The aforesaid topic can be substantiated by a few data points and a different perspective. Globally, staffing and recruiting companies have generated a turnover of $500 Billion in the year 2015. Out of this, $35 Billion revenue pertains to activities related to searching and selecting candidates for permanent employment.
Numbers speak for themselves, whether they relate to performance, either good or otherwise. In this case, these numbers showcase great performance put together by staffing and recruiting companies worldwide.
The data is encouraging for staffing companies as it reflects their increased growth. However, these growth figures are directly proportional to inefficiencies in corporate organizations worldwide.
Why is this so? Below is an elaboration.
Every organization has an HR division backed by special recruitment teams entrusted with the task to recruit. Despite having qualified and specific people for the task and supported with suitable automation systems, companies still continue to hire through placement and staffing companies.
As per research*, this trend is common across all countries. However, companies in developed countries are robbed more than those in emerging economies.
This phenomenon is prevalent across the world. A whopping $35 Billion was given away to recruiting agencies in the year 2015.
This means that organizations let go off significant amounts of money to placement companies in spite of having HR departments.
Imagine a situation where companies are generating sales with the help of representatives who are outside the company. It is but natural that the company will remove their internal sales guys. This is the usual scenario in such situations in almost all the functions of a company except in HR.
HR seldom participates in board level discussions. Ever wondered why? Is it due to a lack of credibility or something else? HR departments across the world use all the latest available technologies such as SAP, Oracle, Workday, Kenexa, etc. and yet are unable to hire on their own when required. What is the point in using technologies which don’t come to use when needed?
Have you ever come across a scenario where the finance team was not able to generate invoices or balance sheets? Now, here is the real difference between HR and any other function. While all others have data which speaks, HR of course has reasons to counter.
How can organizations justify having in-house recruiting teams while spending money on external agencies? especially when hiring from such external sources is over 10% of total hiring done. Can’t we call this as robbery? While companies cannot figure out who is robbing them -internal employees or external agencies, there are intelligent tools available to fix this robbery.
Sometime we need to lose the small battles in order to win the war but this can’t be true for this instance where corporates are losing incrementally every year.
*CIETT Report 2015 and assumption of 8% CAGR