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Direct Recruit or Staffing Firm?

Making the right hire is what every organisation wants to do. However, the reality is often the contrary! It goes without saying that hiring the right candidate is critical for every organisation. It means successful projects, happy clients and organisational growth. On the other hand, wrong hiring decisions could prove disastrous, apart from the obvious loss of time and money.

One aspect that contributes to successful hiring is the recruitment process. Organisations in expansion mode or those looking to fill the talent gap need to first decide on the mode of hiring: whether to handle the recruitment process in-house or to partner with a reputable staffing agency.

First, let’s look at option one: direct recruitment. One of the reasons that makes business owners go the direct recruit way is the cost factor. Paying out the industry standard recruitment fee of 8.33% of CTC per candidate would appear to be on the higher side, especially while hiring for senior positions or going for mass recruitment drive. The cost-effective alternative is to hire directly using the available in-house resources. For organisations in development mode this could mean sizeable saving considering the number of recruits.

Now, let’s look at the second option: a staffing firm does the recruitment and you get to take the final call on the candidate that match your skill sets and demands. However, like all other services, this too comes at a price. Now, the question that needs to be answered is- why would any organisation want to outsource an activity which can be done internally, that too in the cost-effective way? There could be reasons, which we will try to find out.

Organisations going the direct hire route would be doing so under the optimism that they will land up in right hiring decisions. However, the right analytical way is to take into account the efforts and effects of a bad hire. Think about scenarios where the in-house recruiters are unable to find matching talent or where it ends up in a bad hire. Consider the effort and time spend on repeat hire or prolonged periods of recruitment drive. In such cases, apart from the sourcing cost, the cost of time and cost of lost productivity should also be account for.

Take for example the efforts that go into identifying, attracting and hiring a resource. It starts with creating job description, posting ads in online job boards, attracting talent, reviewing resumes, preparing candidate assessment tests, conducting interviews, performing background checks and all that needs to be done before welcoming the candidate on-board. Companies which does not have an in-house recruitment team would find itself in an incompetent position to carry out these steps effectively, often forcing themselves to be satisfied with below par talent. Setting up and training an in-house hiring team would be even more complicated and costly process. The most sensible answer in such scenario is to go for option two: outsourcing the hiring process to a trustable staffing agency.

Staffing firms brings with them a team of recruitment specialists with many years of combined hiring experience which far exceeds that of an in-house human resource team. By virtue of being continuously involved in the placement process, staffing agencies have better coverage of the active and passive talent market and updated information on the current employment trends and recruitment practices. High industry networking, in-house database and access to quality talents who are not active on job portals make it possible for staffing firms to find quality talent even for the hard-to-fill positions. This in fact is the strongest reason why more and more organisations are opting for staffing firms over and above the direct hire option.

In essence, the complexities of the recruitment process, the resources, expertise and the market knowledge required to tap quality talents makes recruitment process outsourcing a safer choice than the direct hire. It also helps mitigate the risk of a bad hire as clients get to choose from the best candidates who have cleared multiple levels of screening and assessment. If you are still not sold yet on the advantages of recruitment outsourcing, try categorising and accounting the various costs involved in the direct hire process such as the cost of sourcing, job posting, advertising, screening, interviewing apart from the cost arising out of low productivity, bad hire and repeat hire.

Having said that, one also need to be cautious while choosing a staffing firm, as organisations differ in their area of specialization and expertise. Having a decade of experience in placing candidates in finance and banking sector does not guarantee any competency while coming to IT sector. Therefore it is safe to investigate and select a staffing firm who has specialised hiring expertise in your industry and are equipped to meet your staffing demands.

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5 Reasons Why Managed Offshore Development Model Makes Sense

From delivering projects at overseas client sites in the 1980s to bringing projects home to establish India as an outsourcing hub in the early 2000 and then boldly surviving the global recession of 2009, India’s software industry has come a long way to live up to the international reputation of being economic, skilled and dependable.

A highly successful software development model which evolved and matured through the last two decades is the Managed Offshore Centre (MOC). In a nutshell, it is having a dedicated offshore team to work on your projects, without having to worry about recruitment, payroll, accounts and other perils of infrastructure and employee management.

Managed Offshore Centre is a tried and tested model that has been helping organisations achieve their technology goals while reducing employee overhead cost. Read through to find out how and why organisations are benefitting from this development model.

Benefits of Managed Offshore Centre (MOC)

Quick start capability

How about having your company’s extended development centre in India without making any capital investments? That’s exactly what MOC offers. It’s the easy way to jumpstart your projects from a ready-to-operate offshore development centre with established IT infrastructure, communication systems, dedicated team of professionals and someone to manage all of these. It acts as the launch pad for organisations to start their software development projects without having to wait to setup infrastructure and resources.

Hassle-free

MOC is often referred as the hassle-free development model as it saves clients from all the perils of employee and infrastructure management including hiring, training, payroll, support and others. It means, the client get to focus on their core business competencies, while another takes care of the technicalities and overheads. It’s the smarter and efficient way of getting work done.

Dedicated team

Under the MOC model, every client is assigned a dedicated team of resources who work according to client’s development schedules. It is as good as having an in-house team of developers working staunchly on your projects, with the only difference that they’re located beyond the doors of your business. Certain reporting systems are set in place to cut short on distance and to make it easy for clients to track the progress.

Cost-effective

Companies working under the MOC get to save big on capital expenditure and setup cost, apart from the monthly savings on operational overheads. It has been estimated that organisations can cut down their project expenditure by 40-50%, when compared to the cost of setting up and running a development centre or an in-house team. In other words, it helps businesses improve their bottom line.

Flexibility

MOC has made it possible for organisations to have a dedicated team of resources even for projects of short duration. It means organisations can ramp us and ramp down resources without having to worry about long term commitments, liabilities or people management issues. This has made it possible for projects of shorter timeframe to decrease the time to market by hiring a large team of resources to work on a 24-hour workday format.

Whether you call it- your extended offshore office or managed development centre, it goes without saying that offshore development model has been helping organisations across the world not only save big bucks, but also help stay focused on business without having to worry about the perils of resource management. If you are looking for a way to jumpstart your projects sans hassles, go for it!

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