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The Green Sheet Online Edition

October 13, 2008 • Issue 08:10:01

The how, when, why of recruitment outsourcing

By Curt Hensley
CSH Consulting

A highly challenging aspect of rapidly growing a business in the merchant services space is finding the right talent. When you need several sales, risk, underwriting, technical support and operations experts to adequately create and support new business, where do you turn?

Some use internal recruiters and job boards; others turn to recruitment firms.

Turn it all over?

A distinctly different solution is to outsource 100 percent of your recruitment effort to an outside recruiting firm. Many vice presidents of human resources departments, chief financial officers, chief operating officers and recruitment directors get their nerves rattled at the mere possibility of outsourcing recruitment. It is indeed a huge commitment, financially and legally, and could be a major risk for any company.

Outsourcing recruitment is similar to hiring a contractor to construct your house or business: You know you can't entrust the future of your entire company to just anyone.

Whether to outsource recruitment is a decision hundreds, maybe even thousands, of executives will be making over the next year. It's a solution that is gaining steam in high-growth industries like merchant services due to the incredible competition for talent.

Many companies of varying sizes have slashed their recruiting departments during the recent economic downturn, and many will elect to avoid possible trouble in the future and simply outsource the entire function.

There are many benefits and potential pitfalls to outsourcing corporate growth to a recruiting consultancy. All decision-makers must assess them. Failure to conduct a thorough cost-benefit analysis could not only cost you your job, but also, perhaps, even your company's well being.

To start with, if your company does not expect to hire more than, say, 25 new employees over the course of a year, outsourcing your staffing function would not make sense. In such instances, a seasoned individual contract recruiter would likely make more financial and strategic sense.

There are economies of scale at work here, and we always recommend that only if there is going to be a large-scale effort to grow and recruit new talent would there be a point to outsourcing the talent acquisition function.

Your checklist for analysis could include:

  1. Involve all the right players.
  2. Decide what's important.
  3. Assess integrated options.
  4. Evaluate client services.
  5. Don't settle for less.
  6. Remember that reputation counts.
  7. Seek industry expertise.

The right players

Typically, deciding to outsource the entire corporate staffing function will involve all the senior executives and even the board of directors. Be sure to know each of your department's business terminology, concerns and questions. Have concrete and empirically based responses to all key individuals' inquiries.

Remember, this decision will have far-reaching impact on the entire company. As such, it will require that extensive feedback is solicited and considered. Your CFO may ask:What cost-lowering guarantees are being offered? What will our overall savings be? What capital costs will we avoid via an outsourced solution?

On the other hand, the senior HR executive or project staffing manager may be more concerned with other issues. Their questions may include:

  • What kind of reporting accuracy and accountability (metrics) will the outsourcing provider give?
  • What benchmark recruitment methodologies have set the market standards in outsourced staffing? Can we exceed such standards?
  • How much will productivity increase by having the staffing function outsourced?
  • How will the outsourced provider assure that our corporate strategic objectives are further driven and met (diversity, mission and training, for example)?
  • Should we have the outsourced recruitment function on-site or off? What are the ramifications in either scenario?
  • What impact on corporate culture, morale, products and services will the outsourcing solution have?
  • Will the provider represent our brand at an excellent level?

In a nutshell, make sure you've sliced and diced thoroughly.

What's important?

After you've sliced and diced all the possibilities, decide which functions are strategic to your business and which are not. What can you afford? Remember, you don't have to achieve everything, and you shouldn't try. After all, there is an impact on the outsourcing provider's transitional capabilities should a company demand the moon and stars from the outset.

An honest, professional recruitment outsourcing firm will be upfront and say no to certain corporate requests. This is why you must only consider outsourcing your recruitment to experts and reputable providers.

Integrated options

It may be viable to consider providers who can effectively integrate multiple business process functions into one outsourced business solution.

For example, some firms, along with outsourcing recruitment, also seek to outsource their third-party payroll to vendor management software providers. Many want to outsource their entire HR function, including benefits. Some of these corporations may decide to go with a single, outsourced human capital solution instead of using individual vendors for each function.

Client services

Ask outsourced staffing providers what their live and Web-based customer service departments are offering and how they function. Scratch those who can't answer off your list. Find out how well providers monitor customer support. Have they implemented total quality management checks and balances? As a client, you can insist on particular levels of client service actions.

Accountability will be a big concern during your decision-making process. The core outsourced recruitment provider may want to subcontract your business to another provider. Ask yourself if this is what you want.

If you decide to work with such an outsourcer, make sure the original outsourcer is held totally accountable, and make sure the new subcontractor on the scene is completely aware of your requirements. Remember, you write the check.

What do you need?

Don't settle for mediocre or questionable solutions. Call colleagues who have already gone through this process.Ask lots of questions. If a solution provider sounds like it is promising too much, it probably is.

Do not be seduced by the possibility of lowering your outsourcing costs by breaking up and compartmentalizing the various business functions you want outsourced to different providers who may have responded with less expensive proposals.

Although, on paper, separating your outsourcing needs to various providers that manage only some aspects of your business may look good, it may very well be a more efficient and effective solution to outsource your entire human capital process to one vendor.


Many people may presume this is the point where I urge you to check on an outsourced provider's references. But references and sales presentations are not the only indicators your firm should check. Be very exact, and know precisely what you're seeking. Dig deep to obtain information relevant to the issues that matter most to your organization.

Industry expertise

You shouldn't have to teach the merchant services industry to your recruitment partner. There's really no way that a recruitment partner without industry expertise could bring you the same talent for each position as one that focuses directly in the payments space.

If you are responsible for deciding whether to outsource an entire recruiting function, you are on the verge of making a decision that could dramatically enhance the growth of your organization.

Do your research diligently so you can find a partner that can facilitate your hiring the very best talent available. end of article

Curt Hensley is the founder, Chief Executive Officer and President of CSH Consulting, a recruiting firm exclusively focused on the payments industry. He and his leadership team have over 50 years of combined experience recruiting in the merchant acquiring arena. They have placed over 1,200 payments industry professionals since their inception eight years ago. Contact Curt at 480-315-8800 or curth@cshconsulting.com. Ee

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