Articles - Understanding the risks of outsourced recruitment options

 As more and more employers opt for an outsourced recruitment option or an in-house procurement team, there are three risks often overlooked according to actuarial recruitment consultancy GAAPS Actuarial.

 1) Additional expenses instead of lower expenses: When buying recruitment services, competitive tenders invariably focus on who will charge the lowest commission to drive costs down. However, this doesn’t always mean the lowest costs; daily rates or salaries demanded from the candidates offered may be significantly higher if they are supplied by the provider with the lowest commission, as opposed to being supplied by an alternative consultancy with a higher commission which provides greater expertise and research facilities that are expensive to maintain.

 2) Lost opportunities: Once a preferred supplier is in place, other recruiters who may have better candidates are not allowed to supply them because they are not on the list. The result of this is that the pool of suitable candidates is severely reduced, usually for cost reasons.

 3) Increased risk of losing staff: An employer can be a happy hunting ground for any search organisations which have not been selected as the preferred supplier. Whilst they have a chance of being able to place a candidate, there is little reason they would they risk ‘poaching staff’.

 Dr Geraldine Kaye, managing director at GAAPS Actuarial said “These risks are often ignored because the risk function is usually too concerned with known and measurable risk. These three risks may be unknown but they are very real. I feel that outsourcing and procurement have very important roles to play and good outsourcers/procurement functions can be worth their weight in gold, but before embarking down this route, employers should consider all the risks and ensure the advantages will comfortably outweigh them.”

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