While the great recession devastated many recruiting departments, it sowed the seeds for another field to flourish, with RPO providers reaping growth of more than 25 percent in revenue last year.
"The downturn helped," acknowledges Rebecca Callahan, president of recruitment process outsourcing, or RPO, operations of Randstad Sourceright. "It was so ugly. Recruiting organizations were decimated."
Although the economy has yet to fully rebound, finding skilled talent in select fields is in high demand. But identifying the best of the best and then bringing them onboard can be a daunting task.
"Right now there's scarcity and abundance," says Kate Donovan, managing director of ManpowerGroup Solutions, the company's outsourcing arm. "So many people are unemployed and theoretically available to fill positions, but there's a great talent mismatch."
As of May there were 12.7 million unemployed people, according to the U.S. Bureau of Labor Statistics, yet at the end of March (the last month for which figures were available) the nation had 3.7 million job openings.
While the unemployment rate is down markedly from its peak of 10 percent in October 2009, many organizations are still gun-shy about bringing new hires—and recruiters—onboard. "The U.S. economy is still not very confident. Companies want flexibility. RPO provides that flexibility and not the fixed cost of a permanent recruiting department," says Rajesh Ranjan, a vice president at Everest Group, a consultancy.
Along with talent shortages and a hesitancy to hire, the exploding reliance on social media to connect with potential candidates makes things even more complicated for recruiting departments that are stretched thin.
That's where RPO comes in, allowing organizations to scale up and scale down recruiting efforts as needed through those outside providers, rather than bringing an office full of new recruiters onboard along with the costs that would entail. "in times of [economic] uncertainty, no one wants to do that," Callahan says.
At the same time, Callahan says an organization that hires a few hundred people each year is unlikely to invest in learning all the ins and outs of using social media for recruiting purposes. "Recruiting in a social media environment is complex at best. It's ever-changing."
Interest in using RPO services took off in the mid-2000s as the economy prospered and organizations battled for talent, Ranjan says.
Demand for RPO services slowed in concert with the recession, but demand boomed as the economy began to recover. In 2011, spending on RPO globally climbed to $1.4 billion, up from $1.1 billion the preceding year, according to the Everest Group study Recruitment Process Outsourcing (RPO) Annual Report 2012. Ranjan expects similar industry growth this year.
North America-based organizations accounted for almost two-thirds of the RPO spending last year, Ranjan says. That includes both organizations with operations solely in North America as well as multinationals headquartered on the continent.
But that doesn't mean RPO providers' focus is just on the United States and Canada. This year, ManpowerGroup signed a contract worth at least $400 million over five years to provide recruiting services for the Australian Defence Force—the largest contract in industry history. It's an extension of a partnership between the two that began in 2003.
With the growth of the industry in general, and increasing interest in RPO services outside of North America, 2011 was also marked by major acquisitions, such as Dutch-based Randstad acquiring SourceRight Solutions for roughly $770 million. Ranjan expects that trend to continue.
The Everest Group report found RPO providers accounted for more than 1 million hires globally in 2010 and 2011. ManpowerGroup led the way with 14 percent of those hired through RPO providers in 2011. It was followed by PeopleScout at 13 percent and RightThing at 11 percent.
That RPO growth has in part been fueled by the evolving recruiting landscape.
"Recruiting used to be post and pray," says Sue Marks, CEO of Pinstripe Inc. These days, "it's hard for a corporate recruiting department to keep up with everything."
The methods for recruiting can vary as much as the generations currently in the workforce. Marks says baby boomers may be more inclined to pick up the telephone, while millennials may prefer texts and videos. Recruiters need to be prepared to "interact with people any time, anywhere, any way."
To that end, Zachary Misko, a vice president at Kelly OCG Outsourcing & Consulting Group, says RPO providers need to be able to use a wide variety of means "and engage candidates where they live, work and play." Misko says there's still a place for traditional methods, such as print media, career fairs, face-to-face networking and cold calling, along with modern technology such as blogs and social media.
Terry Terhark, CEO of the RightThing, says that despite the diversity of recruiting approaches, RPOs need to be on the cutting edge when it comes to using technology. LinkedIn is now the top site for job postings but recruiters also need to be adept at using tools such as Facebook, Pinterest and Twitter.
And millennials are more likely to use their iPhones and iPads than laptop computers when job hunting, so organizations need to make sure candidates can apply for jobs and receive updates via their device of choice, Terhark says.
He also predicts job boards will eventually fade away unless they overhaul their business model. "Millennials want it now," Terhark says, also noting they don't have the patience to comb through job boards looking for openings. "It's amazing to me the pace of change we're seeing right now in recruiting," he says.
Once potential candidates are identified, the RPO provider should start a dialogue to determine where the candidates are in their careers and what they hope their next move will be, Terhark says.
Recruiters also need to be adept at dealing with applicants and leaving them with a good experience, regardless of whether they're hired. "Everybody has a voice on Facebook and Twitter," Terhark says.
Candidates also need to be treated well "because they could be your customers," says Gary Bragar, director of the HR outsourcing program with the analyst and advisory firm NelsonHall. Smart organizations also should know what openings they have coming up so they can have a pipeline of potential talent available, he says.
At Pinstripe, an RPO service provider, dedicated teams are established to operate under a client's brand. Team members typically have experience in that particular industry. "We become our clients' brand stewards," Marks says.
Nury Plumley, global staffing programs manager at Agilent Technologies Inc., says Pinstripe has helped the company hire more than 1,400 new employees in the United States and Canada in the past three years. The jobs they've helped fill have ranged from hourly workers to vice presidents.
Agilent, which was spun off from Hewlett-Packard Co. in 1999 and focuses on testing and measurement solutions for industries such as electronics, works with other RPO providers in other parts of the world, tapping into their local expertise.
The company was attracted to using RPOs, Plumley says, because of the "scalability of the recruitment function and the variability of the costs."
Pinstripe may be involved in talking to the hiring manager to determine what skills and qualities candidates need for the job opening, identifying potential candidates, scheduling phone screenings, or helping management select the best person for the job.
Plumley says Pinstripe brings expertise and resources to the table that Agilent doesn't have in-house, and Agilent can tap into the knowledge Pinstripe employees have developed from working with other companies.
And with Pinstripe available to locate candidates in the United States and Canada, it frees Plumley up to find candidates in other fast-growing markets. In Brazil, for example, Agilent has about three dozen openings at any given time.
One key to success, for RPO providers and the organizations they contract with, is flexibility. "It's not one size fits all," says Marks of Pinstripe. "It has to be really flexible."
Before the recession, organizations wanted RPO providers to be responsible for end-to-end recruiting services, says Donovan of ManpowerGroup. Now they're more inclined to just want certain pieces, such as providing services for a six-month business ramp-up, or identifying a pool of potential candidates and turning the names over to an internal recruiting team.
And RPOs are moving into less direct recruiting roles, such as employment branding. Or they might interview high-performing employees to see what attracted them to their employer, Bragar says. "It's not just about hiring the best talent, but making sure employees are engaged."
Bragar doesn't believe declining unemployment figures will prompt organizations that make use of RPO providers to turn their backs on those services and bring recruiting back in-house. "Even if the economy gets really good and companies have several quarters of great revenue and profit growth, I don't think we'll go back to the days of big HR departments. If they do, they'll focus on performance and talent management."
Susan Ladika is a writer based in Tampa, Florida. Comment below or email email@example.com.
Workforce Management, July 2012, pgs. 16, 18-19 -- Subscribe Now!