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

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

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Everest Group experts will highlight the outsourcing ...

Everest Group experts will highlight the outsourcing
options for RPO, key buyer adoption trends, recent
solutions and deal characteristics, evolving supplier
landscape, and the implications for both buyers and
suppliers.

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

    • Today’s webinar is brought to you byOutsourcing CenterToday’s webinar Upcoming webinarsRecruitment Process Outsourcing (RPO) – Pricing Model AlternativesMoving Beyond the Pioneer Stage Date and time:Synopsis: March 16, 2010Everest experts will highlight the outsourcing 10:00a.m. CST / 11:00a.m. ESToptions for RPO, key buyer adoption trends, recentsolutions and deal characteristics evolving supplier characteristics, Speaker:landscape, and the implications for both buyers and Ross Tisnovsky, VP – Research, Everest Groupsuppliers.About Outsourcing CenterOutsourcing Center is the world’s most prominent internet portal for authoritative information on outsourcing.The Center’s mission is to build the industry by helping people understand how to create value throughoutsourcing.outsourcing We serve the outsourcing community through: Trusted and objective third-party perspective Database of over 81,000 opt-in subscribers Relevant media including editorials, research, whitepapers, and the annual Outsourcing Excellence AwardsFor more information, contact Peter Bowes at pbowes@everestgrp.com 1 Proprietary & Confidential. © 2010 Outsourcing Center
    • Q&ATo ask a question during the Q&A session Click the question mark ( q (Q&A) button located on the floating tool bar in the bottom right ) g g 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 2 Proprietary & Confidential. © 2010 Outsourcing Center
    • Introductions Katrina Menzigian Rajesh Ranjan Vice President Research President, Research Director Everest Group Everest Group kmenzigian@everestgrp.com rranjan@everestgrp.com 3 Proprietary & Confidential. © 2010 Outsourcing Center
    • Recruitment Process Outsourcing(RPO): Moving Beyond the PioneerStage gFebruary 23, 2010
    • Contents Market definition and overview Buyer adoption and solution characteristics Supplier landscape Key takeaways 5 Proprietary & Confidential. © 2010 Everest Global, Inc.
    • There are three kinds of sourcing models used forrecruitment services Scope of this study Low Degree of outsourcing High Out-tasking Selective/componentized Comprehensive model outsourcing model outsourcing modelKey Can include one or more Includes components of recruitment End-to-end outsourcing ofcharacteristics recruitment processes process; can be front-office recruitment process to the Short-term project-based (employer branding, sourcing, etc.) supplier that includes both work or back-office components ( pp p (applicant front-office and back-office Typically restricted to one tracking, offer letter management, components type of hire at a time technology management, etc.) Ongoing long-term (e.g., executive hire, temp Ongoing long-term (multi-year) (multi-year) relationship hire) relationship Typically includes almost all Restricted to external Can include one or more types of types of hires hires; does not include hires for in scope component in-scope Includes both external and internal hire management Can include both external and internal hire management internal hire managementConsideration The need is specific and In some specific recruitment The buyer wants tofor adoption one time processes, buyers need expertise transform the entire Buyers want to keep on an ongoing basis recruitment function direct control over the The buyer wants to tip its toe in the The buyer wants to expand recruitment process outsourcing model the value creation beyond the “selective” model Most frequently used Frequently used in the current Least frequently usedPrevalence environment currently but gaining tractionSource: Everest Research Institute (2009) 6 Proprietary & Confidential. © 2010 Everest Global, Inc.
    • We define RPO as transfer of ownership of all or partof recruitment processes or activities on an ongoingbasis Strategy Judgment-intensive HR Transaction-intensive Recruitment strategy Strategic consulting Employee relations Sourcing Regulatory and compliance Applicant tracking Global mobility Screening Performance management Pre-employment testing Learningg Employment offers/ Recruitment selection management Compensation Background checking Benefits On-boarding Vendor management Payroll Employee data management HR information systems and reporting Employee contact centerFor this study, we include RPO deals in which: A minimum of four or more recruitment processes are included The RPO deal is active and is at least one year in contract length The buyer employee size is 3,000 or more It is a stand-alone deal and not part of multi-process HRO dealThis study does not include “out-tasking” arrangements (typically handled by recruitment agencies, staffing companies,or executive search firm) that are managed on a p j ) g project-by-project basis rather than through an ongoing long-term yp j g g g garrangementSource: Everest Research Institute (2009) 7 Proprietary & Confidential. © 2010 Everest Global, Inc.
    • The single process HRO market is compartmentalizedwith different segments at varying levels of maturity;recruitment is moving beyond the “pioneer” stage now pioneerEvolution in the single process HRO market Benefits Payroll Employee data management onMarket value creatio Increasing adoption Evolving specifications and Slower adoption rates; however, supplier capabilities growth and scale still available Increased M&A and partnerships Accepted model(s) and among suppliers to expand standards t capabilities and quicken Well-established specifications time-to-market and supplier capabilities Consolidated market dominated Performance by a few players management Learning Recruitment Pioneer Emerging rapid growth Reaching maturity MaturitySource: Everest Research Institute (2009) 8 Proprietary & Confidential. © 2010 Everest Global, Inc.
    • There are multiple drivers for RPO; cost reduction andscalability gained prominence in the current economicenvironment Low HighBusiness drivers Traditional Current Brief case example A New Zealand-headquartered co-operative group realized moreCost reduction than 30% cost savings through recruiting agencies consolidation along with process reengineering in an RPO model A leading North America Pharmaceuticals company met itsScalability fluctuating recruitment needs, typical of a pharmaceutical environment, and hired close to 3,000 people by taking the RPO route Not satisfied with the recruitment services of its HRO serviceMove towards best- provider, a leading British defence, security, and aerospaceof-breed options company moved the recruitment function to a specialist RPO providerImprovingI i RPO helped a leading global communication provider to reducerecruitment time-to-hire from four months to 32 days, increase the offerprocess acceptance from 30-90%, and increase the internal hiring by 20% for its European operation A U.S.-based national pharmacy automated the application process,Access to better built pre-screening tools to quickly identify high quality candidates pre screening candidates,technology 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 U S -basedEnhancing company, RPO helped it launch and communicate its brand leadingemployer branding to increase in application by 50% 9 Proprietary & Confidential. © 2010 Everest Global, Inc.
    • Contents Market definition and overview Buyer adoption and solution characteristics Supplier landscape Key takeaways 10 Proprietary & Confidential. © 2010 Everest Global, Inc.
    • North American buyers are the leading adopters ofRPO. The adoption trend is increasing in the UK andContinental Europe Buyer adoption trend by signing region Number of deals 100% = 88 96 South America 7% 16% Asia Pacific 17% 8% Continental Europe 3% UK 19% 22% North America 53% 54% 2006-2007 2008-2009Sample size: 184 RPO deals signed between 2006 to July 2009 Source: Everest Research Institute (2009) 11 Proprietary & Confidential. © 2010 Everest Global, Inc.
    • Buyers increasingly look to expand the countrycoverage in their RPO deals Geographic scope of RPO adoption Number of deals 100% = 85 91 Global 8% 8% (Multiple continents) Regional 14% 19% (Multiple countries in the same continent) Local L l 78% (One country only) 73% 2006-2007 2008-2009Sample size: 176 RPO deals signed between 2006 to July 2009 Source: Everest Research Institute (2009) 12 Proprietary & Confidential. © 2010 Everest Global, Inc.
    • Large buyers are the major adopters of RPO. Theadoption in the upper end of the mid-market isincreasing Buyer adoption trend by size of organization Number of deals 100% = 81 94 58% >15K employees 65% 8K-15K 20% 13% employees Mid-market 3K 8K 3K-8K 22% 22% employees 2006-2007 2008- July 2009Sample size: 175 RPO deals signed between 2006 to July 2009 Source: Everest Research Institute (2009) 13 Proprietary & Confidential. © 2010 Everest Global, Inc.
    • There are four technology models used in RPO withvarying degree of prevalence Low High Increasing role of technology in RPO offering One-to-one model One-to-many model Increasing role of technology in RPO Tie-and-run Technology ATS Platform-based ATS support/ replacement/ solution augmentation implementationBrief Supplier leverages Supplier maintains Implementation of a A pre-configured,description existing Application buyer owned existing new ATS is bundled hosted ATS solution Tracking System ATS in place. Supplier with process owned and (ATS) in place to may also provide outsourcing. While maintained by the manage recruitment proprietary tools that technology ownership supplier. supplier Typically process. Buyer serve as “add-ons” resides with buyer, offered in ‘pay-as- retains the around the periphery of supplier provides you-go’ model with ownership as well as the existing ATS to offer upfront both technology and the maintenance of value add services (e.g., implementation and process pricing ATS tools may link to y ongoing maintenance g g bundled into one external job portals) pricePrevalenceTechnology Typically created and Typically not tied to anyspecificity offered on a specific specific recruitment software ATS 14 Proprietary & Confidential. © 2010 Everest Global, Inc.
    • In the current environment, buyers increasingly pushfor a variable pricing model to better align the hiringcost to hiring volume Pricing structure trend Number of deals 100% = 56 36 Other 2% 5% Fixed price 9% 8% Variable p ce a ab e price 25% 33% Base fee plus 61% variable price 56% 2008 2009Sample size: 92 RPO deals signed between 2008 and July 2009 Source: Everest Research Institute (2009) 15 Proprietary & Confidential. © 2010 Everest Global, Inc.
    • Core recruitment processes are most commonlyincluded in RPO dealsInclusion of recruitment processes within RPO dealsPercentage Strategic consulting 78 Sourcing 95 Applicant t ki A li t tracking 94 Screening 98 Employment offers/ 91 selection managementPre-employment testing 74 Background checking 76 71 On-boarding 68 Vendor managementSample size: 184 RPO deals signed between 2006 to July 2009 Source: Everest Research Institute (2009) 16 Proprietary & Confidential. © 2010 Everest Global, Inc.
    • While offshoring is relatively nascent in RPO, use oflow-cost geographies does increase as RPOengagements mature Use of offshoring within RPO Number of deals 100% = 53 58 59 66% 86% No offshore component 92% 34% Includes offshore 14% component 8% Deals in 1st Deals in 2nd Deals in 3rd year year yearSample size: 170 RPO deals signed as of July 2009 Source: Everest Research Institute (2009) 17 Proprietary & Confidential. © 2010 Everest Global, Inc.
    • Contents Market definition and overview Buyer adoption and solution characteristics Supplier landscape Key takeaways 18 Proprietary & Confidential. © 2010 Everest Global, Inc.
    • Suppliers in the stand-alone RPO market come fromdifferent backgroundsPure-play RPO background Contracting/staffing background RPO market spaceMulti-process HRO background Executive search background 19 Proprietary & Confidential. © 2010 Everest Global, Inc.
    • Reflective of the market maturity, the RPO marketcontinues to witness several M&As andpartnerships ILLUSTRATIVE Partnership examples M&A examplesBetween RPOsuppliers Capital ConsultingBetween RPO andB t dmulti-process HROsuppliersBetween RPOsupplier andtechnology vendors 20 Proprietary & Confidential. © 2010 Everest Global, Inc.
    • Buyers need to carefully evaluate RPO suppliers astheir capabilities vary significantly along key deliverydimensions Scale Company/RPO revenues Number of RPO deals Number f N b of RPO FTEs FTE Recent success Number of hires managed per yearGeographic delivery footprint Scope Delivery footprints across four key Overall RPO Breadth of RPO services regions (North America, South delivery Geographic scope America, Europe, and Asia Pacific) capability Industries served Offshore capability RPO centricity RPO/HRO partnerships Technology capability Recruitment technology partnerships Recruitment technology platforms (ERP, best-of-breed, proprietary) usage experience Recruitment technology maintenance gy experience 21 Proprietary & Confidential. © 2010 Everest Global, Inc.
    • Contents Market definition and overview Buyer adoption and solution characteristics Supplier landscape Key takeaways 22 Proprietary & Confidential. © 2010 Everest Global, Inc.
    • Key takeaways for buyers and suppliers of RPOFor 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 leversFor 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 time – partnerships can b a valuable t l i achieving thi goal ti t hi be l bl tool in hi i this l 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 p could help suppliers differentiate and manage volatility in uncertain economic times 23 Proprietary & Confidential. © 2010 Everest Global, Inc.
    • 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, mark.williamson@everestgrp.com For advice or research on RPO, please contact Everest: Katrina Menzigian, kmenzigian@everestgrp.com Rajesh Ranjan, rranjan@everestgrp.com For background information on Everest, please visit: www.everestgrp.com www.everestresearchinstitute.com Thank you for attending todayTo ask a question during the Q&A session Click th Cli k the question mark (Q&A) button located on the floating tool bar in the bottom right of your ti k b tt l t d th fl ti t l b i th b tt i ht f 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 24 Proprietary & Confidential. © 2010 Outsourcing Center