Why Are Recruitment Directors So Afraid Of Outsourcing?

Outsourcing elements of internal processes to external companies has become the normal practice in business life.  By outsourcing internal tasks this has allowed companies to concentrate on what they are good at and pay for the service and expertise of an external party to look after the parts of their business which can often distract them from growing.  Here at TBOS, our main focus has been to provide a fully outsourced back office and accountancy service to various size recruitment agencies and we speak to many agency directors about how we can help eliminate the mundane administrative tasks from their business to allow them to fully focus on recruiting.  However, we know that there is still a “fear factor” when it comes to relinquishing the reins to an outside party, especially with finances, and there are often a number of misconceptions about how the service will be performed.

Below is a list of some of the reasons we hear as to why recruitment agency directors may not consider outsourcing their back office and accounts departments:-

THINK IT WILL BE MORE EXPENSIVE
The impression that directors often have before they look at the possibility of outsourcing is that the back office and accounts provider won’t be able to provide all the services they need and it will cost more than doing the process internally.  However, many providers can deliver a more comprehensive service at a fraction of the cost and when you start totalling up the whole cost of an internal accounts team (salaries, office space, furniture, computers, licences, stationary, postage, printing and HR costs) the savings become much more apparent.

WANT FULL PROCESS CONTROL
Many agencies will have a director who has always been part of the financial processes themselves, whether that was the early days of raising the invoices, or managing the accounts department on a daily basis.  It can often be a hard task to allow the process to be handled by an outsourced company and it does take time to build trust, but in the long run the director’s time is better spent growing the sales team and making more placements.

AM I TOO SMALL OR TOO NEW?
Many new start-ups or small turnover agencies will often believe that outsourcing their back office is not worthwhile and will be too expensive, so they look to do most of the back office work themselves (invoicing, payments, credit control… even bookkeeping). The time spent on these tasks should be being used wisely on making placements and sales calls instead of wasting their time on administration at the critically early stage of company growth.

AM I TOO LARGE?
Agencies making large numbers of contract/temp placements with a number of internal consultants will often believe that outsourcing won’t work for them as they are too big. However, if a large agency can outsource their accounts department, they can concentrate on continuing to grow the number of internal billing staff and in turn make more placements without having the distraction of a back office team to manage.

TURNING A BLIND EYE
Sometimes an agency will be juggling all of their current back office and accounting responsibilities and running on a day-by-day cash-flow situation, believing that their company is profitable.  In reality, often these agencies are not in good financial shape and the directors are avoiding knowing whether they are actually making enough money to survive.  By using an outsourced back office and accounts company to look after the books, it means that they have the back up to address any shortfalls in the figures and cash-flow and move themselves into a more positive position financially.

Over the years, TBOS has helped a number of recruitment agencies outsource their back office and accounting requirements and in some cases we have had to quash the misconceptions of outsourcing before they will decide to come on board.  The reasons above can be a barrier to the directors but we have found that once the agency is on board, they see the full advantages of using our service and wonder why they didn’t do this earlier.  Also, as our back office and accountancy service is based on the number of placements made instead of the turnover, it means that our service is ideal for new start and smaller permanent agencies through to the larger contract agencies.

For more information on how TBOS can help you outsource your back office and accountancy of your recruitment agency, please contact our office.