top ten, recruitment process outsourcing, trends

Top Ten Trends Shaping the Fast Growing Recruitment Process Outsourcing (RPO) Market

29 Nov 2005 | (Thinking Point) | Joe Vales

By Joe Vales and Sue Marks

Driven by accelerating global competition, organizations feel a need for agility like never before.  They must improve performance, mitigate risk and reduce cost all at the same time. Executive teams are looking to their Chief Human Resources Executive to maintain and improve their business’s organizational capability and intellectual capital. 

In most organizations 80% of costs are people costs.  What a huge opportunity to improve competitive advantage by innovative actions. Think about what it would mean to a firm’s overall performance if it could improve the extent to which their workforce has the skills, motivation and training necessary to improve the day-to-day execution of their responsibilities by just 20 or 25%? 

Given the forecast labor shortages and the corresponding rising recruitment challenges, companies are looking to Recruitment Process Outsourcing (RPO) not just to supplement, but rather to transform their Talent Acquisition and Management functions. 

Here are Ten Trends shaping the fast growing RPO market today.

1. The value proposition is expanding.  Buyers expect service providers to deliver a robust value proposition that goes well beyond economic/cost savings benefits.  Service providers are developing solutions that also achieve strategic, operational, technology, human resources, and risk management benefits.

2. RPO providers are extending the value chain to deliver a robust value proposition and significantly increase the ROI for buyers.  The firms now shaping the RPO market recognize that you need to win the war for talent on two fronts – acquisition and retention.  This new breed of service provider is moving towards a true “end to end” definition of talent acquisition: from outsourcing simple recruiting, to the talent acquisition and management value chain. It starts at the opening of the requisition and extends through initial on boarding, orientation, and training.  This end-to-end process is designed to deliver maximum value, making a huge difference in lowering costs and improving business performance.
3. The pricing equation is changing.  Sophisticated buyers are moving away from per hire fees.  They have become smart enough NOT to look just for labor arbitrage or cost savings driven by outsourcing alone.  They are moving towards a BPO pricing model with performance guarantees and performance pricing.  They recognize that business transformation and performance improvements result in competitive advantage and enduring value.

4. It’s all about the process in this changing market.  Buyers are looking for new methodologies.  Buyers are increasingly looking to RPO firms that can bring world-class processes and change management tools to their organization. The RPO market is being redefined and extended for the first time with R2R; a well defined structured process that goes through the value chain from regulation to results covering 1100 steps.  Providers that have “organizational DNA” composed of Six Sigma process excellence and true BPO expertise will trump those that are simply high volume recruiting firms. The RPO’s that understand “business” – marketing, branding, process, supply chain, metrics, etc – will be the ones that thrive.

5. The supply chain is growing in importance.  In a world where competitive advantage doesn’t last long, knowledge and innovation – the purview of our people – make the difference.   Almost no one today is thinking of labor based supply chains…the models simply do not exist.  RPO providers with VMS and supply chain management expertise will be the big winners here as they help organizations plan and deploy their total workforce. Adapting demand driven supply chain techniques will help clients achieve significant business performance improvements.  Process and technology innovations in this area will bring some organizations closer to “Total Workforce Management”.

6. Offshore is adding value to RPO.  RPO contracts will begin to contain an offshore component, taking advantage of the time difference and labor arbitrage. RPO’s need to have refined standardized processes, extraordinary training, quality control mechanisms and global management and technology capabilities to support client’s global needs and extended value chains. 

7. Corporate culture match is driving solutions.  Cost is not the only measurement, corporate culture match will become a legitimate buying point in outsourcing contracts.  Buyers are looking for true partners. They want outsourcers to act as part of their organization; understand their culture and develop service level agreements that are balanced in a way that holds buyers and providers accountable for the robustness of the partnership and the results. Those relationships with the best culture match will have the best channels of communication, and those with the best communication will be the best performing.

8. Solutions must include risk reduction.  RPO providers must be true experts at process excellence and internal controls to help their clients manage and reduce risk today.  With intense industry scrutiny, an unforgiving regulatory environment, Sarbanes Oxley – risk management is a huge concern. Some companies and individuals worry they will “lose control” if they outsource.  However, in a properly conceived and executed outsourced environment, they will have clearer processes and better performance metrics than they have ever had.  They can reprioritize quickly and change focus areas. That’s more control.

9. CRM is driving talent acquisition. With CRM (customer relationship management) systems allowing one-to-one customer interactions, expect these innovations to translate to “talent” or “candidate” relationship management.  Candidates will not “come running to you” anymore; their resumes will no longer remain static in your database.  You will have to go to them.  RPO’s that are “eBusiness” experts will master the most sophisticated “B to C” technology to win the war for talent. These RPO’s will have significant competency in branding and consumer marketing and provide effective results that will help their clients win in the marketplace for talent.

10.   The RPO buyer is shifting to the HR Leader who is seeking industry specific solutions.  Involving RPO is central to winning the war for talent.  The evaluation and selection process is so important that the HR Leader has become a key decision maker and is frequently seeking RPO service providers who have the deep industry domain expertise to support firm wide transformation initiatives. . 

Note: ±Joe Vales is a special advisor to the Shared Services Business Process Outsourcing Association. He is the founder and Senior Partner of U.S.-based Vales Consulting Group, which focuses on helping clients build businesses that seek to dominate markets or market segments.  Joe is known for building brands that shape markets for years to come.  He also has recently co-founded The Reference Standards Board, an industry organization that works closely with outsourcing service providers to provide client references that help corporate buyers make informed decisions in the industries highly competitive RFP process. The Vales Consulting Group can be reached in Rye, New York at (914) 967-3200 or via e-mail at jvales@valesconsulting.com.

±Sue Marks is the co-founder and CEO of Pinstripe, a leading recruitment process outsourcing (RPO) firm known for its Requisition to Results methodology. She is a 25 - year industry veteran, having previously established two successful HR staffing and HR outsourcing companies, Pro Staff and HRfirst, which were sold to Kelly Services in 2000. Sue has advised numerous financial services companies on HR, outsourcing and technology issues. She has been named Ernst & Young Entrepreneur of the Year in the service business category, winner of the Marquette University College of Business Entrepreneurial Award and a three-time Working Woman 500 honoree, Sue serves on both for profit and not for profit boards, including First Business Bank, Milwaukee and is an active member of the prestigious Young President's Organization. Sue Marks can be reached by telephone at 1-877- 797-3379 or by email at smarks@pinstripetalent.com.

Author: Vales, Joe
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