Recruitment Process Outsourcing (RPO) Looks Beyond Borders
07/24/2007
Findlay, OH
Increased demand from multi-national companies and greater emphasis on global recruiting and staffing as a solution to meet current talent shortages has generated a great deal of buzz in the recruitment process outsourcing (RPO) industry. Going global seems to be the answer…but is the industry ready?
Written by Jamie Minier
The outlook for the RPO industry reveals great growth and opportunity not only here in North America but internationally as well. Supporting this statement is the ever increasing amount of request for proposals that include a global component. To continue their evolution and expansion their service offerings, RPO firms in North America need to develop a solution to support countries outside of North America.
To help determine the industry’s state of readiness to go global, The RightThing, Inc., an end-to-end RPO provider, interviewed industry analysts to probe deeper into the primary question on RPO provider’s minds, “Should we go global?”
Among those interviewed:
Monica Barron, Vice President of Research for the Everest Research Institute, and a leading expert on HR outsourcing and HR technology topics. She brings a deep understanding of HRO topics from three different perspectives: her time working as an HR manager, her experience in HRO marketing and strategy for outsourcing suppliers, and implementation of HR technology solutions.
Gary Bragar, HR Outsourcing Research Manager for NelsonHall. Bragar previously worked at AT&T, where he was the HR Outsourcing service delivery manager responsible for managing the service delivery for that company's HR and payroll services contract. During Bragar's tenure, AT&T received the HRO Relationship of the Year award in the Financial and Business Services sector at the 2005 HRO Awards ceremony.
Jason Corsello,Vice President of the Center of Excellence at Knowledge Infusion. In this role, Corsello is responsible for creating an open community of information, intelligence, sharing and best-in-class guidance for those companies dedicated to creating a business impact with human capital. Previous to Knowledge Infusion, Corsello was an industry analyst and research director for Enterprise Software and Service Delivery Strategies at Yankee Group.
Q: Define “Global RPO.” What is it? What isn’t it? Are there any boundaries?
Barron, Everest Research Institute: Global RPO is exactly what it sounds like – providing the people, process and technology to support recruiting and staffing in whatever countries the organization operates. Clearly, there is a better value proposition in some countries than in others.
Bragar, NelsonHall: Global RPO is when a client transfers operational responsibility for one or more recruiting functions, including recruitment administration, across multiple continents to a recruiting services provider. RPO does not include standard recruiting services provided by a recruitment agency on a project-by-project basis. The contract needs to be of a minimum of one year in length to qualify as an outsourcing service. To qualify as global the service delivery needs to cover locations in more than one continent and not just multiple countries within a single continent.
Corsello, Knowledge Infusion: Global RPO is not only about finding candidates globally for roles throughout the world, it’s also about having a global solution and being able to meet local requirements. You can’t necessarily take a great process or models designed in the USA and drop them into India and expect it to work. Companies should be able to take best practices from all countries and regions but adapt those practices and process to meet the local needs.
Q: Is a global offering a necessity at this point, is the need growing, and what is the primary impetus behind its growth?
Barron: Most companies that outsource recruiting as part of a full-scale HRO project are looking for the process to be implemented on a consistent global basis. However, there are few or no stand alone RPO suppliers that have global capabilities today, which may limit the market to those companies looking to implement RPO primarily in North America.
Bragar: Not a necessity at this point, but it is a good idea to get moving in that direction. Much of the initial RPO demand has been in the U.S., but it is growing in Europe, followed by Asia Pacific. Even if RPO is only being offered to organizations based in the U.S. and that strategy has been successful, many of those companies will be located globally and if they don’t already, will someday have a need for RPO services beyond the U.S. It would be prudent to not only be ready, but to be proactive and provide this an offering to retain and develop existing global customers and attract new ones.
Corsello: RPO is definitely an early stage market. Although a global offering is not necessarily a requirement for entry and participation at this time, it can provide a unique differentiation for some providers. We are seeing individual RPO-specific offerings being set up in many high-growth countries such as India and China to capitalize on the globalization of the workforce and increased talent mobility among highly skilled employees. As RPO matures, we will begin to see greater alignment between regional and country-related efforts in recruiting and a company’s ability finding, attracting and placing talent across the globe.
Q: What advantages does going global hold for the RPO industry? For the clients?
Barron: We’ve seen most clients looking for a global (or at least regional) solution, which allows them to cut costs, streamline the process, and consolidate the data for reporting and analysis.
Bragar: By going global, the RPO industry not only opens up the opportunity to increase business with existing customers, but it enables them to expand into new markets and win new customers. For clients that are global, it allows them to work with one provider globally and is consistent with one of the main reasons why companies want to outsource to begin with.
Corsello: Some advantages include tapping into a global resource pool of talent, finding economies of scale and cost reduction opportunities in the recruitment process, and streamlining the recruitment process typically defined as the time-to-hire cost.
Q: What are the risks?
Barron: It can be difficult to get buy-in from HR organizations around the world to participate in one global process; however, the benefits generally are worth the up-front work to get to a global implementation.
Bragar: A downside or risk could be that it costs more for companies to invest in their global capabilities than they generate in revenue early on. But that is where you must first do the business case with a cost/benefit analysis and scale to meet demand and consider partnerships.
Corsello: Some of the risks include losing the flexibility of the recruitment process and creating a rigid process design unable to adapt to changes, often standard operating procedure in any recruiting process.
Q: What action should RPO providers take to prepare for global requests?
Barron: Change management – to move many countries onto consistent global processes – is a significant part of implementing RPO globally. Obviously, a supplier would need to offer a consolidated technology platform and multi-lingual support to be truly global.
Bragar: If the provider already has a global presence, it would be a good idea to look at the revenue potential and costs of adding RPO resources in those regions. If the provider is not already global, they should develop a business case to investigate if it is worth building a global presence.
Corsello: RPO providers should focus building requirements and solutions globally but prioritize their efforts on the local regions and countries that matter the most. One of the most difficult challenges in RPO is to commit to the requirements of customers before they are fully prepared and ready to be delivered. Global RPO requires up-front planning, and we encourage companies to take an incremental approach towards global RPO, building off the successes of smaller more manageable engagements.
Q: Are partnerships a good way to deploy Global RPO?
Barron: Partnerships are potentially an effective way to deploy a global RPO, as long as the processes and technology are consistent, and the buyer has to deal with only one supplier.
Bragar: Yes, RPO providers should be looking at partnerships with providers based in Europe and Asia Pacific. This is especially so if the provider is not yet global, but wants to meet immediate client needs and/or the revenue potential does not warrant the cost of building a global presence.
Corsello: Partnerships are always difficult but can be a good deployment model if done right. Doing a global RPO partnership requires a defined governance model that outlines process, owners, stakeholders, escalation, etc. Although many customers want “one throat to choke” sometimes that isn’t always the best model based on constrains, accessibility, and management of complex relationships.
Ready for launch?
Until now, global organizations have had to rely on a patchwork of regional recruiting firms to meet their needs, which is extremely inefficient and difficult to manage. Bringing together RPO industry leaders that transcend borders will allow clients to leverage the strengths and critical mass of top-level service firms on a multinational basis. And these alliances and partnerships will accelerate the readiness of the individual firms to serve their collective clients’ needs on a global basis.
Jamie Minier is the Chief Operating Officer for The RightThing, Inc.