Recruitment process outsourcing: the future is ‘total talent’
Employers are battling economic uncertainty but still struggle to source much-needed skills. In such a volatile jobs market, what role does recruitment process outsourcing have in workforce planning and hiring strategies? Jo Faragher investigates.
“In 2019, there’s a whole different raft of things in play in the RPO market,” says industry analyst Nikki Edwards from NelsonHall. The trend we might have seen five years ago towards multi-year, end-to-end deals covering every recruitment process from attraction to induction has waned, she says, as organisations want more flexible RPO models, aligned to fast-changing markets and a volatile economy.
Traditionally, the drivers for outsourcing have been around cost savings and support with volume recruitment. But while saving money remains important, there’s a lot more focus now on candidate quality and experience, according to industry analysts Everest Group. Employers might ask a supplier to look after specific job families such as early careers, or a specific geography. Other areas they may feel are so important they want to keep them in-house.” – Jon Porter, PeopleScout UK.
“For those who have not adopted RPO before cost is an important driver. Apart from that, it’s about scalability and adaptability. It means they can add to employee base or reduce more flexibly,” explains Vishal Gupta, practice director of Everest’s business process services division.
“For second and third generation buyers, they will already have picked the low hanging fruit – so they’re now looking at how they can reduce costs further through automation or artificial intelligence, and they’re worried about candidate experience.”
New employment models
The changing and more fluid nature of the employment market is also impacting buyer behaviour. “The engagement model between the worker and the company is changing faster than they can keep up,” says Michael Wachholz, global head of contingent workforce at RPO provider Alexander Mann Solutions (AMS). “The way people connect with employers is changing all the time and companies are not as equipped to keep up and make decisions amid this disruption.”
RPO providers have had to adapt their offerings to become more flexible in response, so customers can target where they need support and scale up and down as needed. “[Vendors] can design models that accommodate multiple suppliers, or where they do their own resourcing but need help with screening, or simply where they’re looking to experts to guide them through the market,” says Pete Holliday, managing director of Sopra Steria Recruitment, a managed service provider (MSP).
This favours those companies starting out on their RPO journey, who are able to ‘dip a toe in’ to outsourcing for specific projects and scale up and down as the market requires, or when they feel confident enough to add something else. “It’s a means of testing the concept for some companies,” explains Jon Porter, managing director of PeopleScout UK. “So they might ask a supplier to look after specific job families such as early careers, or a specific geography. Other areas they may feel are so important they want to keep them in-house.”
And because most vendors’ technology platforms are cloud-based, it’s relatively easy to scale up and down in this way, as well as less costly because they’re not constantly investing in infrastructure. Many offer “assessment as a service” or similar products so organisations can buy what they need and upscale if necessary.
“Cloud-based platforms mean a lot of the infrastructure has gone, but it’s important to check that your provider can be agile and change things on the fly,” adds Wachholz. “The biggest inhibitor to successful RPO is deploying the technology – it’s important to know whether they can integrate and leverage that tech today.”
Demands on data
The technology aspect has always been central to an RPO investment, and continues to be. Vendors tend to deploy sophisticated management systems that can keep track of everything from the recruitment agencies you work with to communications with candidates themselves. Due diligence into the technology platform used by a provider is still crucial, however.
“Ask them what happens if you change service provider; some sell a proprietary platform and take it away when you terminate. This should be one of the criteria in your buying decision,” advises Holliday from Sopra Steria.
Economies of scale across these platforms mean that vendors also have access to thousands of terabytes of data on candidate behaviour and market movements – and these insights can help employers stand out to candidates.
Access to analytics means companies and their RPO partners can make improvements to their recruitment strategy as they go – for example if a certain approach improves candidate conversion rates, they can adapt immediately rather than waiting until a campaign is over. “Evaluation of the RPO partnership now is constant rather than only when it comes up for renewal,” explains Edwards from NelsonHall, “it’s a case of constant improvement over the contract period versus sitting back and doing nothing.”
Data insights also go hand in hand with improving candidate experience – a factor that has gained in importance in RPO deals. “Candidate experience metrics are increasingly being built into service level agreements, people are looking more and more at post-offer quality of hire,” says Porter from PeopleScout.
This means that the impact of employer branding – once a luxury add-on to many RPO deals – can be measured and adjustments made where things aren’t working. “We can see how people are performing in their role, what attrition rates are. Are the people we’re bringing in culturally aligned to the business?” he adds.
Frances Ibe, director of product management at payroll and HR services provider ADP, agrees that there is a shift away from the “transactional” experience that was a historical feature of RPO. “There’s a greater focus on not just having transactional experiences with candidates but personalised experiences by building out true CRM (candidate relationship management) capabilities and ensuring a company’s culture has a positive impact on its ability to recruit,” she explains.
“This means you can invest in your talent pools and engage in different ways, not only to increase employer value proposition and brand but to enable companies to identify potential candidates that they can hire and train into the role in order to meet their long-term needs, while reducing their short-term staffing shortages and challenges.”
Total talent acquisition
The stand-out trend in recruitment outsourcing over the coming years, however, is “total talent acquisition” – a catch-all term that brings together the outsourcing of the recruitment of contingent workers and permanent staff.
The rise of gig-style working, where individuals may take on a short-term project or even be serving multiple clients at any one time, has forced both employers and their outsourcing suppliers to make systems more fluid in response. In many larger organisations, HR has typically dealt with permanent hiring while procurement brought in contractors through managed service provider (MSP) arrangements.
Now the focus is moving towards what skills someone can offer, regardless of their employment status. “Before it was a case of they don’t really talk to each other so there’s a disconnect – now they need people with the right skill-sets so it doesn’t matter if they’re permanent or contractor,” says Gupta. “This means RPO providers are serving clients in a more holistic way.”
At AMS, this is done through a “talent cloud” that sits in front of the separate applicant tracking systems, explains Wachholz: “The evolution will be in how you look at the worker at the front end.
“We’re bringing a consumer-like relationship to these workers. Companies now need to be thinking about the type of talent they need, rather than the engagement model.”
Of course, businesses could build these talent clouds themselves, but the fast-changing nature of both their needs and the candidate market means many still prefer external support, even on a consultancy basis.
“Most employers are waking up to the reality that they need to train and develop their own people as part of their overall workforce plan,” says Holliday.
“But they recognise that contractors can help build more knowledge in house and can pass that on to their own people.” Wachholz describes this as an ‘educate, build, shift’ model that is constantly evolving.
“Companies need a guide that understands not just how to source the best candidates, but how to have the right platform in place to deal with them efficiently and marry up that human element,” he explains.
“This can ebb and flow depending on where your company is on the journey. Outsourcing and talent acquisition is not going away.”
Originally published on Personnel Today, https://www.personneltoday.com/hr/rpo-market-2019-recruitment-process-outsourcing-total-talent-candidate-experience-quality/
