Why outsource recruitment in 2025?
Compliance, cost control, strategic value and more - to outsource recruitment in 2025 is a decision to make with all of the information, James Parnell writes.
Published: 7 January 2025
Article by: James Parnell
Considering outsource recruitment in 2025
Outsourcing recruitment is hardly a new concept, with Recruitment Process outsourcing (RPO) and Managed Service Programmes (MSPs) having been utilized in increasing abundance since the turn of the century. It was not long ago that only the absolute biggest of organisations with the largest of hiring demands would typically outsource their permanent and/or contingent recruitment. But in recent years as technology has brought further efficiencies, the model has both matured and demystified, and partnerships have become ever-more strategic. A heightened focus on compliance and legislation in more recent years has also seen a marked increase in organisations electing to centralise recruitment activity. For all these reasons, an increasing number of small and rapidly growing, mid-sized organisations, have also seen the benefit of outsourcing recruitment and more are considering outsource recruitment in 2025.
If you’re an organisation that has not outsourced, why should you consider this in 2025?
Well firstly and importantly, the key here is that this is a question that could derive a yes or a no answer. Outsourcing is not the right thing for every organisation, why fix something that may not be broken? There are however a number of challenges expected in 2025 that will put pressure on Talent Acquisition (TA) teams. Some of these are new, some not.
In this article we explore some of these in more detail.
We are in uncertain times
It is fair to say 2024 has been one of the most challenging years in recent memory from a talent and staffing perspective. From stuttering economies still recovering from Covid-19, geopolitical events, to new governments in the UK and US, the year was one of unpredictability. This takes us into 2025 pretty unclear on what lies ahead.
Uncertainty is not helpful if you are trying to align your TA function appropriately to current and future demand. Underinvest and you risk lacking the resources to capitalize on growth opportunities, overinvest and you risk carrying heads that are underutilized and face the far-from-ideal situation of having to make subsequent cuts. No better example to illustrate this than late 2021 and 2022 when TA professionals were in unprecedented demand. Salaries soared, the great resignation swept across the market, and many organisations just couldn’t get the TA talent they needed to meet demand. Forward wind to 2024, and the volume of TA people out of work is at an all-time high (outside of the eye of the pandemic storm).
Flexibility & agility
Outsourcing can be a highly effective way of achieving agility through volatility. With the right partner and service in place, peaks and troughs in demand can be firmly limited to being the provider’s problem. You get the resource you need, when you need it, roll on and roll off as you need to. All employment responsibility sits with the provider, so you get the best of both worlds – qualified experts that are embedded into your organisation, no HR responsibility, yet your people to task manage and integrate into your business however you wish. Many businesses will be watching costs more closely in 2025 than they may have for a long time, so the malleability of an outsourced talent service could be a valuable commodity.
Harnessing strategic support and insights
Has there ever been a more important time to know what your competitors are doing? What about the wider employment markets pertaining to the particular skills your organisation needs? What innovations and technologies are being utilised by your peers to enable them to attract the best talent quicker, more effectively and with optimum candidate experience?
Are your hiring processes inclusive, and aligned to your wider ED&I and ESG strategies? Having the external lens and widespread expertise that the right outsourced talent partner can bring you, could be invaluable. Reputable MSP, RPO and Total Talent providers are not just there to perform a pre-defined transactional recruitment service that goes through the motions. They can and should be held accountable for providing that critical ‘lens’ from the external world.
Change is happening at a faster pace than ever, could a Talent partner help you keep up with this in 2025 and beyond?
But are you putting all your eggs in one basket?
No. Often a misconception – that going into an outsource relationship is effectively picking a recruitment agency for an exclusive relationship. This is instead appointing a strategic talent partner that will be accountable for delivering your permanent talent acquisition and/or contingent workforce under a programme with agreed parameters, performance metrics and pricing. How the demand is delivered is completely tailorable.
If the service is an RPO, then the provider is effectively becoming an extension of your TA function, adopting your brand and optimising your direct sourcing strategy. An external supply chain can support any positions requiring this attention. If a Managed Service Programme (MSP) then again a supply chain will provide a valuable safety net underneath the provider’s delivery capability. If a master vendor model, the likelihood is the provider is fulfilling 80%+ of demand and bringing with it economies of scale, whereas in a more neutral vendor arrangement a supply chain will fill a higher percentage or even all of the demand. Whatever the model though, the provider have to be accountable for delivering against any potential requirement, and a supply chain is critical to this. With reference once again to the cost pressures many organisations are facing in 2025, an outsourced solution could give you the opportunity to maintain a diverse supply chain, whilst also being able to hold a single party accountable for the success of your talent programme.
What if my organisation is in its infancy – could outsourcing still be a good idea in 2025?
If you are expecting to go through significant growth, then most probably yes! If you do not currently have the infrastructure or strategy to grow, but have the budget and business growth expectations to do so, it’s going to be tough. Utilising recruitment agencies for key hires as you grow will help solve critical skills gaps, but unless you are investing in your employer brand as you go, it’s going to be hard securing talent over better-known and established competitors. Why not partner with a Talent specialist that can either complement your growing TA strategy with a Project RPO to focus on a specific portion of your hiring, or outsource the whole inception and building of this TA strategy to someone else, that can hand it back to you later to run with yourselves when ready?
Why consider outsourcing contingent labour going into 2025?
As referred to earlier, it’s no longer just big companies that have turned to outsourcing. This also includes contingent labour. Gone are the days that an organisation needed to have hundreds of temporary workers to see any value in a Managed Service Programme.
There are a few reasons for this including:
Compliance: Running a contingent workforce compliantly is going to be more challenging than ever in 2025. With key legislative pressures such as AWR and IR35 already in play, 2025 will also see Employer’s National Insurance increases, and a newfound tax accountability for agencies and end clients working with contractors via umbrella companies. This is unlikely to be the last time in the coming years we see some key legislative changes.
Strategic value: MSPs are more popular than ever because they do more than just deliver your temporary workers. As previously discussed, they also bring market insights, competitor intel, and ultimately should be making your business more successful in achieving its goals via a successful talent programme.
Alignment with Services: The lines between contingent workers and SoW services are becoming increasingly-blurred. Making the right decisions on when to use these respective routes to market is key in both ensuring effective delivery and accountability on key projects, but also protecting costs. An MSP can enable a decision triage process, and potentially also manage the vendors providing SoW Services, in addition to the conventional vendor management of preferred recruitment suppliers.
Technological efficiencies: The capabilities and user experience of the Vendor Management System (VMS) that power Managed Services Programmes now are so good, that the presence of a technology alone makes MSPs so slick. Your VMS can also integrate into your wider business and HR systems via integrations, as well as provide critical management information to enable optimum decision-making and budgeting. With the above point in mind, in 2025 there are also many ways for technology to enable the full management of SoW service provision as well as contingent workers and suppliers.
Cost control: Has there ever been a more important time to ensure your organisation is not incurring unnecessary costs? Whether those be through suppliers, through contractors, through indirect costs and inefficiencies – an effective MSP will shine a light on all of these, and deliver improvements. You can read more on this in our recent article: How to reduce recruitment costs with an effective MSP
Final thoughts
The key to success in Talent Acquisition is ultimately having a high performing and accountable team delivering your recruitment programme for you. If you can build such a team yourself and are able to sustainably meet these needs both now and in the future, maybe an internal strategy is your best way forward. However, if you require a flexible and highly accountable solution, then outsourcing is an option you should seriously consider.
If any of the reasons to outsource have resonated with you, or you want to discuss how an outsourced solution could help your organisation achieve its Talent goals, please get in touch with one of our experts!