The CEO of RPO provider The RightThing, Inc. examines how outsourcing models will further evolve and the growing adoption of RPO by small and mid-market organizations.

by Terry Terhark

As the daily challenge of sourcing and recruiting intensifies, so have the competencies of RPO providers. With growing talent shortages compounded by our nation’s current financial state, there is unique pressure on RPO firms to evolve. As organizations look to reign in costs due to lack of controls in today’s environment, the importance of RPO is clear, and the need to further tighten spending will continue to escalate in 2009. Look for the following five trends to emerge in the new year.

  • Provider Clarification. Overall industry growth and current economic conditions have played a significant role in clarifying the most established providers. Barriers of entry, which have historically been low in the past, are increasing as client demand for proven methodologies and a robust technology platform come to the forefront. Consolidation is occurring as companies look to increase their value proposition by combining solutions to expand into new territories and offer unique market differentiators and sophisticated service platforms.
  • Expanded Audience. As companies scramble to deploy global solutions aimed at larger enterprises, there is great opportunity in the mid-market that should not be overlooked. The need for skilled workers continues to intensify regardless of company size, and overall supply and demand issues continue to grow. In March 2008, the Aberdeen Group published a research report entitled “RPO: The Ins and Outs of Recruitment Process Outsourcing.” The report concluded that small and medium businesses are ready for RPO services. As the SMB market continues to heat up, providers that invest in mid-market solutions will see tremendous ROI.
  • Evolving Models. While historically many RPO solutions were more project based, today, an increasing number of companies are relying on end-to-end solutions as economical factors and lack of scalable resources present additional challenges. As delivery models, scope of services, and customer service improve with increasing competition, many providers are redesigning their go-to market strategies. Today, RPO clients expect providers to deliver strong analytics. Contracts are noticeably more robust around delivery of metrics with a tremendous focus on time-to-hire, as well as quality of hire, which is often predefined by the client.

    Frequently, contracts include incentives to provide a strong slate of quality candidates. Items like SLAs and fees at risk are also becoming a part of all contracts. Furthermore, a strong demand in service offerings that provide 24/7 operations and specific regional or geographical focuses have emerged.

  • Revised Sourcing and Recruiting Strategies. With an important need for increased quality and retention, a robust sourcing and recruiting strategy is vital. While many companies have historically relied on recruiting methods to attract the active candidate, a significant paradigm shift is occurring that focuses on recruiting passive candidates. This strategy helps to build a robust talent pipeline that can be utilized when hiring is scaled up and create efficiency and consistency.

    It also provides better support to the recruiting function in both good times and bad. Currently overall spend is decreasing in traditional methods of recruiting such as job board postings and classifieds and print ads, but increasing in areas of e-marketing, social networking, and deep web search techniques. While many companies lack the resources in understanding how to proactively recruit candidates and build a robust pipeline, they’re relying more on an RPO solution to fill that gap.

  • Technology Solutions. From higher efficiency and reporting to employment branding and candidate communication, today’s clients are requiring technology-enabled solutions. While the human touch is essential to the overall process, technology is needed to leverage maximum effectiveness for the client, regardless of hiring volume.

    From advanced recruiting software to customized, proprietary solutions, providers who invest in technology and embed it into their overall solution offer a significantly higher value proposition than those who don’t.

As we look toward 2010 and beyond, the deployment of top-tier global solutions as well as potential developments in job aggregators will be important to watch. While the future is bright, it is vital that providers continue to research, explore, and innovate best practices to escalate their competencies, deliver cutting-edge solutions, and ultimately drive the industry forward.

Tags: Enabling Technology, Engaged Workforce, Performance Management & Rewards, RPO & Staffing, Talent Acquisition

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