How recruitment companies can capture new opportunity with outsourcing and AI
The recruitment industry made its start in World War II, when there was a labour shortage caused by soldiers being called to serve. Since then, the industry has flourished and there are 7,300 recruitment companies in Australia today.
Anyone can start a recruiting business – there are virtually no barriers to entry – and this has resulted in an intense level of competition which in turn has caused a reduction of the fees charged in the “good ‘ol days”. But there is a silver lining as well, as recruitment companies now have two golden opportunities to leap ahead.
With margins being squeezed, recruitment companies have no choice but to look for cost-savings in the way they operate. Fortunately, they don’t need to look far. Cost savings of more than 50% are right in our backyard! In the island paradise of Fiji (just 4 hours’ flight from Sydney), for example, there is a huge pool of talent ready to do all the tasks a recruitment agency would traditionally need to hire for locally:
- candidate research and outreach
- creating and posting job ads
- reference checking
- setting up interviews with clients
- verifying timesheets
- processing contractor payroll
…the list goes on. All for an hourly rate in the vicinity of A$12-$14, which makes the BPO Fiji value proposition highly worthy of consideration!
For those looking for services in the powerhouse destinations of the Philippines or India, the rates are similar (with India being around 10% cheaper). There are thousands of BPO Philippines providers, many with physical representation in Australia, and many with experience serving other overseas recruitment companies, so you won’t be starting from scratch.
But cost savings aren’t the only advantage of having an offshore partner. There is a strategic growth opportunity here which some Australian agencies have only just cottoned onto. And that is the ability for recruitment agencies to offer their clients access to an offshore workforce too, creating a new revenue stream. Most recruitment companies focus on recruiting within their home market, but there is no reason why geography needs to be a limiting factor – the pandemic taught us well that remote working is possible and in fact here to stay in some form in most businesses. As to why more recruitment companies don’t seize the opportunity of offering offshore talent – for administrative, customer service, accounting, HR and even high-end web development roles – is a good question. Sometimes, it’s the fear of the unknown, and not knowing a trusted offshore partner to work with.
It must be stressed that having an offshore team – whether that’s 1 or 100 people – doesn’t mean ceding control and handing over your business. You can pick the operating model that works best, and for some, a staff leasing model is the most effective, whereby the BPO (business process outsourcer) finds you CVs and processes payroll, but you manage your own team.
In summary, outsourcing offshore is a cost reduction, talent attraction and a business growth opportunity, which should not be missed.
Leveraging AI (artificial intelligence)
Recruitment is by its very nature a people business, but that doesn’t mean technology can’t help. AI offers a range of capabilities that can both reduce cost and speed up service. Here are our top 5 uses of AI in recruitment:
- CV analysis: For some roles, particularly in volume recruitment scenarios, companies can receive thousands of CVs. AI tools are available to instantly analyse CVs to identify the best possible match and create a manageable shortlist. Every recruiter hates the “résumé race” but AI can help you win the race.
- Chatbots: AI-powered chatbots can answer candidate FAQ, releasing human recruiters for more value-add tasks.
- Hiring analytics: AI can analyse data to identify both patterns and anomalies in candidate sourcing, which can then be interpreted by humans.
- Better communication: recruitment agencies can use a friendly Voice AI to keep candidates informed, from receipt to progress of their application, while answering simple questions if the candidate has any along the way. Generative AI can also provide unsuccessful candidates with coaching on why they were not shortlisted – for example due to poor spelling/grammar, or lack of a qualification.
- Removing bias: AI is often accused of having bias, but this is only because humans have programmed the AI in a way which causes bias. Ethical AI removes the bias and ensures a fairer recruitment process for candidates.
Where to start
If you are in the recruiting business and would like to explore the cost reduction and new revenue stream opportunities of outsourcing or AI, please contact us to schedule a complimentary consultation, and we’ll help you get started.
Alternatively, if outsourcing is on your immediate agenda, answer a few questions and we’ll connect you with trusted partners offshore straight away – whether you’re looking for a BPO Philippines, Fiji or India provider!
Last reviewed for accuracy: December 28, 2023