Reducing Recruitment Costs

I checked out Seth’s Blog global Alexa traffic analysis and it states – “Visitors to the site spend approximately two minutes per visit to the site and 84 seconds per page view.” I checked out my blog’s analysis and it states- Visitors to the site spend roughly two minutes per visit to the site and two minutes per page view.” My readers spend more time per site visit (2 minutes) than Seth Godin’s (84 seconds) do. Yippee!Obviously I am ignoring the traffic ranking, as there is a few hundred thousand difference.  Now you must be wondering how this data relates to reducing recruitment costs. Read on.

I further analyzed the ranking of Tata Consultancy Services, Infosys and Wipro Technologies; the three technology and business process outsourcing  giants of India. Now look at the table below:

Company Website Global Rank Audience Age Total time on site Time per page view
Tcs.com 12,405 Mostly under 25 6 minutes 44 seconds
Infosys.com 17,672 Mostly under 25 5 minutes 41 seconds
Wipro.com 12,706 Mostly under 25 6 minutes 46 seconds

What am I getting at? Most of the site visitors are young males looking for a job. Each site has a career section that allows candidates to register and submit their resume. Look at the table from a recruitment cost lens. If the organization focuses on career webpage, it can reduce recruitment costs.

The Business Case

Overall, recruitment costs include job advertising costs, recruitment company fees, employee referral, interview travel expenses, relocation expenses and human resource recruitment department operating costs.

Let me take the example of IT and BPO sector recruitment costs. According to the NASSCOM Strategic Review 20011 report, the IT and BPO sector will employ 2.5 million employees in 2011. In comparison to 2010, the total employee strength will increase by 240,000 employees. Secondly, the attrition rate is ranging from 20-40% in the sector. This means that approximately one-third of the employees will change jobs. Back of the envelope calculations show that BPO and IT sector organizations will hire roughly one million employees in 2011.

Most of the demand is for employees with 1-3 years of experience. Their monthly salary ranges between Rs. 20,000 – Rs. 50,000 and the recruitment companies’ fees range between 1-2 months of employee monthly salary costs.

Hence, if I take 10% of annual salary cost to company as recruitment fee and Rs 300,000 as annual salary, nearly Rs. 30 billion will be spent on recruitment fee alone by the sector. Definitely, a line item worth looking at for reducing organization recruitment costs. Especially in case of BPO and IT sector as the profit margins are decreasing with the recession in US and Europe economy.

The Solution

Simply put the organizations need to drive traffic to their websites to ensure prospective candidates submit their resumes on the website. Any percentage increase of hire through website will decrease agency recruitment fee costs.

As in the case of BPO and IT sector the audience age is less than 25. The Gen Y is technologically savvy and looks for the same in websites. Hence, some of things that organizations can look into are:

> Post a video message from CEO or other CXOs explaining the vision and mission of the organization.  Gen Y prefers flat structures, access to senior management and enjoys watching videos. This will increase their enthusiasm to submit their resumes.

> Aptitude tests – IT and BPO sector generally request recruitment agencies to do preliminary screening by giving candidates written aptitude tests. The tests can be web-enabled on the career page to enable candidates to complete it while submitting their resumes.

> Voice and language tests – BPO sector in call center business conducts voice and language tests. The organizations can provide a facility for prospective candidates to upload audio and video recordings for voice tests. Secondly, administer written language tests through web.

> Pre-employment background verification – Provide a facility to candidates for uploading relevant certificates required for background screening. In India, roughly 25% of the resumes are fake or inaccurate. The background screening costs are high if done after appointment. Hence, organizations can conduct a preliminary verification before interview by reviewing the scanned certificates.

> Application processing system – Organizations can provide an application  tracking mechanism to the candidates, either to update them through automated emails or showing the application status on the website.

I was amazed that technologically advanced companies that provide technology and business consulting services have not focused aggressively on developing the career page and attracting candidates through them. Maybe the technology costs are higher, though to me it does not seem so. Maybe the thinking is that putting boots on the ground will reduce the recruitment pressure on the human resource teams. In my opinion, since in BPO and IT sector the recruitment numbers and costs are high, the human resource teams should have all technological advantages to do their jobs better. What is your opinion?

References:

NASSCOM: The IT+ BPO Sector in India – A Strategic Review 2011

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