2 REVIEW OF LITERATURE

Purpose of Literature Review

The purpose of the literature review is to identify the problem statement, understand the
secondary data that has been gathered in the field of study and to make new finding on
the problem statement.

RPO Is the Net !eneration Of "R #ervices
Ramandeep Nehra, $%& News Network
'(ednesday, )pril **, +,,- ./++/00 P12

(ednesday, )pril **, +,,-/ (ith the costs of payrolls and payroll taes, health3care and
other epenses associated with full3time workers shooting up day by day, outsourcing has
now become an essential solution for businesses of all sorts. 1oreover, access to superior
competency typically emerges as a motivator for outsourcing4 the eternal service
provider offers a degree of sophistication that in3house specialists cannot match. In a
nutshell, outsourcing is resorted to with a view to reducing firm costs and achieving
improvement in four key areas 5 6uality, cost, speed and service. "ow does a company
enhance these core areas during the recruitment process7 The answer is outsourcing and
transferring all or parts of the staffing processes to an eternal service provider through
Recruitment Process Outsourcing 'RPO2 or $mployee Process Outsourcing '$PO2. It is a
more specific department for "R personnel and a new subset of 8usiness Process
Outsourcing '8PO2 and emerging as a key outsourcing demand from the clients.
O9T#O9R:IN!
Outsourcing is used in business strategy, in public and private organi;ations '<remic et al,
+,,=2 and it is a powerful tool when used appropriately '!reaver, *>>>2. Outsourcing can be
described as when an organi;ation delegates parts of its business to another company, and
many companies outsource divisions the company used to handle itself '<remic, et al, +,,=4
$lmuti ? <athwala +,,,4 )ubert et al., *>>=2
There are different divisions companies are able to outsource, and the prime reason to
outsorce is to reduce the costs '@uelin ? Auhamel, +,,B4 Ngwenyama ? 8ryson, *>>>4
!reaver, *>>>4 )ubert et al., *>>=4 8ettis, 8radley ? "amel, *>>+2. The basic reason is as
mentioned above, to reduce cost, but it is also to speciali;e the labour. The labour reason is
driven by the different aspects, employee driven, which this dissertation will look more
deeply into, organi;ationally driven and improvement driven. The employee driven reason to
outsource is to give the employees a strong career path and to increase the employees
commitment. The organi;ationally driven reasons to outsource are to enhance effectiveness
by focusing on what each part do best to transform the organi;ation and to increase product
and service value. %urthermore the improvement driven reasons to outsource are to improve
different operating performances such as higher 6uality, increased productivity and shorter
cycle times 'Ngwenyama ? 8ryson, *>>>4 @uelin ? Auhamel, +,,B2.
Outsourcing is gradually becoming an essential element of the world economy due to
globali;ation. The global economic instability has considerably accelerated and intensified
the competition in many fields forcing organi;ations to overlook their strategies and find new
way to deal with the challenging environment. )side from cost cutting 8PO allows
management to allocate more time and resources and concentrate on developing core
competencies 'Plinkett Research, +,,=2.
The :hartered Institute of Personnel and Aevelopment ':IPA2 in +,,> defined "91)N
R$#O9R:$ O9T#O9R:IN! as the purchasing of "R services from a third party supplier.
In other words, "RO occurs when an organi;ation contracts a third party service provider that
performs the organi;ations "R functions on its behalf.
)ccording to a study conducted in )ugust +,,. by the #"R1, some of the "R related
functions that are currently outsourced by 9# based organi;ations include but not only
limited to conducting background checks, employee development program, in addition to
legal and administrative functions.
R$:R9IT1$NT PRO:$## O9T#O9R:IN!
RPO is an activity carried out by organi;ations to attain talent by delegating to a third party,
known as recruitment service provider, who partly implements the organi;ations recruitment
needs. Recruitment service providers, such as eecutive and contingency search firms, used
to provide support to organi;ations in the developed countries through presenting their
services for many years.
) study conducted by #uyash in +,,= which shows the maCor reason for outsourcing are to
reduce operational costs 'B0D2 and focusing more on the core activities of the business
'B+D2. )dditionally the variable cost predicatability '*BD2, improved 6uality '0D2, conserve
capital '0D2 and increase speed '0D2, among the other key aspects that enable outsourcing in
the global environment.
) theoretical motivation for outsourcing provided by the Resource 8ased Eiew'R8E2 is that
decisions are driven by their effect on the number of resources and capabilities that substitute
the competitive advantage, rather than focusing on cost advantage '8arney, *>>*2