The longer I am in this industry, the fewer people I know who had the “opportunity” to experience the challenges of the Great Recession. For those who don’t recognize that term, that was the largest economic downturn since the Great Depression in the 30s and extended for about 18 months, starting around the end of 2007 and ending in June 2009. According to an International Labour Organization (ILO) 2012 report, at the end of recovery in 2009, globally, there were still 27 million more people unemployed than at the start of the crisis[1]. And according to the U.S. Bureau of Labor Statics (BLS), the unemployment rate in the United States reached its peak of 10 percent in October of 2009, which was up from 5 percent at the beginning of the recession[2]. So for those in the talent acquisition space, talent was plentiful, but jobs were scarce.
For those of us engaged in recruitment process outsourcing (RPO), we were challenged as the scarcity of jobs impacted our industry. Some RPOs felt the need to scrap key strategic objectives to “keep the lights” on and had to regroup or reprioritize as the economy returned. Additionally, RPO at that time was much more transactional and thus dependent on large recruitment teams, whereas today, technology could fill many gaps in recruiting; everything from sourcing to interview-scheduling to offer letter distribution had to be handled primarily by human touch. Therefore, when team size had to decrease during the recession, it was not always easy to ramp back up on the other side.
At the same time, many companies found value in outsourcing recruitment through this downturn. RPO, which started around 1998, has evolved significantly through the years to the point where it has become an engine for transformation. Many of us offer expertise and solutions related to technology, diversity, branding, analytics, and insights, upskilling and reskilling, early careers, and campus recruiting, among other services. That being said, one of the lasting benefits of utilizing RPO is flexibility. And flexibility becomes even more critical when hiring fluctuates precipitously. In the recession, companies learned they had no way to redeploy their recruitment team and were hit with financial and reputational repercussions when they offboarded most or all of their talent acquisition function. It is a tremendous benefit to have a partner with more flexibility to move personnel to other companies that are not as severely impacted. Similarly, in the post-pandemic hiring frenzy, companies learned the value of having a partner responsible for providing more people, better processes, and relevant technology to ensure the ability to onboard the right people to keep pace with a surging market. It has been my observation that companies increase “insourcing” during times of financial stability and outsourcing during times of growth, decline, or uncertainty when the value of a partner who can own that burden becomes clear.
To learn about the RPO, check out this guide to understanding RPO.
The RPO industry learned a lot during the Great Recession that has become a staple in the industry. Some of the key lessons learned during a recession are
Regarding the current economic conditions, there are almost as many opinions as there are people. Still, it is my belief that we are not looking at anything, even approaching the Great Recession. I think Moody’s Analytics correctly labels this more of a ‘slowcession’ with growth slowing significantly, but a full economic downturn can be avoided [3]. This event seems more sector-specific. Certainly, financial services and technology are taking a hit, but even then, much of the impact in the tech industry is due to recent over-hiring. At the same time, industries like healthcare are thriving, and airlines and hotels are still hiring as they recover from the massive downturn during the pandemic.
About the author: As Managing Director/EVP of Client Services at AMS, Chip Holmes is responsible for the overall leadership and management of global talent acquisition teams across the America's, EMEA, and APAC.
Sources:
[1] https://www.ilo.org/global/about-the-ilo/newsroom/news/WCMS_171700/lang--en/index.htm
[2] https://www.bls.gov/spotlight/2012/recession/
[3] https://www.moodysanalytics.com/-/media/article/2022/slowcession.pdf