A guest post by Elizabeth Rennie of NelsonHall
NelsonHall is putting the finishing touches to its latest Recruitment Process Outsourcing landscape report. In advance of the report’s release, Elizabeth Rennie, the NelsonHall research director with global responsibility for human resources outsourcing, shares her perspective on the global environment and what companies might expect in 2015.
As we enter the new year, NelsonHall sees a strong continuation in the trend of global companies engaging in blended recruiting and managed services contracts. By 2019, we estimate this type of arrangement will constitute around 17 percent of all recruiting contracts.
These statistics reinforce the fact that many companies now consider the external workforce a vital element of their enterprises. From recruiting through hiring to retention, companies now include contingent workers, contractors and even alumni in their workforce strategies. The practice of looking at workforce planning holistically – including professional development, branding and succession as well as a broader, deeper talent pool – is taking hold. The numbers we are seeing for RPO and MSP point to a lively adoption of this wider talent management focus.
Around 40 percent of RPO vendors offer a blended RPO/MSP offering, and these contracts currently account for around 11 percent of the total RPO contracts in 2014. Sourcing people directly has grown in popularity and the market has matured, especially in Europe. The trend to blend contracts is also strong in Asia Pacific, where RPO is less mature and greater value is sought through combined governance teams and through greater economy of scale.
Amid the shift to a wider talent management approach, there are two reasons why blended contracts are increasing in practice.
First, current market dynamics are pushing companies to satisfy short-term hiring needs through managed contingent worker services. In 2014, there was a growing shortage of talent, especially in the STEM disciplines, yet the demand for talent remained strong. This means companies must embrace part-time talent, find people and manage them. And this puts candidates squarely in the driver’s seat.
Second, in a mature market, companies recognize that a broader approach to outsourcing delivers a better return on investment. With the rise of social networking via mobile tools, companies need help in reaching permanent and temporary candidates where they are and in a manner that appeals to them. At the same time, companies put increasing value on the ability to outsource governance and consolidated reporting while aligning new hires with current employees and established processes. So companies appreciate the service providers who can find the talent, handle critical hiring needs, and achieve strategic alignment across people and processes.
In fact, the increase in blended contracts represents the growing value placed on workforce planning. If HR teams want to engage strategically within their business organizations, they must be able to deliver strong workforce profiles, plan not just for hiring but for retention, and balance cost with agility and talent availability. New analytics tools support makes broader contracts feasible and enables organizations to compare current to pre-workforce planning strategies.
As well as the broadening of contracts across blended MSP/RPO services, multi-country arrangements are likely to grow by 36 to 50 percent of total RPO contracts by 2019, mostly driven by organizations’ demand to manage talent acquisition consistently across the organization and to support geographical expansions.
In the current market where candidates are in demand, effective workforce planning also supports identifying which segments of talent to target when translating the company’s brand for employment purposes. Candidates want to know how a company will fare as an employer, not just how they will help portray the brand or how good the brand will look on their resumes. Candidates want to align with a company’s values, and describing values transparently supports workforce effectiveness. With the increasing talent skills gap, workforce effectiveness is more critical than before. This also includes supporting a smooth onboarding process to strengthen a candidate’s experience throughout a crucial first year. The entire universe of workforce planning and effectiveness – including recruiting and managed services, administration, change management, communication and engagement – needs to holistically broaden from candidates to evaluating and engaging with existing employee to best support the talent challenges faced today. Companies must retain their talent, and current employees need a reason to stay with a company.
These factors speak to the important role of RPO and MSP providers in an HR universe that has matured to focus on talent management and is now getting closer to reaching the holy grail of effective workforce planning. NelsonHall sees a continuing, expanding place for providers who can satisfy the need to unearth and engage talent that can support companies seamlessly and energetically.