Tag: differentiation

Takeaways from My RPO World (okay, on the ground U.S.) Tour | Sherpas in Blue Shirts

During the past few weeks, I was on the road interacting and engaging with a variety of buyers, service providers, and technology providers in the Recruitment Process Outsourcing (RPO) ecosystem. My travels took me to the HRO/RPO Summit in Las Vegas, Manpower’s analyst day session in Milwaukee, and meetings with numerous buy- and sell-side organizations in multiple cities.

Broad themes I identified during those forums, meetings and some very stimulating conversations include:

Greater pragmatism on global/multi-country RPO. Notwithstanding the continued interest among multinational companies around global/multi-country RPO, there is an increasing realization that a more practical and pragmatic approach is required. For example:

  • Buyers are realizing it’s exceptionally important to understand the “art-of-the-possible” in heterogeneous markets such as Europe, Asia Pacific, and Latin America, even before floating an RFP.
  • Quite often, it makes sense to approach and scope multi-country RPO utilizing the Pareto Principle, i.e., focusing on 80 percent of the hiring that takes places in 20 percent of the operating countries.
  • A phased approach that starts with limited countries in scope and expands into other countries/regions once the relationship stabilized is increasingly preferable.
  • A hub-and-spoke delivery model is emerging as the most prudent choice.

High interest in “understanding” a total talent acquisition approach. Note my emphasis on “understanding,” as opposed to adopting. Currently, I see buyers making RPO and Managed Service Provider (MSP) decisions for permanent hire and contingent hire management, respectively, independent of each other. While a combined approach to permanent and contingent hiring management through an integrated solution looks compelling, the reality is there are organizational (e.g., misaligned objectives of HR and procurement), operational (e.g., difference pricing structure and service level considerations), and technological (e.g., lack of single technology solution for permanent and contingent hire management) challenges to adoption in the current market. Buyers must have a clear upfront understanding of these challenges and need to identify potential mitigation steps. I have even seen buyers comfortable with their organizational readiness but lacking confidence in providers’ capabilities to offer an integrated solution at this time.

I expect adoption here to be gradual and in a phased fashion, with buyers starting with either RPO or MSP and then looking to expand and integrate the other. From a service provider perspective, creation and execution of total talent acquisition requires expertise in both traditional RPO and MSP models. That expertise, if proven, can create differentiation and significant opportunities, while also creating a natural entry barrier for competitors that focus only on RPO or MSP.

Side note: Everest Group’s forthcoming RPO studies will focus on multi-country RPO as well as blended RPO (RPO + MSP) exclusively highlighting the current state of the market and various dynamics at play.

Providers’ proactive investments to enhance their value proposition and create differentiation. It is clear that some RPO providers understand the importance of creating differentiation in a cluttered marketplace. Those that do are proactively investing in building their differentiation themes and associated capabilities. Examples include Kenexa’s focus on quality of talent theme, Manpower’s investment in helping buyers better plan their workforce requirements, Pinstripe’s development of tools to enhance the efficiency and effectiveness of the recruitment process, and SourceRight Solutions’  total talent acquisition solution.

Broader opportunities in emerging markets. With the demographic and economic changes taking place around the world, emerging markets such as India, China, and Brazil are increasingly viewed as markets with immense potential extending far beyond low cost delivery. Manpower’s recent acquisition of China-based REACH HR is a prominent example.

While my current tour in-person has concluded, I am looking forward to keeping a close eye on the RPO industry’s journey, even if from a near-term virtual view.

The Brand Angle in Technology Services | Sherpas in Blue Shirts

There has been a lot of recent talk about growing commoditization in the technology services industry, and understandably so. In an industry significantly fragmented (nearly 100 global firms with more than US$1 billion+ in revenue), there is a growing sense of firms turning into mirror images of each other. For example, large Indian IT firms are today so perceptively indistinguishable that they are more identified by their category presence (e.g. Tier 1, TWITCH) than by unique company branding.

To be fair, quite a few industry firms have attempted to build brand awareness through creative advertising. Accenture’s “High performance. Delivered.” and HCL’s “Mr. HCL” campaigns are cases in point. Yet, these tend to focus on building awareness on capabilities and credentials, and rarely, if ever, communicate differentiation. Every equivalent player in the marketplace has its own version of the “delivering high performance” or “we run everything that has technology in it” theme to deliver to clients when needed.

While a few firms could be starting to differentiate on their strategic intent, and the commodity characterization of some could be debunked with diligence, distinctive brand communications are needed if market perceptions are to be molded. With similar sales and delivery capabilities, similar talent pools, similar hiring and training structures, similar methodologies and tools, and management with similar backgrounds, it is easy for the market to continue viewing all firms in a category as clones.

In addition, the technology services industry is quite unique in the long-term nature of client-provider interactions. Because these interactions happen continuously throughout sizable deal tenures, these experiences influence client perceptions more than all advertising and sales communications.

Therefore, a key to communicating differentiation lies in branding delivery. While obviously easier said than done, two well worn-out strategies from other service industries could help:

  • Create tangible “markers” around experience touch points: Airlines brand everything from aircraft look and feel to merchandise sold on board to customer greetings today. Closer akin, professional services firms brand everything from distinctive color schemes to employee apparel to unique jargon. Creating “smashable” markers that communicate distinctive value is difficult, but not infeasible.
  • Recruit and train to align with the value proposition: P&G hires entry-level employees for fit with long-term values (‘Hire the person, not the position’). From the lowest rung, employee recruitment needs to be aligned with the brand intent and values. And training needs to move beyond technical, to reinforcing brand specific values.

Today, only two of the top 50 global brands (per the Interbrand 2010 rankings) have a technology/business services focus (IBM at #2 and Accenture at #47). And not one among the Indians features in the top 100.

It would be great to see this change.

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