Recruitment is now the top problem for more than half of all UK companies, ahead of business strategy or management, according to a study from the accountancy and consultancy firm KPMG and the Recruitment and Employment Confederation.

"All HR directors are desperate to add value to their organisations,” says Rav Bains, a principal at KPMG Sourcing Advisory Services. “But the ‘war for talent’ is what everyone is talking about. HR directors have a right to be nervous; everyone is fishing in the same pool.”

Some companies are, however, reluctant to use the services of a specialist recruitment outsource (RO) provider. At a Chartered Institute of Personnel and Development event in Harrogate last month, recruitment outsourcer Hy-phen surveyed 168 HR directors about their attitudes to RO. The results show that although 60% of respondents are frustrated that it takes between three and five months to fill a management position, 56% feel outsourcing recruitment is a risk to their organisation.

Neil Jones, director of corporate solutions at Hy-phen, says the perception among some bosses that RO means relinquishing control needs to be changed: “Our research shows that many HR directors deeply need support. RO cannot only handle the back-end, high-volume processes such as payroll, but also the more strategic elements of HR, such as talent management.”

The search for a suitable RO provider can be confusing because suppliers come from various backgrounds and bring different skills. Some firms were born out of executive search companies while others are recruiters who have relabelled their staffing business as RO so they can offer a fully managed service. There are also software companies that have developed online recruitment tools and are moving into the service sector.

“You must ask plenty of questions,” says Tim Palmer, managing director of HR practice at sourcing consultancy EquaTerra. “Does a software company have the competence to develop a database of candidates? Does a head- hunter have enough independence because it has its own database?”

Firms are also advised to choose a provider whose culture and business ethos matches their own. Some companies prefer to outsource to a number of RO providers rather than use just one. This fuels competition on costs, which can save the client money.

The next step is to ensure the contract is watertight with strict service-level agreements that set realistic objectives. Areas to be clear about in any contract include:

1. How much work will be subcontracted to other RO companies? The provider might specialise but need help finding suitable candidates outside its normal areas of expertise. The client must know who exactly will be doing the sourcing.

2. Spell out which processes the RO provider is responsible for. Is it just putting together the initial advertisement or following up with interviews? What is the scope of the service and is it obvious how quickly vacancies are expected to be filled?

3. Do not go for too long a contract — between one and three years is the recommended length. If and agreement is too long, a client can miss the chance to work with a provider whose pricing structure is more competitive.

4. Is it apparent who is responsible for retaining and securing data on candidates?

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