How to measure ROI for Outsourcing?

Any company that is engaging an outsourcing model for the first time will always have questions. How to measure the return on investment (ROI)? What is the maximum benefit that a business can attain by outsourcing their recruitment function?  What activities should be outsourced to an offshore firm?

Once the program is up and running, companies tend to lose momentum in measuring returns on the investment made.  If you wish to earn the maximum out of your offshore recruitment partnership, you must be clear, upfront and very accurate while measuring its success. Evaluating ROI is also important from the prospective of analysing progress, improving the recruitment function, and managing internal expectations.

How should you start? Identify your goal.

Before you even get into a real time offshore partnership, be very specific about what results you are expecting. Once your expectations and goals are quantified, you can design service level agreements with the vendor.

Related: Recruitment Process Outsourcing Around The World

There are two basic analyses that you can run to evaluate the overall success of offshore recruitment partnership.

Cost benefit:

By outsourcing your recruitment function you can transfer your fixed cost to a variable cost that can be expanded and reduced in line with project requirements.  Compare the cost of hiring an offshore recruiter with the cost that you would pay if you hire an internal recruiter.  Remember to include each and every cost that is involved in the transition, including all on-costs including office space, IT and communications. Once you have calculated both the costs, compare it with the benefits and savings earned by choosing an outsourcing option.

Quality analysis:

Outsourcing core and ancillary recruitment functions to an offshore company brings many qualitative benefits too. While calculating the success, you must also include these factors. By comparing your internal productivity status before and after outsourcing recruitment to an offshore recruitment company, you can analyse the qualitative benefits too.

The bottom line

When calculating ROI on your outsourcing project, include every qualitative or quantitative benefit and also everything that you are spending. The more transparent and accurate is your calculation; the better will be the base for the next level of investment in outsourcing recruitment functions.

Call HHMC or IMS to discuss your requirements now.