The Future of RPO: 2014 and Beyond (Part 3 of 3)

by Allison Reilly

RPO in the futureFor the final part of our three-part series covering the past, present, and future of the RPO industry, we look at recruitment process outsourcing from this day forward. The industry has come a long way from education and proof of concept, and in the third part of this series, we look to the horizon and project the next 10 years for this industry.

Size of the RPO Market

Mike Mayeux, CEO of Novotus, said that the RPO market was projected to grow 12-17% in 2013, which is great news considering that the market shrank somewhat in 2012. But, what makes the projection of growth even more fascinating is that in 2013, then number of new deals actually increased by 50%.

"So, what we're seeing is smaller deals... small to mid-sized companies coming in really fast, where I think [RPO] works really well," Mayeux said. "It's a $1.6 billion industry at this time. The acceleration in the number of companies adopting this is noteworthy."

How to Think About Pricing

The cost of RPO services is a popular question, and one that doesn't have a definitive answer since the cost of an RPO solution would depend on many factors. Therefore, instead of worrying about the initial cost or the monthly cost for the service, think about return on investment for improving your recruiting process, which is what Mark Baudler did. Baudler is the senior manager of HR Services and Process Improvement at Panduit.

"We worked extremely closely with our finance partners, and pretty much turned over every single rock there could be," Baudler said. "We found every penny we could find. What came out was that it looks like you're paying quite a bit of money for an RPO, but when you find every penny in the company, there's definitely a positive ROI."

Baudler also noted that, for Panduit, the more open positions they had then the higher their internal costs would be. This makes RPO a good investment because the company is able to save more money during a busy year versus a slow year. He also recommended that companies considering an RPO solution need to look at the entire business budget, not just the HR budget. This is how you find every relevant expense and make an RPO a positive investment.

3 Insights from the Past 10 Years of RPO

John Younger, CEO of Accolo, noted three important insights that he and his company has gained over the past 10 years in this industry:

  1. The insights that can be gained because of an RPO's depth and breadth are profound. Most executive teams had little or no data-driven visibility prior to recruitment outsourcing, and also had a complete disconnect with the recognition that applicants may also be customers, shareholders, future hires, and referral sources.
  2. An RPO provider, which sometimes to its own detriment, exposes issues that sometimes have been lurking in the shadows for decades. These issues can include how to promote from within, lousy client leadership, fear of making a decision, not wanting to make a hire, and failure to recognize retention strategies for top performers. RPO will ultimately highlight these types of issues, either directly or indirectly.
  3. The RPO advocates within companies get promoted. We think this is related to bringing a business solution to an HR function.

Overall, What Do We Have to Look Forward to in RPO?

Kipp Sassaman, vice president of human resources at Fikes Wholesale, Inc, said that for current RPO buyers, one thing to look forward to is outsourcing the entire recruiting process while convincing other companies that RPO is just an extension of Fikes. Even though talent acquisition is not in the same building as the rest of the company headquarters, this doesn't mean their talent acquisition is any less effective.

Baudler is particularly excited about the experience RPO brings, and not just the experience of managing the recruiting process. He's also referring to the experiences of candidates and hiring managers. An aspect of the recruiting process that's making a huge difference is pipelining. Hiring managers are excited to have candidates right away when positions open up, and pipelining also makes it easier to find candidates for hard to fill positions.

Mayeux said that, for providers, there's going to be an increased focus on contingency staffing. Buyers are interested in a one-stop shop, where the fewer people they deal with the better. Also, more companies are considering contingency staffing to fill a variety of business operations, and hiring this type of people different from hiring full-time and part-time staff. Contingency staffing is an increasing need, something that providers will have to come in and help their clients with.

To learn more about the past, present and future of RPO, our latest webinar featured a panel discussion profiling the changes that have brought this industry from “the wild wild west” to the new landscape of the current competitive market. Now that the dust has settled, the RPO industry has grown significantly over the past 10 years and has increased in sophistication. View this webinar's video to learn how today's RPO adds extraordinary business value.

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