Recruitment Process Outsourcing (RPO) – Moving Beyond the Pioneer Stage

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Today’s webinar

Recruitment Process Outsourcing (RPO) –Moving Beyond the Pioneer Stage

Outsourcing Center

Date and time:March 16, 201010:00a.m. CST / 11:00a.m. EST

Speaker:

Moving Beyond the Pioneer Stage

Synopsis:Everest experts will highlight the outsourcing options for RPO, key buyer adoption trends, recent solutions and deal characteristics evolving supplier Speaker:

Ross Tisnovsky, VP – Research, Everest Groupsolutions and deal characteristics, evolving supplier landscape, and the implications for both buyers and suppliers.

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Proprietary & Confidential. © 2010 Outsourcing Center1

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IntroductionsIntroductions

Katrina MenzigianVice President Research

Rajesh RanjanResearch DirectorVice President, Research

Everest [email protected]

Research DirectorEverest [email protected]


Recruitment Process Outsourcing (RPO): Moving Beyond the Pioneer Stageg

February 23, 2010

Contents

Market definition and overview

Buyer adoption and solution characteristics

Supplier landscape

Key takeaways

Proprietary & Confidential. © 2010 Everest Global, Inc.5

There are three kinds of sourcing models used for recruitment services

Out-tasking Comprehensive Selective/componentized

HighDegree of outsourcing

Scope of this study

Low

model outsourcing modeloutsourcing model

Key characteristics

Can include one or more recruitment processes Short-term project-based work

Includes components of recruitment process; can be front-office (employer branding, sourcing, etc.) or back-office components (applicant

End-to-end outsourcing of recruitment process to the supplier that includes both front-office and back-office

Typically restricted to one type of hire at a time (e.g., executive hire, temp hire)Restricted to external hires; does not include

p ( pptracking, offer letter management, technology management, etc.)Ongoing long-term (multi-year) relationship Can include one or more types of hires for in-scope component

componentsOngoing long-term (multi-year) relationship Typically includes almost all types of hiresIncludes both external and

Consideration for adoption

hires; does not include internal hire management

hires for in scope componentCan include both external and internal hire management

Includes both external and internal hire management

The need is specific and one time Buyers want to keep

In some specific recruitment processes, buyers need expertise on an ongoing basis

The buyer wants to transform the entire recruitment functionBuyers want to keep

direct control over the recruitment process

on an ongoing basisThe buyer wants to tip its toe in the outsourcing model

recruitment functionThe buyer wants to expand the value creation beyond the “selective” model

PrevalenceMost frequently used Frequently used in the current

environmentLeast frequently used currently but gaining


Prevalence environment currently but gaining traction

Source: Everest Research Institute (2009)

We define RPO as transfer of ownership of all or part of recruitment processes or activities on an ongoing basisbasis

RecruitmentStrategic consulting

StrategyJudgment-intensive Transaction-intensive HR

strategy Strategic consultingSourcingApplicant trackingScreeningPre-employment testingEmployment offers/ Learning

Global mobilityRegulatory and compliance

Employee relations

Performance management

selection managementBackground checkingOn-boardingVendor management

Employee data managementPayrollBenefits

CompensationRecruitment

g

For this study, we include RPO deals in which:A minimum of four or more recruitment processes are includedThe RPO deal is active and is at least one year in contract length

Employee contact centerHR information systems and reporting

The RPO deal is active and is at least one year in contract lengthThe buyer employee size is 3,000 or moreIt is a stand-alone deal and not part of multi-process HRO deal

This study does not include “out-tasking” arrangements (typically handled by recruitment agencies, staffing companies, or executive search firm) that are managed on a project-by-project basis rather than through an ongoing long-term


) g p j y p j g g g garrangement


The single process HRO market is compartmentalized with different segments at varying levels of maturity; recruitment is moving beyond the “pioneer” stage nowrecruitment is moving beyond the pioneer stage nowEvolution in the single process HRO market

Benefits

on

Benefits

PayrollEmployee data

management

Slower adoption rates; however, growth and scale still availableAccepted model(s) and standards

Increasing adoptionEvolving specifications and supplier capabilitiesIncreased M&A and partnerships among suppliers to expand t v

alue

cre

atio

standardsWell-established specifications and supplier capabilitiesConsolidated market dominated by a few players

capabilities and quicken time-to-market

Performance management

Mar

ket

Learning

Pioneer Emerging rapid growth Reaching maturity

Recruitment


Maturity


There are multiple drivers for RPO; cost reduction and scalability gained prominence in the current economic environmentenvironmentBusiness drivers Traditional Current

HighLow

Cost reductionA New Zealand-headquartered co-operative group realized more than 30% cost savings through recruiting agencies consolidation

Brief case example

along with process reengineering in an RPO model

ScalabilityA leading North America Pharmaceuticals company met its fluctuating recruitment needs, typical of a pharmaceutical environment, and hired close to 3,000 people by taking the RPO route

I i RPO helped a leading global communication provider to reduce

Move towards best-of-breed options

Not satisfied with the recruitment services of its HRO service provider, a leading British defence, security, and aerospace company moved the recruitment function to a specialist RPO provider

Improving recruitment process

RPO helped a leading global communication provider to reduce time-to-hire from four months to 32 days, increase the offer acceptance from 30-90%, and increase the internal hiring by 20% for its European operation

Access to better A U.S.-based national pharmacy automated the application process, built pre-screening tools to quickly identify high quality candidates

technologybuilt pre screening tools to quickly identify high quality candidates, and provided online information to hiring managers about candidate status, and resumed banks and phone interview notes through the implementation of a new Application Tracking System (ATS) tool and web portal as part of RPO engagement

After a U S -based brewing company acquired a UK-based


Enhancing employer branding

After a U.S.-based brewing company acquired a UK-based company, RPO helped it launch and communicate its brand leading to increase in application by 50%

Contents



Supplier landscape

Key takeaways


North American buyers are the leading adopters of RPO. The adoption trend is increasing in the UK and Continental EuropeContinental Europe

88 96100% =

Buyer adoption trend by signing regionNumber of deals

8%17%

16%7%

3%Continental Europe

Asia Pacific

South America

19% 22%

3%

UK

Continental Europe

53% 54%North America

2006-2007 2008-2009


Sample size: 184 RPO deals signed between 2006 to July 2009Source: Everest Research Institute (2009)

Buyers increasingly look to expand the country coverage in their RPO deals

Geographic scope of RPO adoptionNumber of deals

100% = 85 91

Regional (Multiple countries in the same continent)

Global(Multiple continents)

14% 19%

8%8%

same continent)

L lLocal (One country only)

78% 73%

2006-2007 2008-2009



Large buyers are the major adopters of RPO. The adoption in the upper end of the mid-market is increasingincreasing

100% =

Buyer adoption trend by size of organizationNumber of deals

81 94

>15K employees58%65%

3K-8K

8K-15K employees

Mid-market22% 22%

13% 20%

3K 8Kemployees

2006-2007 2008- July 2009

22% 22%



There are four technology models used in RPO with varying degree of prevalence

Increasing role of technology in RPO offering

HighLow

Increasing role of technology in RPOTie-and-run ATS

replacement/ implementation

Platform-based ATS solution

Technology support/ augmentation

One-to-one model One-to-many model

implementation

A pre-configured, hosted ATS solution owned and maintained by the supplier Typically

Implementation of a new ATS is bundled with process outsourcing. While technology ownership

Supplier leverages existing Application Tracking System (ATS) in place to manage recruitment

augmentation

Supplier maintains buyer owned existing ATS in place. Supplier may also provide proprietary tools that

Brief description

supplier. Typically offered in ‘pay-as-you-go’ model with both technology and process pricing bundled into one

technology ownership resides with buyer, supplier provides upfront implementation and ongoing maintenance

manage recruitment process. Buyer retains the ownership as well as the maintenance of ATS

proprietary tools that serve as “add-ons” around the periphery of the existing ATS to offer value add services (e.g., tools may link to

priceg gy

external job portals)

Prevalence


Technology specificity

Typically created and offered on a specific ATS

Typically not tied to any specific recruitment software

In the current environment, buyers increasingly push for a variable pricing model to better align the hiring cost to hiring volumecost to hiring volume

100% =

Pricing structure trendNumber of deals

56 36

Fixed price

Variable price

Other

25%

8%2% 5%9%

a ab e p ce33%

Base fee plusvariable price

61%56%

2008 2009


Sample size: 92 RPO deals signed between 2008 and July 2009Source: Everest Research Institute (2009)

Core recruitment processes are most commonly included in RPO deals

Inclusion of recruitment processes within RPO dealsPercentage

78

95

94

Strategic consulting

Sourcing

A li t t ki 94

98

91

Applicant tracking

Screening

Employment offers/selection management

74

76Background checking

selection management

Pre-employment testing

71

68

On-boarding

Vendor management



While offshoring is relatively nascent in RPO, use of low-cost geographies does increase as RPO engagements matureengagements mature

100% =

Use of offshoring within RPONumber of deals

53 58 59

No offshore component 92% 86%

66%

Includes offshore34%

Includes offshore component 8% 14%

Deals in 1styear

Deals in 2ndyear

Deals in 3rdyear


Sample size: 170 RPO deals signed as of July 2009Source: Everest Research Institute (2009)

Contents



Supplier landscape

Key takeaways


Suppliers in the stand-alone RPO market come from different backgrounds

Pure-play RPO background Contracting/staffing background

RPO market space

Executive search backgroundMulti-process HRO background


Reflective of the market maturity, the RPO market continues to witness several M&As and partnerships ILLUSTRATIVEpartnerships

Partnership examples

Between RPO suppliers

ILLUSTRATIVE

M&A examples

suppliers

CapitalConsulting

B t RPO dBetween RPO and multi-process HRO suppliers

Between RPO supplier and


technology vendors

Buyers need to carefully evaluate RPO suppliers as their capabilities vary significantly along key delivery dimensionsdimensions

Scale

Company/RPO revenuesNumber of RPO dealsN b f RPO FTENumber of RPO FTEsRecent successNumber of hires managed per year

Overall RPO delivery

capability

Scope

Breadth of RPO servicesGeographic scopeIndustries servedRPO centricity

Geographic delivery footprint

Delivery footprints across four key regions (North America, South America, Europe, and Asia Pacific)Offshore capability RPO centricity

RPO/HRO partnershipsOffshore capability

Technology capability

Recruitment technology partnershipsRecruitment technology platforms (ERP, best-of-breed, proprietary) usage experienceRecruitment technology maintenance


gyexperience

Contents



Supplier landscape

Key takeaways


Key takeaways for buyers and suppliers of RPO

For buyers

Buyers need to have a clear understanding of RPO and its value proposition

Buyers looking for a global RPO solution should look at not only the self-capability of suppliers but also at their combined capability through regional partnerships as well

In the ongoing economic environment, potential buyers need to look closely at the financial stability of the suppliers as well as other M&A developments in the supplier landscape

Buyers seeking early cost savings need to look at offshoring as one of the key levers

For suppliersFor suppliers

Suppliers will have to continue to educate buyers on RPO and its value proposition

Continued investments in strengthening and broadening service offerings should be the focus at this ti t hi b l bl t l i hi i thi ltime – partnerships can be a valuable tool in achieving this goal

Creation of a standardized RPO model is key to long-term success

Offering a broader suite of services such as internal hiring management and outplacement services


g g g pcould help suppliers differentiate and manage volatility in uncertain economic times

Q&A

Attendees will receive an email with a link to download today’s webinar presentation. To access a recorded audio version of this webinar, please contact Mark Williamson, [email protected]

Q&A

For advice or research on RPO, please contact Everest:Katrina Menzigian, [email protected] Ranjan, [email protected]

For background information on Everest, please visit:www.everestgrp.comwww.everestresearchinstitute.com

Thank you for attending todayThank you for attending today

To ask a question during the Q&A session

Cli k th ti k (Q&A) b tt l t d th fl ti t l b i th b tt i ht fClick the question mark (Q&A) button located on the floating tool bar in the bottom right of your screen. This will open the Q&A Panel

Be sure to keep the default set to “send to a Panelist”


Then, type your question in the rectangular field at the bottom of the Q&A box and click the send button to submit