Can Recruitment Process Outsourcing empower a more flexible, scalable workforce?

Mindy Blodgett, Research Director, Horses for Sources

One of the facets of outsourcing that always challenges industry observers is fuguring out the timing of when (or if) companies will take the plunge.  Delivering a value proposition for outsourcing isn’t enough – it’s proving that those processes can benefit a company’s competitive position if they are externalized in a managed services environment. 

For example, most companies would never have dared move the management of their entire recruiting function over to a third party, but the squeeze of this post-recession economy, combined with fresh thinking from company leaders and a willingness to explore global sourcing models in business functions that can benefit from added expertise and flexibility, is moving services such as Recruitment Process Outsourcing (RPO) up the corporate agenda for many firms.  

We’ve decided to take a deeper-dive into the RPO market, and have asked our new research director for HRO, Mindy Blodgett, to tee up her research into this area for us.  In fact, taking a closer look at Mindy’s bio, I see she likes “eating at expensive restaurants”, so hopefully you’ll like what she’s working on enough to sign up for our research program and help her maintain this past-time… over to you Mindy: 

Can RPO empower a flexible and scalable workforce? 

 Although the global financial picture is still unclear, the signs of an economic recovery are tentatively drifting into view.  However, this isn’t your typical cyclical post-recession market:  industries are facing fundamental shifts in their very make-up and competitive dynamics, and this is impacting how many firms need to approach their recruiting strategies.  

 Many firms, fearing the worst, laid off staff aggressively in the crisis months, and now have to readjust their talent resources quickly to meet the business demands of a recovery that is – in many industries – appearing faster than many had anticipated.  Without an agile recruiting strategy, vital market opportunities could swiftly pass by those firms with talent shortages. But there is risk in taking a bold recruiting stance; no one can be sure that the economy will not take another nose-dive, and the need for greater workforce flexibility has never been so strong as it is in today’s environment. 

 Staffing back-up in the midst of uncertainty -  Four critical questions to address 

 2010 is a year that threatens to expose many firms.  Uncertainty drives some to be conservative and hold back on major re-investments; others to be bold and use the conditions to forge ahead in their respective markets.   Whatever stance firms choose to take, they need to answer these questions: 

  • How best to add qualified staff – and what should an expanded workforce look like? Which talents make sense in an uncertain economy going through such secular change?
  • How to meet the new demands for a flexible workforce, capable of expanding and contracting quickly?
  • How to meet a growing demand on the part of workers for a more “1099 “ work culture, one where employees have contracts and are not bound by long-term commitments?
  • How to take advantage of the latest recruiting techniques, for example, social networks such as LinkedIn, as well as the latest talent management application suites, to source talent quickly and at much lower cost than dated recruiting models?

Those who fail to answer these questions and define a coherent recruiting strategy could well find themselves left dog paddling as more nimble competitors surge ahead.  Enter the concept of RPO, which attempts to help firms tackle these issues without significant upfront investment and business risk… 

Is now the time for RPO to finally emerge? 

Recruiting, onboarding and training a global workforce is a daunting challenge for companies of all sizes and industries, and enterprises have traditionally invested in large inhouse recruiting functions to manage this process.   However, many HR leaders today do not have the bandwidth or focus needed to keep up with the latest in recruiting management technologies and best practices. Maybe it’s finally time to use a third-party specialist to help manage this process?  

Therefore, the increasingly smart answer for a number of enterprises is to turn to Recruitment Process Outsourcing (RPO) to manage some or all of their recruiting processes. 

At Horses for Sources, we believe that RPO, one of the HR functions that has historically lagged in the HRO space, is now poised to finally come of age in this growing, but uncertain, recovery. 

Hot off the presses survey data tells the interesting story. Data from the Seeking the New Normal in Outsourcing Delivery survey, conducted by Horses for Sources in January of this year revealed that in the coming year, close to 50% of respondents report they are either likely to increase or are already increasing their participation in some form of HRO.  

The survey also showed that there is a growing interest in RPO, whereby some 35% of buyers said they were actively evaluating the outsourcing of some aspect of their recruiting function, while another 12% said they were actively interested in pursuing RPO. More importantly, some enterprises are moving into RPO immediately, with 6% reporting that they are engaging in RPO in the 2010-2011 timeframe. 

So while RPO is still relatively low on the HRO totem pole, it is occupying a more significant piece of the total HRO pie. As enterprise leaders are increasingly scrutinizing RPO as a viable, and potentially formidable, weapon in the HR arsenal. 

Why RPO claims to make sense: 

Managing the talent life cycle has always been an intimate process for many firms, and finding staff which are a cultural fit, as opposed to simply filling immediate task-oriented and transactional needs, has been a major reason why enterprises have clung to managing the bulk of this process inhouse.  However, in today’s maturing outsourcing environment, both providers and buyers are vying to become more sophisticated at working together to achieve common business outcomes.  RPO is no exception, and there is no reason why a quality RPO provider cannot work with a client today to understand its culture and work in a personalized manner to meet its recruiting needs. In an ideal world, an RPO provider should be able to deliver:  

  • Faster time and lower cost to hire
  • Easier requisition management
  • The potential of better talent retention
  • Standards that meet the need for regulatory or corporate compliance
  • A more organized, focused, modern and swifter hiring process that should lead to improved service quality and lower cost-per-hire
  • Removal of some non-core and low-value functions, allowing greater focus on developing talent, as opposed to acquiring it
  • Access to the latest in technology, applications and recruiting best practices, including such benefits as updated skills and behavioral assessments 

Breaking old habits is hard, and many enterprises cling to the belief that their recruiting needs are unique, not easily adapted or standardized into universal templates. Hence, a rapid increase in RPO adoption is not yet a sure bet as many HR leaders will continue to resist transferring such processes into the hands of a third-party. Still, it’s clear that RPO is now firmly on the agenda for many firms ready to embrace new recruiting strategies that add agility, and do not cost the earth to deploy.  Enterprises pursuing RPO need to be committed to change and to effective outcomes – but the goal of finding a true service provider/partner is not easy to attain. 

At Horses, we’re committed to tracking RPO in addition to many other developments in the wonderful world of HRO  - stay tuned! We’ll be asking the hard questions about adoption challenges, analyzing buyer successes and failures, as the markets mature. 

If you are an organization engaging in RPO, are interested in RPO, or if you are a service provider with an RPO solution and a strong message for how these relationships are working to build a new global work culture, we want to hear from you. As part of our research efforts in the near future, we will be surveying buyers; analyzing service provider offerings; conducting case studies – you name it, we’ll be doing it. 

So please email me if you’d like to participate in our RPO research, or whether you have some suggestions or questions.  It’s an exciting time to be watching the RPO space, and we look forward to sharing our insights  and hearing about your experiences. 

Mindy Blodgett (pictured), is Research Director for Horses for Sources, her prime focus being Human Resources services and Business Process Outsourcing areas.   Mindy’s role is to deliver research analysis and thought leadership for Horses clients and readers in areas related to recruitment process outsourcing, total benefits outsourcing, workforce analytics, talent management and broad HR areas, such as compliance, payroll and compensation.  You can read more on Mindy’s background and expertise by clicking here.

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4 Comments

  1. Brian Ellis
    Posted March 13, 2010 at 8:19 am | Permalink

    Mindy –

    Interesting perspective, you could well be correct that the RPO model is poised to accelerate in this new economy. What industries do you see showing the most interest in RPO?

    Brian Ellis

  2. Mindy Blodgett
    Posted March 15, 2010 at 9:09 am | Permalink

    Hi Brian –

    Thanks for your comments! As for which industries are growing their use of RPO — it depends on the region of the world. But we think that the financial services industry will be likely to continue to lead in RPO adoption, with such sectors as manufacturing being strong as well — and healthcare is one of the industries starting to gain ground in this space.

    Mindy Blodgett

  3. AJ Wijesinghe
    Posted March 15, 2010 at 5:29 pm | Permalink

    Mindy,

    In my opinion RPO could be a lot bigger than what it is today. However, historically some of the niche players have done better than the large HRO players. With more investments in platforms and portals, large players could quickly make a difference in this space.

    At the end of the day with the staffing needs been a variable any more for most organizations, a transaction based RPO model would just make perfect sense to them where they would have the People, Process and Technology be readily available to deployed very quickly.

    Good Luck with the research!

    - AJ Wijesinghe

  4. Posted March 18, 2010 at 2:12 pm | Permalink

    Would very much like to talk with you Mindy and support your research, the email you link didn’t work.
    I can be reached at jon.holden@talent2.com

    Kind Regards
    Jon Holden

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