The document discusses the evolution of recruitment process outsourcing (RPO) in the UK market. It finds that while RPOs have become more sophisticated in their offerings, they still face significant challenges. Some key findings include: clients rated RPO service quality as average or poor 57% of the time; relationships with external suppliers were also rated average or poor by 55% of clients; and SLAs may be driving RPOs to submit unsuitable candidates to meet requirements. The document raises questions about RPOs' abilities to innovate, deliver a broader strategic service, and address challenges in attracting and retaining their own talent.

1. Recruitment Process Outrsourcing
INSIGHT & DIRECTION

2. PAST, PRESENT & FUTURE
In a rapidly maturing, third generation, UK RPO market, with increasingly
sophisticated demands from clients, the RPO offering in the UK has evolved
significantly, and continues to do so. Yet RPOs face significant challenges, with
some of the biggest issues stemming from increased competition, pricing
pressures and their own SLA-driven behaviours.
Of particular interest to us is the inextricable link between RPOs and external
recruitment businesses, the relationship between the two has historically been
mixed.
To understand the situation more clearly, in February and March this year we
undertook qualitative and quantitative research with HR decision makers.
In our survey of 100 senior, multi-sector HR clients who are all involved in the
RPO selection process and/or a user of RPO services:
• 57% rated their RPO service as ‘more good than badʼ
• 55% of respondents described their RPOʼs relationship with external suppliers
as ‘averageʼ or ‘poorʼ
• 39% described internal service levels as ‘average or poorʼ whilst 30% said the
same for the delivery of accurate metrics
• 65% rated the internal and external communications as ‘good or excellentʼ
• Time to hire and cost of hire also scored highly, with 80% and 75% respectively

3. Yes
Mixed
N/A
No
29%
57%
9%
5%
Does your current/previous RPO arrangement
deliver the service you agreed it would?

4. many
RPO organisations
have now introduced
strategic workforce
planning, social media
sourcing and many
other innovations that
businesses see real
value in.
RPOs
need to embrace (and potentially
offer) EVP research through to
implementation and ensure the whole
organisation and its suppliers
understand how to be an ambassador
of the organisation.
Organisations
are demanding
a much more
strategic
solution, based
on partnership
with a trusted
advisor.”
CLIENTSare realising that you get what you pay
for, and with candidate demand
increasing in many areas, RPOs really
need to show value, rather than cost
saving.
ONEreal advantage RPO
suppliers have is their
scale and ability to share
technology and
innovations ahead of the
market.
A SNAP SHOT OF VIEWS FROM HEADS OF
RESOURCING/TALENT ATTRACTION

5. In your opinion has the RPO delivered the cost/benefit you envisaged?
9%
29%
62%
Yes
No
N/A

6. “
”
Overall, the general view from both sets of research
is that RPO has evolved (or is evolving) from a
short-term, problem-solving approach to issues
such as headcount and flexibility vs. demand to a
much more sophisticated, forward-thinking model,
where strategic workforce planning (SWP), EVP,
Talent Management and executive hiring play a key
role in the RPOʼs offering.
The RPO industry has evolved for sure - however, the
level and speed of the change is different from firm to
firm. The RPO firms have tended to focus on time to
hire and direct sourcing, however, nowadays there is
a lot of focus on the quality of our hires, building
proactive pipelines and ensuring a quicker “time to
productivity” with robust on-boarding solutions for
new joiners.
- Shilpa Shah, Global Head of TA,
Rolls Royce

7. “RPO has evolved into a 3rd generation now, which is
more sophisticated than 10 years ago and now includes
areas such as SWP, Diversity, assessment and employer
branding. Organisations are demanding a more strategic
solution, based on partnership with a trusted adviser.
The service offering needs to operate hand in hand with
business strategy, have an agile approach to talent
management a nd become trusted experts within the
technology space."
THOUGHTS ON THE EVOLUTION
OF THE RPO INDUSTRY
- Jim Richardson, Director of Talent,
Learning and Resourcing, Santander

8. Some HR participants felt that RPOs were failing to align
their client’s business needs with their own KPIs, whilst
others had noticed that high staff turnover and the difficul-
ties in acquiring and retaining top talent within the RPOs’
own teams were common issues across the board.
Pricing structures were another concern, with views that
RPO pricing models still relate to the services offered ten
years ago, with the emphasis on low cost and volume, rather
than value and outcome.
WIDERC O N C E R N S

9. The move into executive hiring, in particular, has been met with a
degree of concern from many corporates, including those we
spoke to, who feel executive hiring should be retained or brought
back in-house.
1ST
Their first iteration was as
a mass temporary hiring
service, specialising in
finance or IT.
3RD
Now in its third
generation phase, the focus
seems to have shifted to
sourcing revenue-generating
roles as well as executive
search
2ND
The second generation of RPOs
expanded into the
permanent market with
RPOs becoming more
sophisticated by attempting
to cover broader support
functions.
RPO HISTORY OF EVOLUTION

10. S L A s a r e p r eve n t i n g R P O s f r o m
w o r k i n g f r e e l y w i t h e x t e r n a l
r e c r u i t e r s a n d p r ov i d e r s , t h e r e
i s t h e p o t e n t i a l fo r r e a l c o n f l i c t
b e t w e e n a l l p a r t i e s .
T i e d t o t h e c o n s t r a i n t s o f t h e
S L A , t h e R P O i s o b l i g e d t o
d i r e c t s o u r c e w h e r e p o s s i b l e ,
w h i c h i s n ’ t a l w a y s i n t h e b e s t
i n t e r e s t s o f t h e c l i e n t .
R P O s a r e u n d e r p r e s s u r e t o
p r ov i d e C V s r e g a r d l e s s o f
q u a l i t y, a n d a t w o r s t , t h e
h i r i n g m a n a g e r a p p r o a c h e s
e x t e r n a l p r ov i d e r s d i r e c t l y i n
t h e k n o w l e d g e t h a t t h e i r R P O
c a n t p o s s i b l y d e l i ve r.
D E L I V E R Y I S S U E S

11. INCREASING PRESSURES
- tom baker - global head of resourcing,
imperial brands
The pricing models have become transactional as
clients demand lower cost per hire and quicker time
to hire. Now with the demand for better quality of
hire it’s difficult, particularly having been through a
deep recession, to try and find any higher value
(incremental fees) from an RPO’s perspective.
Also can their low cost shared service centres
genuinely manage variable volume/complexity and
service multiple differing markets? So transactional
pricing has become the norm which isn’t always the
easiest thing to land. And also the challenge of how
they deliver in some markets the same value of
service where their service may not be always on
premise – its difficult building the rapport/credibility
if not on premise despite technology (telephone/on-
line assessment and video interviewing ) emerging
as common place tools.”
- Rachel barr - global head of resourcing,
tullet prebon
The growing demand for improved candidate
levels, worries about employer branding and
the need for accurate data and analytics
seem to conflict with the increasing pressure
on margins and the ability to attract and hire
their own staff.

12. The inflexible nature of SLAs
are universally acknowledged
as potentially driving bad
behaviours by RPO staff.
Submitting unsuitable
CVs to fulfill an SLA
commitment was a
common complaint
amongst respondents.
There is the acknowledgment
that RPOs are under enormous
pressure to deliver, despite
squeezed costs, declining
margins with ever-growing client
demands and the need to offer
more tailored and specialist
services.
SLA'S
EXPLORED

13. Key
Research
Findings
based
on all data
collected from
respondents
whose companies
currently have an
RPO Staff.
Poor
Average
Good
Excellent

14. Are they capable of
What future
technological “disruption” can
they deliver?
1
3
4 5
2
What is the
future of Exec Resourcing:
in-house or RPO?
Given the influence
of Procurement, how do they
align their KPIs more with
true business and HR needs?
of delivering a broader service
offering, such as SWP, Diversity,
OD and Graduate Recruitment?
6
Can they deliver
active “candidate pools” to
further build the direct source
capability?
7 How do they
address the challenges of
their own talent attraction
and retention?
How will their
relationships with external recruitment
partners change? Do they see any benefit in
embracing change and will SLAs continue to
drive current behaviours? If not, is talent
pipe-lining dead?
It’s pretty clear that in developed (third generation) markets, such as that in
the UK, RPOs face a number of challenges. Whilst under no immediate
threat, they are under severe pressure to innovate, both to maintain market
share and margins. This raises a number of questions:
Richard Colgan
Founder & Joint CEO, Oakleaf Partnership Limited

15. A Final Thought From An Industry Leader...
“They will either move more into their clientʼs talent and Organisational
Design space or they may run out of steam. As the cost vs. in-house numbers
come closer together we may see the ‘bring it back in-houseʼ argument
played out more and more. How they cope with the expectation of line man-
agers to constantly be looking for new talent rather than traditional ‘vacancy
ledʼ recruitment also remains to be seen. They are under no immediate
threat. They have real scale and one must have an appetite for risk to begin
a journey of returning back to in-house.”
- John Hardy - Resourcing Director,
Barclaycard