Outsourcing back office admin in your agency to offshored resource

Will the real Outsourcing 2.0 please stand up?

In the employment market recruitment process outsourcing (RPO) has become a prominent business model, with many larger businesses across business and commerce adopting the approach as a way of obtaining greater efficiency through offloading their human capital management needs. 

Recruitment industry RPO thought leader APSCo is now turning the conversation full circle as recruitment businesses consider the pros and cons of outsourcing their back office admin functions. 

This is a trend that has been growing across the economy in response to worldwide skills shortages, the global pandemic and “The Great Resignation”.

Typically, this might be offshoring to lower-cost labour markets, with India being a gravitational centre for skills for many of the businesses which offer such services.

This topic was the focus of the recent APSCo event, International Forum: Outsourcing & Offshoring – The Facts, which was attended by ETZ’s customer success lead, Nina Anthony. 

The debate on the evolution of outsourcing has developed a frame of reference, allowing us to distinguish how the model has changed over time. It has adopted the modifiers 1.0 and 2.0 to capture two distinct phases.

Outsourcing 1.0

Essentially this can be described as the original model for outsourcing offshore to another country by businesses operating in developed economies. In essence, it is a way to leverage the global HR market to find cheaper labour. 

Though this has been practised for decades, it is often at the expense of service quality, invites customer dissatisfaction, undermines control and generally reduces the employee experience often through promoting a ‘sweatshop culture’.

Despite many years of the Outsourcing 1.0 model being the de facto standard, to many, it is now seen as something of a dinosaur. 

Outsourcing 2.0

Businesses still use outsourcing as a way to drive cost savings. However, now service quality is top of the agenda. Ultra-competitive marketplaces mean that customer experience trumps every other consideration – even the need to maximise cost-cutting.

Essentially outsourced services are handled with the care and attention to detail that would be applied if the company had done them as part of their internal operations.

Whether that is diverse recruitment business needs such as content creation, data processing or back office administrative processes, it needs to be an extension of the agency’s business, enshrining its brand and its values.

A natural evolution but risks remain

At face value, within the evolved frame of reference, Outsourcing 2.0 seems to chime with the times. It is a natural evolution that addresses the negative impacts (and image) associated with offshore outsourcing. Most importantly, it supports the need for good customer experience, data security and guards against insider fraud.

With indicative cost savings of around 40%, going offshore using the Outsourcing 2.0 model looks to be a compelling proposition. However, there are downsides. Factors such as time-shifted working hours, cultural differences and remote performance management are often problematic. For some, languages are also a barrier, often resulting from English not being a common first language.

No! I’m the real Outsourcing 2.0!

At the APSCo Outsourcing & Offshoring International Forum one of the key threads of the discussion offered a different view and an alternative definition of Outsourcing 2.0. Some argue that Outsourcing 2.0 is actually a technology-enabled approach.

This perspective sees Outsourcing 2.0 as a fundamental shift – less of an evolution and more of a revolution. In this view, technology becomes the central driver. This version of the 2.0 model leverages technology to deliver outsourcing services through software automation, API connectivity and AI, as well as through other tech innovations.

Automating tasks and utilising AI to deliver services entirely through software comes with its own risks. Human interaction becomes less prominent, with the emphasis on seamless integration and digital workflows. Without skilled human oversight, this means outputs are unmoderated.

In a refined form, Outsourcing 2.0 balances the use of tech with human oversight through the inclusion of a human-in-the-loop (HITL) strategy. This enables businesses to perform quality management of the outputs from automation and AI technologies through monitoring by the human workforce.

This approach to Outsourcing 2.0 implements the benefits of digital transformation so that all operations end-to-end are digitised and connected. This enables maximum efficiency wherever workflow dependencies exist while providing human oversight. With Outsourcing 3.0 and 4.0 on the horizon, the debate isn’t done just yet!

Tech-driven Outsourcing 2.0 for recruiters with ETZ

For some agencies, offshored outsourcing may be a step too far. As an alternative, ETZ’s recruitment back office automation technologies further support your efforts to grow your agency. 

ETZ supports the technology-driven version of the Outsourcing 2.0 model by streamlining your administrative processes to save costs while improving accuracy and efficiency. But it’s not all about timesheets and invoicing. 

Have you seen how ETZ Comply simplifies onboarding and document management, or how Caspian uncovers business intelligence?