More Employers Embrace RPO as Hiring Battles Heat Up

By Roy Maurer Jan 11, 2017
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The tightening labor market has some employers turning to recruitment process outsourcing (RPO), growing the market by 17 percent in 2015 over 2014, according to the Everest Group, a consulting and research firm. A majority of global RPO growth is attributed to new deal activity, which grew at a rate of more than 18 percent year-over-year.

"Most organizations are continuing to encounter competitive labor markets and, in response, need to evolve ways to attract, engage and secure top talent," said John Wilson, CEO of WilsonHCG, a global talent solutions firm headquartered in Tampa, Fla. "Talent acquisition leaders are now expected to lead initiatives which in the past may not have been core to their function. RPO is helping to fill this knowledge or experience gap with expertise."

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Everest Group's practice director for business process services, Arkadev Basak, finds that RPO buyers are expecting more proactivity and innovation from service providers. "Providers are responding to this opportunity by developing niche areas of expertise, adding talent advisory capabilities and improving their internal efficiencies by leveraging technology," he said.

Korn Ferry Futurestep, an RPO and executive search firm based in Los Angeles, significantly expanded its RPO offerings in 2016, with growth in all of its global practice regions, said Jeanne MacDonald, global operating executive and president of talent acquisition solutions.

"One of the main reasons is a shift from being a tactical vendor to a strategic partner," she said. "It starts with understanding business strategy and how the talent strategy can support it."

RPO providers are offering more value-added services and targeted offerings such as recruitment marketing, diversity hiring and outplacement. "Mature next-generation RPO buyers, in particular, are seeking a depth of knowledge and breadth of capabilities from talent service providers in areas such as employment branding, talent community development and workforce planning, in addition to sourcing candidates," Wilson said.

Managed search is one area where Korn Ferry Futurestep has seen positive growth. "In a managed search environment, companies engage an RPO partner for a set number of higher-level professional positions, often across the globe," MacDonald said. "This eliminates the need for costly niche search firms, streamlines the process across levels and provides the client with an in-depth feeder pool of candidates instead of just seeing the finalists."

Technology Is the 'Enabler'

More than 40 percent of RPO deals are bundled with a technology capability, according to the Everest report. In particular, many service providers are making dedicated investments in developing bundled RPO offerings that include advanced analytic services.

"Technology has become a requisite enabler," Wilson said. "The explosion of new tools in the last few years has meant technology is integral to every aspect of talent and talent acquisition, a trend that will accelerate with future advancements in artificial intelligence and the increased use of bots."

The growing use of talent analytics has employers moving away from traditional hiring metrics such as cost-per-hire and time-to-fill in favor of longer-term success metrics measuring tenure, promotability and performance.

"In the past, our job was done when the person was hired," MacDonald said. "Now we are collecting data as part of the search process that can be used well after the hire. Our assessments allow us to measure not just what the candidate does but who they are. This helps us understand if they are a good long-term fit for the organization, as culture and candidate fit are key to long-term success."

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