Spring has arrived, and much like our economic recovery, it is working to get a foothold on the slippery chill of winter. Like the seasons, business cycles are perpetual and growth and employment will return. Like the affects of a harsh winter, the landscape can forever be changed and it can be argued that the economic downturn has forever changed corporate recruiting. In many corporations, recruiting is seen as a cost center and many functions were downsized in cost-cutting measures. As economists analyze signs of economic recovery, hiring activity has picked up in comparison to a year ago. And many of these recruiting functions that were impacted by layoffs are now being challenged to keep up with hiring demand with fewer resources.
To augment the labor load balance of supply and demand, talent acquisition leaders restricted by headcount and budget limitations are partnering with external suppliers. Recruitment process outsourcing or RPO service providers are seen as a logical choice to partner for recruiting labor support. However, RPO service standards do not exist, and vary between organizations. Talent acquisition leaders are left to decipher between service offerings to identify the right partners to align with. With the term RPO being uses loosely by many suppliers, the marketplace can be confusing.
To contribute to the confusion, many of the true RPO providers have evolved from pure outsourced providers to offering specific task-oriented services to support the individual steps of the recruiting process. I describe the move from broad scope to narrow scope as the emergence of micro-recruiting services. In an attempt to understand the change, I will explore the relationship between RPO providers and their customers and the catalyst for transformation.
The RPO industry is evolving driven by client demand. The need for full-scale outsourcing has shifted as hiring activity waned last year. By definition, the PO in RPO means process outsourcing or shifting the burden of day-to-day management of a process to an external supplier. The idea is that the process, albeit important, is not part of the core business offering and can be better managed by a specialized vendor. An example would be the outsourcing of call center recruitment or a short-term recruiting project to ramp up a new business unit. The value being that internal recruiting resources would remain focused on critical employment and not be distracted by spikes in demand or less strategic initiatives.
As many companies hunkered down in 2008 and 2009 and implemented cost-cutting measures, hiring slowed and corporate recruiting functions were fighting for relevance as the downturn continued. The broader RPO services were not needed and RPO suppliers found themselves in the dubious position of being perceived as a threat by corporate recruiting functions. The term “outsource” became a cause for concern for many talent acquisition leaders as layoffs cut deeper into organizations. RPO businesses needed to reinvent. In performance review meetings and sales calls, RPO representatives changed their language from touting the value of outsourcing to supplemental or support services. They positioned themselves as an ally and not a threat to internal corporate recruiting functions. They listened to their customers challenged by req creep.
Many talent acquisition leaders evaluated their current operations and looked for ways to become more efficient in handling the demand. The obvious challenge was to figure out how to balance the load. They found that most full-cycle recruiters working on 20 or more professional openings lose their sourcing effectiveness and become project and relation managers. The more innovative functions divided the labor into sourcing, administration, and recruiting but found limitations to scale as the req load increased. Contract recruiters are a viable option; however, training and workspace issues burden ramp up time and the cost of additional ads and sourcing tools burden tight budgets. Creative RPO providers jumped at the opportunity to close the gap on recruiting labor shortages. They unbundled their broad offerings and developed individual services such as full cycle, co-sourcing, response management, and pipelining to better meet their customer requirements.
In deconstructing the recruiting process, talent acquisition leaders evaluated the effectiveness of hybrid models, using a blend of supplier-provided services with internal recruiting resources. They found they could expand their recruiting teams with full-cycle services without expanding headcount. Internal recruiters at load capacity would benefit from co-sourcing assistance which allowed external recruiters to work with the internal recruiters to populate their pipeline of talent with qualified candidates, while internal recruiters maintained ownership of relations with the hiring manager. Sourcing and administration teams burdened by the candidate-rich market and the overwhelming response from their efforts, welcomed the extra support from external recruiters offering response management in helping to qualify resumes and phone screen qualified candidates. And for those functions with candidate relationship management strategies put on hold, pipelining support allowed them to reinitiate strategic talent efforts to help position their organizations for growth and finding key talent.
Talent acquisition leaders are attracted to three key value propositions of these micro-recruiting services: cost, scale, and intelligence. At this stage in the economic recovery, companies are varied in their levels of investment in recruiting. For example, technology companies are investing heavily in recruiting as product development and marketing initiatives increase demand for talent, whereas healthcare companies are cautious as they interpret the impact of reform but still look to position themselves for growth. In both cases, companies are investing at some level and hiring more recruiters is not always the answer. Talent acquisition leaders are looking for ways to maximize their investment.
With regard to cost, micro-recruiting services are significantly less than broader project-based or standard search fees. Micro-recruiting service fees are anywhere from $1,000 to $5,000 based upon project or monthly cost and include advertising, phone, and computer related burden. Versus hourly rate or percentage of annual salary, the cost is typically contained and predictable, allowing for accurate forecasting in measuring against cost-per-hire benchmarks. With regard to scale, as compared to hiring recruiters or engaging contract recruiters, micro-recruiting services can be engaged within 24 hours, if not sooner. It is a true plug-and-play resource with recruiters on call. Obviously size of project and volume of recruiting labor needed affects the time to engage, but in the spirit of the service, it is on demand. It can be disengaged just as rapidly when it is no longer needed. As for intelligence, the information gleaned from sourcing is not lost. Companies are paying for recruiting labor and the recruiting labor is an extension of the existing corporate recruiting team. Candidates sourced and qualified belong to the corporation, and that data or intelligence is shared and input into the client’s ATS. And in some cases, a seamless relationship is developed where the external recruiters work directly in the client’s ATS. Applicant and diversity tracking requirements remain intact.
This is an exciting time for corporate recruiting functions as they continue to evolve and define their value within organizations during the economic recovery. The ultimate goal remains the same: to find top talent as quickly as possible. But how they execute against that goal is rapidly changing, with the advent of suppliers offering new services to augment and support their initiatives. The challenge for talent acquisition leaders will be to identify, pilot, and find the right supplier with the right services. And as RPO organizations continue to partner closely with their customers, new services will be developed and the industry will continue to advance. Ultimately it takes a cataclysmic event such as the Great Recession to enforce change and the adoption of new ideas. We find ourselves in some stage of evolution of recruiting services and some experts are predicting full-scale outsourcing, but ultimately change is driven by demand. Today less is more, flat is up, and micro is in.