, will need to perform extensive research before selecting a location, including the labour market and cultural differences between recruiters and candidates.

Once a country and city are selected, you must select an office location. This requires in depth knowledge of the local real estate market, including available buildings, applicable codes and ordinances, local lease requirements and tenant improvements. Leases must be negotiated, which may require attorneys, developers, property managers and/or realtors.

This whole lengthy process has the potential to derail any progress and will start to incur costs from inception. It is vital to plan the process well ahead of time to ensure that attention is not drawn away from your core operations.

2: Office infrastructure/construction. The next step will involve hiring an architect and building contractor to design and build your office space to an agreed branding identity. They will need to have experience of local resources and be familiar with local design parameters and building regulations. You will also need to source, retain and coordinate design professionals and other contractors, including electrical and IT. It will be necessary to employ a project manager who can oversee the whole project and ensure compliance with the design and contract specifications. This process usually takes approximately two to three months.

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3: Hiring/training staff. During the construction process you will also need to start considering staffing the local office and hiring staff prior to launch to ensure any training and on-boarding is conducted in good time. You must determine and post job requirements, then screen, shortlist and interview candidates locally. If successful, you will need to negotiate the offer and prepare for on-boarding activities. This process can be lengthy, up to five to six months and can occupy management’s time. You will also need to create a training program and/or hire in-house trainers.

4: Management and culture. When you are managing employees from a different culture in a different country, it would be important to understand the culture, what motivates them to work, how should the appraisals be managed, what kind of career growth do they look for and how do you retain them. It would also involve active grievance redressal and complying to the local employment laws. Add to that will be the ongoing requirements, including payroll and compliance and the continuous demands of cash flow for salaries.

It is certainly a lengthy, time consuming and expensive process to establish an offshore office and therefore so many staffing firms see outsourcing these tasks to an experienced partner with existing operations as a better solution. By working with an established offshore recruitment services partner, you can avoid the long planning process or upfront investments. They allow you to secure quicker returns whilst allowing you to maintain full operational control. With their established state-of-the-art communication facilities and infrastructure, they work as a virtual extension of your office providing 24/7 services and with the best breed of recruiters.

While it may be great to set up your own centre, the risks, time and cost investment will soon outweigh the gain. The right partner can easily become a branch of your business in an overseas location allowing you to gain out of the partnership with minimum risks.

This blog was first featured in The Global Recruiter Magazine Issue 188

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