RPO providers seek more value from technology; industry leaders moving beyond efficiency solutions to advanced analytics and next-gen digital tools to enhance candidate experience
The global Recruitment Process Outsourcing (RPO) market continued to remain one of the fastest growing single-process Human Resources Outsourcing (HRO) markets in 2016, growing at a rate of 16 percent to reach a cumulative market size of US$2.85 billion, according to Everest Group. In 2016, RPO saw wider acceptance among companies of all sizes, including small (less than 3,000 FTEs) and mid-sized (3,000-15,000 FTEs) buyers, which captured an increased share of the market at 51 and 6 percent, respectively, as compared to large buyers at 43 percent.
Digital adoption is the trend most strongly attributing to this rapid growth. RPO service providers are increasingly differentiating themselves through technology, increasing their investments in both technology partnerships and proprietary solutions. The exact nature of the “partner+build” strategy adopted by each provider is dictated by the regional availability and quality of off-the-shelf talent acquisition tools. Annual technology investments vary considerably among providers, ranging from $1 million to in excess of $100 million.
Efficiency focused technology solutions such as Applicant Tracking Systems (ATSs), Customer Relationship Management (CRM) tools, and Robotic Process Automation (RPA) systems are readily available through technology partners and have essentially become “table stakes” in the industry. In fact, nearly half of all RPO engagements include provision of ATS solutions.
So, now, the focus for differentiation has shifted to technology solutions that either enhance the experience of candidates or generate better insights on various aspects of the recruitment value chain. Accordingly, RPO service providers are adjusting their “partner+build” strategies to rapidly assimilate into their service portfolios additional technology solutions such as self-service scheduling tools and chatbots (primarily acquired through partnerships) and advanced analytics (primarily developed through proprietary investments).
“The RPO service provider landscape is intensely competitive, with many players and very few with dominant market share; plus, the high growth in the global RPO market, combined with increasing adoption in emerging economies, is attracting even more new players,” said Arkadev Basak, practice director, Business Process Services, at Everest Group. “In the coming year, technology orientation will be one of the key parameters by which RPO service providers will distinguish themselves in this fragmented market. Other key differentiators will be geographic focus; consulting capabilities, particularly with respect to strategic workforce planning and talent management; and Total Talent Acquisition capabilities.”
These and other research findings are explored in a recently published Everest Group report: Recruitment Process Outsourcing (RPO) Annual Report 2017 – Strategic Value Creation in a Rapidly Evolving Market.
This research provides comprehensive coverage of the RPO market and analyzes it across various dimensions such as market overview, key business drivers, buyer adoption trends, solution and transaction trends, and service provider landscape.
***Download complimentary report abstract here***
Other key findings:
- The mature market of North America saw a decline in its market share, with the emerging markets of Eastern Europe and Latin America gaining at its expense. The biggest growth of single-country RPO was seen in deals outside the mature markets of the United States, United Kingdom and Australia. Many countries in different regions across the world are emerging as strong RPO markets on their own, particularly in Latin America, Continental Europe and Asia Pacific.
- RPO as a concept continues to gain wider global acceptability as evidenced by the rising number of multi-country deals. These are more complex deals, which require both the buyer and service provider to invest more time and effort in order to understand local nuances.
- Value-added processes such as employer branding, talent communities, workforce planning and assessment are increasingly becoming table stakes; buyers are now demanding next-gen value-added services such as consulting (especially for technology strategy and implementation), talent engagement, and content creation and communication.
- 2016 saw heightened activity in the market around Total Talent Acquisition (TTA) services, as demonstrated by a 41 percent increase from 2013 to 2016 in number of new TTA deals.