RPO & StaffingTalent Acquisition

Growing Global

The value proposition of recruitment outsourcing has spiked in North America and, increasingly, worldwide.
 

By Katie Kuehner-Hebert
 

As the economy continues to improve, more companies are expanding their recruitment process outsourcing activities worldwide.
 

“Buyers are recognizing their workforce is global,” says Jerry Collier, global head of client development for Alexander Mann Solutions in London. “A hiring manager could be sitting in Milwaukee and managing a workforce in Italy. Or a hiring manager could be sitting in Paris and be responsible for global operations. A store in a second-tier city in China will be staffed by people within that local geography, but the client is thinking about things globally, ensuring a consistent brand experience for customers.”
 

According to research firm Everest Group, economic recovery brought stabilization to the global services marketplace in the first quarter. The global services market is showing early signs of recovery, with number of transactions in the first quarter up slightly from the third and fourth quarters of 2012, bolstered by revenue and operating margin growth among major service providers.
 

Migration trends are also affecting global RPO activities, Collier says. For example, a hiring manager for a Chinese consultant firm might try to find additional candidates along the west coast of Canada, where many Chinese people have emigrated.
 

“All of these dynamics have clients thinking about connecting all the pieces together,” he says.
 

Mercer’s Talent Barometer Survey reports that 60 percent of the 1,200 global companies surveyed are investing more in talent expats, especially in the areas of science, research, and engineering. As such, top-tier RPO providers are expanding coverage into more countries.
 

Rebecca Callahan, Randstad Sourceright’s president of RPO, is not surprised by this uptick in growth of RPO on a global scale. “In North America, the value proposition of RPO has absolutely picked up, and as a result, the rest of the world wants in on the benefits–the ability to transform fixed costs, scalability, the adoption of social media into recruitment,” she says.
 

Additional research shows the dynamics of talent have a greater reach. Aon Hewitt reports engagement levels are on the rise globally but shifting across regions: Europe and Latin America had the highest increases, while Asia Pacific remains the same.
 

Alexander Mann Solutions defines global RPO as being in
at least three regions—the Americas, Europe, the Middle East and Africa (EMEA), and Asia Pacific—and the number of hires can differ greatly. Business outcomes and metrics have a tendency to vary across regions as well as by position. For example, if a United States pharmaceutical sales person needs to quickly meet targets, then quality of hire may be the most important metric, whereas for call center positions in Manila, customer satisfaction might rank supreme in terms of measurement.
 

Jeanne MacDonald, Futurestep’s chief global sales officer, says companies considering global RPO should first implement a solution in regions that have “business readiness,” and then “turn global on region by region.”
 

Many U.S.-based buyers believe they can just replicate a sophisticated RPO solution they may have in North America for all of their other markets globally, MacDonald says. “But to have the most effective change management, they need to start in a place that has business readiness.”
 

Grow Grow Grow
 

Jon Hull, global head of resourcing for Electrocomponents plc, is expanding his RPO contract to include a larger global footprint for the electronics distributor’s talent needs.
 

“We are in the fortunate position of growing organically, especially in the European and Asian markets, and we want to be able to get to talent quickly in the areas where we want to go,” Hull says. “We want to be able to measure the efficiencies of recruitment and whether we are doing it according to our values consistently.”
 

The organization has a dynamic workforce landscape: its headquarters are in Oxford U.K. and has direct operations in 32 countries across the globe. Alexandar Mann Solutions initially delivered solutions for the company’s operations within Asia Pacific, but is expanding to cover Europe. The company will continue to oversee recruitment and hiring internally in the United States.
 

Global technology vendor Itron Inc. is in a similar boat with plans to leverage RPO for its increased global reach. The company acquired Belgium-based Actaris Metering Systems in 2007 and now has nearly 8,000 employees in more than 100 countries. Following the acquisition of Actaris, Itron began transitioning to a global RPO engagement with Futurestep, beginning with EMEA, and has plans to phase into both Asia Pacific and Latin America in 2014 says Jared Serff, vice president of competitive resources.
 

The main driver is to centralize recruitment procedures and lessen the number of third-party contingent agencies that Itron currently uses throughout the world, he says. Itron is also looking to Futurestep for a better understanding of market dynamics by given region and deliver an integrated talent management approach.
 

“An integrated talent management approach ensures we’re not only hiring good talent, but the best possible talent through a competency-based approach,” he says. “The competency framework helps define the success factors associated with an individual in a given role.”
 

Applicant tracking systems, candidate relationship managers, and other recruitment technologies lead the globalization of talent acquisition strategies, says Jay Floersch, solution architect for RPO business lines at Aon Hewitt.
 

“Multilingual technology capabilities now enable the stakeholder in HR and talent acquisition to own the recruitment processes on a global stand,” Floersch explains. “So now, following globally-enabled technology comes globally-enabled professional services.”
 

Many buyers need expertise in growth markets where
they have limited to no experience recruiting, such as sub- Saharan Africa, South America, or the Middle East. Andrew Goldschmidt, global offering leader for RPO at Kenexa, an IBM Company, reports these HR executives are looking to outsourcers to provide the capabilities.

Moreover, buyers may have cultural and process siloes that create system limitations, Goldschmidt, says. “They are looking to RPO to provide them a global platform and one governance model, to provide a level of brand and process consistency from region to region.”
 

Considerations
 

Managing recruiting and talent acquisition efforts on a global scale certainly has its challenges. Some considerations to take into account:
 

Change is difficult. Getting local hiring managers on board can be a significant roadblock, Goldschmidt says.
 

“We address these challenges by suggesting a phasing approach,” he says. “We like to be involved with clients upfront, helping to craft effective change management by communicating to talent acquisition leaders why the change will be better for them.”
 

Itron’s in-house talent acquisition staff is serving as liaisons between its hiring managers in the field and Futurestep, Serff says.
 

“Recruitment tends to be a relationship business, and as hiring managers move from doing business with local contingency firms to a more centralized solution, it is critically important to have a service level agreement focused on quality, cost, and service delivery,” he says. “If this is not met, hiring managers will fall back on their relationship with their existing third-party providers to provide services.”
 

Expanding an RPO engagement into countries where organizations have historically relied on local sourcing agencies can be a very big source of disruption, Goldschmidt says. “We inform clients upfront that change will be harder in those areas, and we help management through that, showing them the steps to build credibility and implement it.”
 

Define expectations. For Hull, the principle challenge for Electrocomponents is to make sure scope of services is clearly defined, so local hiring managers don’t expect Alexander Mann Solutions to “solve all of their problems overnight.”
 

“For example, we want to use RPO to hire permanent workers, but not temporary and contingent workers,” he says. “We want to be able to educate managers that if they want a contingent process, they will need a different vendor and a different solution.”
 

Callahan says many buyers want a uniform solution, but providers have to let them know that sometimes can’t occur, as recruiting methodology and laws can very greatly. For example, the U.K.’s Trade Union and Labour Relations Consolidation Act of 1992 specifies the amount of notice that an employee has to get if their assignment changes, which affects the price of RPO.
 

“We are also developing a statement of work and contracts to fit this,” she says. “We encourage our clients to have
one global master service agreement, but with separate statements of work for each region.”
 

Are you really ready? Buyers need to truly access their needs before determining how—and if—a global RPO engagement is the solution.
 

“There’s an important question whether some clients
 are really ready for global RPO,” says Paul Rubenstein,
Aon Hewitt’s leader of talent solutions and product strategy.“While RPO may be right for many clients, the homogenous nature of some clients’ recruiting needs may not be global, which leads to multiple providers in multiple regions. Each client has their own tipping point on how they’re going to be truly harmonized on a global basis.”
 

What’s Next?
 

Bigger and better things. “The future is bright,” Callahan says. “We’ve got some very successful programs that are yielding positive results, which bodes well for other buyers that want to proceed, she says. “It is an exciting avenue of growth for all of the providers.”
 

There is a lot of buzz in the industry that in the future, more buyers will incorporate permanent, temporary, and contract workers in their workforce plans. Karen Browne, president of Advantage xPO, explains that a total workforce solution covers both managed services programs (MSP) and RPO.
 

“We at Advantage xPO are really working to cultivate
 that – looking holistically about what type of workforce planning drives material change to their business and how to create more density and flexibility across talent categories,” Browne says.
 

While the U.S. is one of the more sophisticated regions related to staffing, she believes many U.S. companies are “extremely siloed in their buying behavior,” whereas EMEA companies are set up with one vendor for both RPO and MSP and can “course correct faster.”
 

As such, more providers will likely unify RPO and MSP programs, to ensure clients have “a more complete, real-time view of capacity and organizational capability globally,” Collier says. “In the future clients can’t see RPO and MSP solutions as discrete activities – they have to have a unified platform to drive efficiency, matching demand and supply most accurately.”
 

MacDonald says buyers need to be careful of temporary staffing agencies offering such services. “Just because they have had a physical presence in 120 countries doing temp work doesn’t mean they have end-to-end experience placing full-time employees in the regions where buyer want to staff up.”
 

The more sophisticated global buyers are likely spending up to 60 days to conduct due diligence and review partnerships with at least three or four potential RPO providers, and then building their business case, she says.
 

While Hull’s HR team might integrate the company’s temporary contingent workforce into its overall workforce planning strategy, it may not be within one solution, he says. However, Hull can understand why providers are heavily promoting the idea of combining RPO and MSP programs: “They want to protect their margins.”
 

“On the permanent side of RPO, the margins are getting thinner and thinner because it’s becoming more of a commoditized service,” he says. “While on the surface, integration of everything from temporary to permanent sounds easy, it’s not quite as simple.”
 

For example, Germany, France, and Italy have strict rules on how to employ low-paying workers for temporary and contract work, and “buyers need to be really careful about how they manage that.”
 

“One solution for all types of recruitment might work in one country, but if it’s for multiple countries with multiple legislative and regulatory requirements, it might not be so straight-forward,” Hull says.
 

There are challenges with a single source RPO model as many RPO companies have limited breadth and do not have access to all markets around the world, Serff says.
 

“In addition, as markets evolve, it is important that our recruitment strategy is flexible to meet the changing needs of our business and customers,” he says.
 

Tags: RPO & Staffing, Talent Acquisition

Related Articles

Menu