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RPO Business Surges as Employers Look to Restart Hiring

July 28, 2009
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Recruitment process outsourcing providers are seeing an increase in interest from employers that have cut their internal recruiting staffs but are now realizing the need to start hiring again in the next few months.

Just in the past month, Findlay, Ohio-based The RightThing has signed on three Fortune 500 companies that have gotten rid of much of their recruiting staff, said CEO Terry Terhark.

“Over the last 45 days we have seen a surge in activity,” he said. “Generally when you see a downturn like this, the recruiting department is the first to be impacted, and so many of these recruiting organizations have been decimated.”

Similarly, Fort Lauderdale, Florida-based Spherion has seen a 40 percent increase in new customer prospects on average just over the past four months, said Rebecca Callahan, senior vice president of Spherion’s RPO division.

“For many companies, their recruiting departments were the first to go, and as things started to turn around they are realizing that they don’t have the capacity to get back to where they were,” she said. “All of a sudden RPO becomes a favorite item for them.”

ABB North America signed on with The RightThing in May to reduce its recruiting costs.

During the past several months, the company has eliminated seven recruiting positions and 20 HR jobs which also had some ABB North America signed on with The RightThing in May to reduce its recruiting costs. During the past several months, the company had laid off 20 HR managers who had recruiting responsibilities, said Shelia Gray, director of talent acquisition.

“The cost of recruiting is going up,” she said, noting that ABB North America plans to hire 4,000 people this year. “We expect that within the first year of working with The RightThing, our recruiting costs will be one-quarter of what they were before.”

RPO providers are also benefiting from the economic downturn in that they have access to recruiters who are being shed from large companies, experts say.

The RightThing has hired 100 recruiters in the past six months. Spherion has also been hiring, but Callahan declined to elaborate.

RPO seems to be a  bright spot in HR business process outsourcing, said Gary Bragar, lead HR outsourcing analyst at NelsonHall, a global business process outsourcing consultant.

“All of the providers that I have spoken to are seeing their pipeline bigger than ever,” Bragar said. “Even though contracts haven’t all been signed, they are seeing people realizing that they need to get their recruiting capabilities back.”

RPO will grow to 3.5 percent this year, according to  NelsonHall. The firm predicts growth will hit 12 percent in 2010.

“This is the time to test out RPO because most companies don’t have the pressure to fill hundreds of positions right away,” Bragar said. “Companies can start out with a smaller number of hires and assess how things are going before going full speed ahead.”

—Jessica Marquez

Workforce Management’s online news feed is now available via Twitter.

 

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