Right skilling! Combination of Internal and External Resourcing and its Importance

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.

Internal resourcing

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

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.

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.

Internal resourcing

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.

External resourcing

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.