When it comes to recruiting, we’ve got some lexicon issues.
Once upon a time, organizations had 3 basic options when it came to recruiting and staffing:
- An in-house recruiting department
- Contingency-fee-based recruiting agency
- Temp staffing agencies
These options work fine in certain situations, of course, but have limitations: An in-house recruiting department is only efficient if you’re a big company doing constant hiring; contingency can get expensive if you have to make a whole bunch of hires; and temp agencies are fine for short-term junior staffers, but aren’t always great for specialized roles.
In the past 10 years, recruiting and staffing options have broadened considerably, but it wasn’t until the 2008 recession that most organizations really started to get serious about changing the way they looked at recruiting.
One of the most popular ideas – at least the one that got talked about the most – was RPO, or Recruitment Process Outsourcing. The idea was that companies would outsource their entire recruitment to a third party, who would then manage all the sourcing, screening, securing and onboarding of new hires, thereby saving the company lots of money while driving all kinds of efficiencies.
Great in theory; less great in practice – full RPO is really only suitable for large organizations; it can take 2 years to achieve full implementation; and even then doesn’t always manage to deliver the promised efficiencies because full RPO often can’t be any more responsive to changing business requirements than an old-fashioned, in-house recruiting department.
Which is where ‘insourcing’ comes in.
Insourcing: Combining ‘in-house’ with ‘outsourcing’
Wikipedia says that insourcing is “the opposite of outsourcing“. While this may be true for other industries or functions, it’s not really true for recruiting. In recruiting, insourcing really combines the third-party responsibility of outsourcing with the on-site, seamlessness of an in-house recruitment function.
Generally speaking, recruiting insourcing means engaging a third party to manage your recruiting function, but they do it on a smaller scale, on-site, and with more integration with the rest of your organization than full-scale RPO.
Where it can get a little complicated for recruiting is that there are sort of two ‘flavours’ of insourcing:
1. Insourcing of the recruitment function
In this model, a recruiting company provides a recruiter or team of recruiters, at least some of whom work on-site with the client, and manage the bulk of the recruitment lifecycle, from sourcing and talent pooling to screening, hiring and onboarding. (How much of the recruitment lifecycle depends on whether the client organization has an HR department and other resources.) The client pays either a monthly fee or a time-and-materials fee, and the whole setup tends to be very scalable.
2. Insourcing of a specific business function, with recruiting as a component
This model is a little more complex: Typically a larger organization has a specific business function – often the IT, helpdesk or service desk/technical support department – for which they’ve considered outsourcing, or have outsourced in the past with less-than-stellar results (i.e. the stereotypical outsourcing of the technical support department to a different country).
In this model, the client decides that they’d like to keep the function on-site, but they engage a third-party organization to run it. For an IT or helpdesk function, that might include not only recruiting, hiring and managing the staff, but also managing service levels, technology, administration and payroll, etc.
The client typically pays a set monthly fee dependent upon staffing and service levels – they get all the benefits of outsourcing (less risk, less headache, predictable costs, etc.) plus all the benefits of having the function in-house (seamless interaction, greater oversight and control, etc.).
The challenge? Making sure everyone’s on the same page.
So now you know the basics of insourcing for recruiting!
In our experience, the challenge isn’t in understanding the basic concept of insourcing – it’s in making sure that when you’re discussing your options, everyone’s using the same terminology.
Our advice? The next time your organization starts talking about ‘outsourcing’ and ‘insourcing’, take a moment and make sure that everyone is referring to the same thing. Spending a few minutes making sure everyone’s on the same page, lexicon-wise, will save you a whole lot of headache in the long run.