Since its inception in Australia in the late nineties the RPO (Recruitment Process Outsourcing) Industry has greatly evolved, diversified and spread across the Asia Pacific region. Recently the industry has been experiencing significant growth, particularly after the recovery from the global financial crisis. Mark Atterby talked to Kimberley Hubble the Executive General Manager – RPO at Hudson Global Resources, about the changes she has seen in the industry over the years.
Ms. Hubble has eighteen years of experience in the recruitment industry and 12 years of experience working in RPO. In fact, she helped establish the first RPO deal in Australia between Hudson and Johnson and Johnson in 1999. “We established the contract in 1999 and today, some 12 years later, we still have J and J as a loyal client. In 2002 we set up RPO as a separate business within Hudson. Since then we’ve grown the business at around 30% per annum acquiring customers such as Sensis, Perpetual, Sanofi-Aventis, Medibank and Origin Energy.”
Recruitment Process Outsourcing is a form of business process outsourcing (BPO) where an employer outsources or transfers all or part of its recruitment activities to an external service provider.
The US-based Recruitment Process Outsourcing Association defines RPO as follows: “when a provider acts as a company’s internal recruitment function for a portion or all of its jobs. RPO providers manage the entire recruiting/hiring process from job profiling through to the on boarding of the new hire, including staff, technology, method, and reporting. A properly managed RPO will improve a company’s time to hire, increase the quality of the candidate pool, provide verifiable metrics, reduce cost and improve governmental compliance.”
Crucial to the success of the Hudson RPO business is the quality of the team and the leadership that Kimberley has built around her. “Our own retention is over 90% and the average tenure of my leadership team is 13 years. The ability to retain highly committed, motivated and talented people is crucial to the success of any business and of course it’s one of the things organisations are hoping to achieve when engaging an RPO provider.”
While recruitment companies have provided staffing services for many decades, the concept of an employer outsourcing the management and ownership of part or all of their recruiting process was not first realized on a consistent basis until the 1970s, in Silicon Valley’s highly competitive high-tech labor market. Fast-growing high-tech companies were hard-pressed to locate and hire the technical specialists they required, and so had little choice but to pay large fees to highly specialized external recruiters in order to staff their projects. Over time, companies began to examine how they might reduce the growing expenses of recruitment fees while still hiring hard-to-find technical specialists. Toward this end, companies began to examine the various steps in the recruiting process with an eye toward outsourcing only those portions that they had the greatest difficulty with and that added the greatest value to them.
Initial RPO programs typically consisted of companies purchasing lists of potential candidates from RPO vendors. This “search/research” function, as it was called, generated names of competitors’ employees for a company and served to augment the pool of potential candidates from which that company could hire.
Over time, as business in general embraced the concept of outsourcing more and more, RPO gained favor among Human Resource management: not only did RPO reduce overhead costs from their budgets, but it also helped improve the company’s competitive advantage in the labor market. As labor markets became more and more competitive, RPO became more of an acceptable option.
Originally, the primary motivation for an organisation to engage a RPO provider was quality and cost. RPO providers aim to leverage economies of scale to enable them to offer recruitment processes at lower cost while allowing them to operate as high-quality specialists. Those economies derive from RPO organisations having a larger staff of recruiters, databases of candidate resumes and investment in recruitment tools and networks.
Kimberley comments, “Yes. Definitely. At first improving quality of hire and cost reduction were the primary motivators for adopting an RPO solution. Though both factors are still very important, we are seeing an increase in companies outsourcing recruitment to achieve better flexibility and scalability.” The importance of this was demonstrated throughout the global financial crisis when companies needed to scale down their recruitment functions quickly but also scale up quickly once consumer demand rebounded and recruitment volumes increased. It is this ability to create flexible solutions that can adapt to constantly changing business requirements that is key. In essence RPO converts fixed investment costs into variable costs that scale in relation to fluctuations in recruitment activity.
These demands for increased quality of hiring, cost reduction and flexibility and scalability have been factors driving the growth of RPO in the last few years. Another has been the shift from companies outsourcing the management of permanent recruitment to include casual and contract workers, “The initial focus of RPO in this region was on permanent recruitment, but gradually RPO is extending into the contingent space, to manage casuals, contractors and statement of work consultants. The drivers in the contingent space tend to be more about visibility, control and reduction of spend, retention of intellectual property and risk avoidance. Worldwide the industry is expected to grow at twenty percent per annum in the next couple of years, according to Kimberley that growth will be focused more on Asia Pacific than in the mature markets of Europe and North America. There are numerous opportunities for providers and client organisations to mutually benefit from RPO in the near future.
Kimberley advises, “The key to our success in this region has been the ability to attract and retain a high caliber team who in turn create successful partnerships with our clients. These partnerships result from the implementation of effective change programs that result in high quality recruitment solutions that continuously exceed our client’s key performance indicator’s and add value over the long term. Our proven track record and industry leading client retention has helped open up new opportunities in this market as more and more clients see the broad range of benefits that a RPO can bring over and above a PSA model or in-sourced recruitment function”.
