The recent SAP Analytics Symposium survey of SAP implementation companies revealed that only around 32% of the companies felt they had the necessary skills to leverage their business data. Adding to that, less than 45% of the companies possess the necessary data analytics and business intelligence skills to fully leverage their data.
Michiel Verhoeven of SAP UK believes that “the availability of skilled talent is vital to the success of all organizations.” The lack of skilled talent is not just restricted to SAP users but is impacting most technology companies. EdTech company, Skillsoft has released its annual report on IT skills and salaries and reports that talent shortage has grown to 76%, which is an increase of 145% since the year 2016. The report says conclusively that 3 in every 4 IT teams are now facing serious skill gaps.
How do technology companies meet their growing skills gap? Through Right Skilling! The key towards achieving that is to combine external resourcing (from outside their organization) with internal resourcing (from within the existing workforce).
What are internal and external resourcing? Let us discuss that first.
What are Internal and External resourcing?
Whether the purpose is to fill a new job role and replace a departing worker, internal and external resourcing are the two primary modes of recruitment in technology companies. Let us look at each one of them.
With internal resourcing, companies look at their existing workforce for potential candidates to fill the vacant position. Internal resourcing (or recruitment) is often a more cost-effective mode of hiring, which can also boost the motivation levels of existing employees. On its part, internal recruitment can be implemented by offering an internal candidate a promotion (or salary) to a higher responsibility level, or by internally transferring an employee from the current to another job role.
External resourcing (or recruitment) is all about hiring a potential candidate from an external source. External recruitment is necessary when the technology company is not able to fill its open positions with its existing workforce. There are multiple ways to recruit external candidates including job postings, campus recruitments, employee referrals, and professional recruitment agencies. As compared to internal resourcing, external resourcing exposes the hiring company to a larger pool of skilled resources to select their best candidates.
Next, let us look at the pros and cons of both internal and external resourcing, as well as the importance of combining them in today’s job market.
Should Internal and External resourcing be combined?
Should organizations opt for internal or external resourcing or combine both in their recruitment process? Let us look at the pros and cons of each of these recruitment methods.
Let us start with some of its pros or advantages:
- Internal resourcing reduces the time to hire or fill a position, as the right candidate is known and can be sourced from within the organization. This eliminates the time taken to recruit an external candidate.
- Familiarity with the company’s culture is another strong point with internal resourcing. The employee onboarding process is shortened as existing employees are already well-versed with company policies and business practices.
- Internal resourcing is efficient at improving employee morale and productivity, as existing workers are aware of these career opportunities and that their employers are looking to promote “promising” employees in the right direction.
- Finally, internal resourcing is cost-efficient as compared to external recruitments, which can include cost factors like paid job advertisement, employee referrals, and training-related costs.
Here are some of the cons or disadvantages of internal resourcing:
- Among the biggest disadvantages, internal resourcing can adversely impact employee morale and motivation when the process is not transparent or a perception spreads that “deserving” candidates are not selected.
- Organizations can also incur higher training costs to upskill or reskill the existing workforce, as compared to an external resource who may already be possessing the necessary job skills.
- With internal resourcing, hiring companies now have a limited pool of candidates to fulfill their resource requirements, or existing employees may have not had all the diverse skill sets required for different job positions.
Next, let us look at some pros or advantages of external resourcing:
- External resourcing enables companies to recruit the best candidates from a larger pool of resources and can attract candidates with a diverse set of skills.
- With external recruitment, hiring companies can implement an engaging recruitment drive that can build their brand image and attract more talent.
- Thanks to the larger pool of candidates, external resourcing initiatives have a higher conversion rate as compared to internal resourcing.
- Along with more skills, external resourcing brings in employees with fresh ideas and skills for business growth.
Here are some of the cons or disadvantages of external resourcing:
- Among the biggest disadvantages, external resourcing can be both time-consuming and expensive depending on the skill requirements.
- External resources may often be a misfit into the company’s working culture, thus causing disagreements resulting in new hires leaving the job.
- Companies recruiting their employees from external sourcing often go through a lengthy and time-consuming training and onboarding process for their new hires.
As both external and internal resourcing have their share of pros and cons, hiring companies can get the best of both by combining them in their recruitment process. Next, let us look at some of the best practices when combining external and internal resourcing.
Combining Internal and External resourcing – Best practices
For the best results, most companies employ a combination of both external and internal resourcing to meet their requirements. Here are some of the best practices when combining the two recruitment methods:
- Get the accurate job descriptions
Before opting for external or internal resourcing, HR teams must obtain the correct description of the open position from the hiring manager. Use a detailed checklist of questions to be asked to learn more about the job profile and the desired skillsets of the resource.
- Continuous improvement
A work environment of continuous improvement is essential to attract and retain the best talent. Along with effective hiring practices, companies must develop their internal employee training and development processes, which can build technical skills, interpersonal skills, and build employee morale.
- Career development
As high employee morale is key to internal resourcing, HR and project managers must be encouraged to have regular conversations with their team members about their long-term professional goals and skill development. This can potentially help in identifying resources that can fit into other (or added) job roles.
With the ever-growing skill gap in the technology domain, hiring companies must look to combine the best practices of internal and external resourcing to fill their job positions. To optimize their hiring time and costs, tech companies can consider internal recruitment as the fast mode of hiring and implement external resourcing only when the required skill sets are not found in the existing workforce.
With its industry expertise as an SAP technology partner, Groupsoft provides its customers the best consultation services regarding their talent management initiatives. Our SAP services range from technologies like SAP S/4 HANA and cloud-based solutions. We are experts at building, growing, and retaining teams and many of the processes we have spoken of are leveraged by us to great effect too!