The Birth of the RPO Alliance

From opportunity to industry, RPO continues to flourish.

by Jason Berkowitz

In July of 2003, Randall Mehl of Robert W. Baird & Co. identified recruitment process outsourcing (RPO) as one of the most significant emerging opportunities in HRO. Since then, the industry has grown rapidly. The latest sign of the growth and maturity of the industry is the formation of the first nonprofit, nonpartisan industry group dedicated to RPO.

In March of 2005, the Human Resources Outsourcing Association (HROA) announced the formation of the RPO Alliancea group of HROA members who provide RPO services. Between March and June, the RPO Alliance grew from a handful of providers to more than 20 companies, with more joining every week. The RPO Alliance represents a broad cross-section of companies ranging from large, end-to-end, enterprise RPO providers, to vertically specialized companies, to project staffing providers, and even executive search firms. These companies have come together to help professionalize this rapidly growing and evolving industry.

I was appointed by the HROA to act as interim chair of the RPO Alliance, with the charge of organizing the group and setting its early direction and goals. As such, Ive sought and received input from many in the industry and have uncovered some of the following issues that are driving the initial efforts of the HROAs RPO Alliance.

NEED TO STANDARDIZE THE DEFINITION OF RPO
The term RPO has only gained widespread use in the last year or two and lacks a clear definition. Does RPO mean only the total outsourcing of a companys recruitment process? Is a search firm or employment agency providing RPO? Does hiring contract recruiters fit into RPO? Does outsourcing just one facet of recruitment, such as resume screening, fit into RPO? There isnt an agreed-upon answer to these questions. Everyone in the industry has their own definition of what RPO means, but we can all agree that RPO comes in a number of shapes, sizes, flavors, and colors. To address this need, the RPO Alliance is developing an organizing schema and understandable terminology to describe what type of RPO a company provides and what type of RPO a buyer seeks.

NEED FOR DATA TO DRIVE DECISION MAKING
Before embarking on any outsourcing initiative, it is important that the buyer has a quantitative grasp of what is driving their current state so that a business case for outsourcing can be built. In recruitment, current-state data should include a detailed understanding of the current direct and indirect costs, metrics of hiring time and quality, hiring-process mapping, and hiring projections and turnover/retention. Many buyers have a hard time efficiently gathering or analyzing such data. The RPO Alliance is preparing a variety of free, downloadable tools online to help buyers gather and analyze data in preparation for evaluating the viability of RPO as a strategy.

NEED FOR BEST PRACTICES AROUND EVALUATING AND SELECTING A PROVIDER
While companies have been using search firms and temporary staffing agencies for years, the idea of larger-scale or integrated RPO is relatively new. As a result, many companies are still using outdated evaluation and selection processes to pick their providers. For example, Ive seen RFPs for RPO that were clearly based on templates for buying contingent labor or IT consulting or even payroll services. By trying to fit the square peg of RPO into the round hole of an inappropriate RFP template, the buyer ends up investing unnecessary time reviewing a mountain of provider data irrelevant to the RPO program, while missing other data that is highly relevant. The RPO Alliance is developing best-practices recommendations around the evaluation of RPO providers, including guidance on when the RFP is or is not the best way to evaluate providers. We are also putting together templates and sample RFPs that will help buyers gather the information they need and rank providers according to their suitability to the specific project.

As the RPO Alliance continues to expand, we will undoubtedly tackle other issues in addition to the ones described above. I would welcome hearing from buyers and providers alike about the issues you feel we should address as the voice of the RPO industry. Drop me a line with your thoughts and you can take part in the ongoing dialogue about RPO and its place in the toolkit of serious HR executives looking to improve performance and control cost in the face of a tightening labor market.

Jason Berkowitz is a founding member and the current interim chair of the RPO Alliance, as well as a board member of the HROA. Jason is cofounder and VP of Business Development of Hyrian, a provider of enterprise-wide RPO exclusively to the Fortune 500. Jason can be reached at jberkowitz@hyrian.com.

Posted July 10, 2005 in Talent Acquisition

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