Companies have aggressively pursued offshore outsourcing services as a means of lowering their costs.
From 2000 to 2004, however, many outsourcing deals had services with minimal scope, ill-defined business cases, or overambitious cost-cutting goals.
Only little was known about outsourcing relationships, and problems arising from its complexity led some organizations to conclude that its costs outweigh the financial benefits.
However, there’s excellent news. The offshoring market has improved and evolved tremendously, as companies began approaching their processes and service delivery in a more systematic and thoughtful manner.
The Origins of RPO
Recruitment Process Outsourcing became the solution for corporate leaders amidst the reeling global economy in the early 2000s.
After the dot-com bubble, budgets for recruitment tightened, and RPOs began to take shape. Companies sought for strategic, scalable, and quality-focused partnerships rather than costly in-house recruitment programs.
By 2008, the second economic collapse fuelled the acceleration of the adoption of emerging RPO providers. Financial investment grew, and the search for better quality, value, and specialized services began.
Early RPO providers were only able to shift their services offered among agency recruiting, staff augmentation, and project staffing.
By 2013 to 2016, the RPO market seemed to have a relatively quiet period. Here, global offerings became more popular, and three-year contracts between the clients and service providers were still the norm.
RPO Market Trends and Outlook
At present, there are better technology stacks and tech-driven efficiencies that enable the RPO industry to take-off.
In 2018, the global recruitment process outsourcing market accounted for USD 4.16 billion. It is expected to grow at a compound annual growth rate (CAGR) of 14% over the next five years.
Technavio analysts, in their latest market research, reported that the market would face an incremental growth of USD 3.2 billion from 2017 to 2022. 41% of the growth will come from the Asia-Pacific region.
Here are other significant RPO industry trends to watch out for these coming years.
- The emergence of data analytics and artificial intelligence (AI) is revolutionizing recruitment processes at a very high pace.
Data analytics and the use of UI is one of the major trends rising in the global RPO market. Large chunks of data are created and analyzed to make better recruitment decisions.
Analytical tools are used to get the required information, either as big data or real-time information. Human resource departments use this to manage recruitment effectively.
People analytics and recruitment analytics also play a crucial role since they translate raw data into useful information, thereby helping recruiters select strong candidates and fill job openings at a faster pace.
- Cost reduction through streamlining hiring processes is one of the key factors contributing to the growth of the global RPO market.
It is no secret that many companies are seeking the help of RPO firms. This helps organizations save up on operational costs while continually adding value to their business.
Any imbalances in the market incur substantial costs for the company. RPO partners can streamline the hiring process to reduce the effect of such imbalances. The active involvement of RPO consultants determines what processes need to be curbed.
They identify overlaps in processes, the causes of excessive costs, and inefficient practices that could double up or stagnate processes within the company.
- The APAC region will experience the maximum increase in its market share from 2018 to 2022.
In a more specific survey of Technavio on the RPO market of the Asia-Pacific, it was found out that the market in the region will be growing at a CAGR of over 21%. Its expected incremental growth from 2017 to 2022 is at US 1.2 million.
In 2017, 30% of the market share came from the BFSI segment. The manufacturing segment, however, recorded a higher level of growth than the energy segment.
By 2022, the RPO market in APAC has a positive outlook as the business process as a service (BPaaS) is expected to evolve via a cloud computing service model.
- The emergence of shorter, more focused Agile Recruitment Services (ARS) is increasingly coming into play.
ARS is an approach based on software development. It puts much focus on “collaboration, and lean and continuous releases/delivery.” It is because of this that talent acquisition leaders seek these services to invest in their own TA maturity.
Such services are formatted into shorter contracts and are more targeted in scope. Before, three-year contracts were the norm. With ARS, leases are shorter, which implies faster results from the recruitment process.
Other benefits of ARS include improved collaboration, real-time feedback, and being able to make use of a method that would make the most sense for your recruitment environment.
- The RPO market is fragmented, with many players occupying the market share.
This also means a competitive industry comprised of global, regional, and national players. For example, there are only a handful of players who can credibly deliver on a global basis.
According to the Grant Thorton report, such players include senior headhunting firms, broader recruitment firms, HR/payroll outsourcing, BPO players, ‘pure-play’ competitors, and other smaller providers focusing on recruiting for niche sectors or specific regions.
The RPO market remains to be fragmented because of the presence of several companies and competitors who come from several backgrounds, with many entering the industry through acquisition.
- Meritocratic recruitment will continuously improve decision making when it comes to hiring employees.
This process of recruitment steers away from yet another traditional method of hiring employees. Instead of relying mostly on CV-based assessments and competency interviews, the focus is on an applicant’s performance on a practical assessment.
A senior analyst at Technavio says, “since it is a skill-based system of recruitment, it focuses on avoiding biases in the recruitment process.”
The trends mentioned above make RPOs unique. Here are more things that set RPOs apart from other forms of recruitment processes. Ultimately, service providers can bank on these to strengthen their RPO brand in the future.
- RPO recruiters are 100% focused on one thing: recruiting.
Corporate recruiters take some HR responsibilities on top of recruiting. Their hours are divided among these tasks, and the number of requisitions they are managing is often lower than any RPO recruiter.
Staffing agency recruiters, on the other hand, manage a high volume of job requisitions, but they also have client management responsibilities in conjunction with their sales teams.
RPO recruiters can focus more on polishing their skills and recruitment techniques, as well as in doing more research and developing functions.
- RPO recruiters focus on recruitment as their core competency by investing substantially in the right tools.
Unlike staff agency and corporate recruiters, RPO recruiters comprise the strongest recruiters in the talent acquisition field. They work for a recruiting company, which means that it is their core competency.
A corporate recruiter, on the other hand, works for a company whose core competency is on business, and strictly not recruitment.
An RPO firm will invest more in recruitment technology, training, sourcing tools, and more. Corporate recruiters, on the other hand, may have more stringent budget limitations.
- RPOs show accountability by producing results.
Even with the rise of several technologies and tools that allow recruiters to do work faster, results can still be murky. A company can purchase a tool or a program, yet it can still blame the vendors for giving inadequate training or for the lack of features in the software.
Once an RPO provider is hired, however, they are accountable for the results. Unlike a software, an RPO vendor cannot sell despite giving an outstanding demo. They will need to produce results and fill in job vacancies.
- RPOs give relentless focus on candidate experience.
As automation in recruitment will reduce costs, it can and will hurt the candidate experience when done thoughtlessly. This can, in turn, hurt the company or organization’s brand and image among the pool of potential hires.
As an RPO, they must be able to design the right program to enable a better experience for the job seeker. To do this, it is essential to understand that a candidate’s experience is not without emotions, and finding the correct touchpoints will maximize engagement.
- Careers in RPOs may offer more opportunities for growth.
In terms of opportunities for career development within the RPO industry, recruiters in RPO firms have more chances than those working within corporate HR. This is because the latter is in an area of HR outside recruitment.
Recruiters in RPO also workaround with many other recruiters, so there are more opportunities to share best practices and help each other hone their craft. As well, good firms usually conduct forums and training where best practices and wins are shared across different teams.
The Future of Recruitment is Changing
Technology will make big changes in hiring, but RPOs need to clearly let their clients know who they are and what they do.
At Sysgen RPO, we leverage our years of recruiting excellence and proven best-practices solutions.
Our programs and recruitment plans aim to reduce costs immediately, give our clients access to qualified and well-trained recruiters, and add speed and urgency to get the right talent.
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