Outsourcing Today’s CEO takes a look at the journey of recruitment process outsourcing and the shifts in buyer engagement and vendor development.
Many of the “uninformed” mark the emergence of the HRO market with the first “enterprise deal.” Not so, say I and other longtime participants in the market. I really don’t care about the chicken or the egg, but I can tell you that the enterprise market evolved from the single-process market that preceded it.
Had Darwin charted the evolution of HRO deals instead of spending time indulging his voyeuristic tendencies peeping in on the mating habits of Galapagos turtles, we would know that the benefits, relocation, RPO, TPA, and payroll deals all preceded the mega HRO deal. Much of the press coverage, however, focuses on these deals. The richer tapestry of HRO also includes the single process or, as they like to be called, “best-of-breed” providers.
One of the most important markets is RPO, which is exploding. It is not an “emerging” market, to be sure. In fact, RPO programs emerged more than a decade ago. The evolution is a story of market acceptance and is a parable for single-process HRO.
The earliest RPO programs were project-driven staffing programs that were typically defined by number of positions filled. They almost never extended more than one year, and the provider team provided an adjunctive capability to the internal staffing department.
RPO providers quickly got smarter and more efficient. In a short period of time, they evolved (Darwin would agree if he could tear himself away from the amorous turtles) and focused on moving more output per recruiter per hour than in-house staff, thus justifying their value proposition. In the late 1990s, annual programs began to emerge where RPO players could supplant in-house functionality. These programs were considered pilots at first with annual renewals, progressing to three-year deals, and lately to seven- to 10-year deals.
The major HRO players frequently include RPO within their bundle, but success in the high-touch world of recruiting has been hard fought for the top HRO players, and the successes are outnumbered by the train wrecks. So for companies that do not want an end-to-end program and for those that do not wish to put recruiting in scope in their HRO deals, RPO is an alternative.
The market has also developed segments. We examine this phenomenon in other parts of this issue. For example, Kenexa, Spherion, and The Right Thing all compete for the large, complex RPO programs, particularly in deals where knowledge-worker employees are critical. In such verticals as health care, Hyrian and TalentTrack have shown dominance in large-scale programs. CRI has gained a strong foothold in mid-sized programs in the technical and engineering markets and is now well positioned to challenge the aforementioned major players.
Veteran players have established new companies scoring early successes—including Pinstripe and RPO Worldwide. Meanwhile, growing capabilities at traditional staffing firms such as Volt, Manpower, and a strong push from Adecco into more classic models of RPO have also made the bidders list more complicated.
And finally, new powers stir as European leaders Alexander Mann Solutions and Capital Consulting both look to North America.
We help the buyer sort it out with two lists. First, we offer our Baker’s Dozen list of the 13 top players, and then a list of emerging market leaders because, depending on your company’s needs, a specialty firm may be your best solution. This market is evolving and we recognize that many buyers use this list. (The providers also know you use it as they have all called me about it.) We also break down the rigorous survey process we used to define the lists. Read on and enjoy!
