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The recruitment process outsourcing (RPO) industry continues to grow rapidly despite tepid hiring plans by many companies in the United States. RPO industry leaders see new opportunities to capture business among midsized firms and companies expanding internationally.
“This is a really interesting time” for the RPO business, said Angela Hills, executive vice president of Brookfield, Wis.-based RPO firm Pinstripe Inc.
Several years ago, the business was dominated by corporations signing huge, typically five-year deals for complete outsourcing of the recruiting and hiring process. Today, as some of those deals expire, client companies are looking at options for less comprehensive services, in part so they can regain control of strategic functions such as workforce planning and succession planning.
Meanwhile, providers are acquiring companies that boost their market share or expertise, and new companies are entering the RPO market.
The midmarket—which includes businesses as small a few hundred employees—is a major target of RPO providers. “The fastest-growing segment is that midmarket segment,” said Rebecca Callahan, president of RPO at Randstad Sourceright in San Diego.
Many midsized businesses cut back recruiting staff during the recession and are unsure of their hiring needs and hesitant to bring them back.
“If you build an internal [recruiting] team, you have a fixed cost,” said Hills. “You have to build for maximum volume.” At the other extreme, using headhunters to supplement staff recruiters can be very expensive, she said. “There is something in between” in the RPO industry.
Specialization is also on the rise, industry leaders say. For example, “Many medium and smaller companies may find themselves underinvested in a function such as IT” and will contract for staffing in that area, said Jim McCoy, vice president of RPO provider ManpowerGroup Solutions in the Boston area.
Hills noted that some RPO providers “are very high-touch and customized; others operate with a model that is more focused on efficiency” that produces savings through a high volume of hiring.
Going GlobalHelping clients establish or expand operations globally is a critical—and difficult—challenge for many RPO providers.
Callahan said that some U.S. companies ask: “Can I just copy what I have today” in other parts of the world. Languages, cultures and laws vary significantly, so “you have to get local expertise on the ground.”
“We’re all trying to catch up to this,” said Hills, noting that while RPO providers are building expertise in all regions, “nobody’s really figured out Latin America.”
“There is no such thing as a global RPO provider today,” said Jon Bennett, consultancy director of London-based recruitment and talent management firm HB Retinue, to SHRM Online through an e-mail interview. “RPO in Germany is very different from RPO in France and the U.K.”
Constructing Talent Pipelines, Social Networks
Many RPO businesses are emphasizing their ability to use the recruiting process to help build a client’s brand and fill the talent pipeline. “Having your brand out there in the marketplace is tremendously important,” said Hills, adding: “There’s a lot of confusion about pipelining and talent pooling. People assume that we are finding hundreds of candidates who are a perfect fit for their organization and are just sitting on a shelf.” They can’t wait indefinitely, she said, and ultimately move on to something else.
There’s more to using social media for recruiting than posting vacancies on LinkedIn and a job board or two.
“Recruiting organizations have seven or eight different tools for tracking candidates,” said Callahan. “You really have to know how to use the tools,” effectively to, for example, sustain conversations online.
Technology is critical to another feature of RPO services: data mining and analysis. “Recruiting is increasingly looked at as a way to get competitive intelligence,” said McCoy. The best RPO providers “package that information and deliver it to their clients. … Firms are looking for more than recruiting,” he said.
Among the HR professionals who are re-assessing their use of RPO services is Linda Calicchio, SPHR, vice president of recruitment and talent services at drug development services firm Covance in Princeton, N.J.
“I really try to kick the tires” of RPO offerings, said Calicchio, a member of the Society for Human Resource Management’s HR Disciplines special expertise panel. “We read the literature and read the reviews.”
In addition, she talks with her colleagues in other companies about RPO firms. “The staffing community is pretty tightly connected.”
The decision to hire an RPO provider to recruit and hire staff can’t be taken lightly. “These folks are representing my company,” Calicchio said. “I want to have those job candidates have the same good feeling walking away from the interview” with an RPO firm recruiter as if they had interviewed directly with Covance.
McCoy said he recognizes that HR professionals like Calicchio have varying needs and are demanding personalized services. “It makes our job really interesting and really challenging.”
Steve Bates is a freelance writer and a former reporter and editor for SHRM Online. His website is www.stevebateswriter.com.
How to Recruit A Recruitment Outsourcer,HR Magazine, July 2012
Alternatives to Recruitment Process Outsourcing, HR Magazine, July 2012
Finding Flexibility with RPO,Staffing Management magazine, July 2009
Outsourcing the HR Function, SHRM Templates and Tools
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