RPO gaining in traction
November 22, 2009
The other day I happened to stumble upon a career portal launched by a Tirupur (Tamil Nadu) based textile group that offers video conferencing facilities to recruiters, wanting to widen their multi-cultural resource pool?
WIMB claims video conferencing of prospects help clients save 20% to 40% in flying recruiters, scheduling interviews, booking venues etc.
The market for such niche services may still be small, although Everest Group’s annual report on Recruitment Process Outsourcing (RPO) predicts that after growth fell flat in 2009, demand for back-office RPO services is once again growing for offshore locations such as India and Philippines. The research group also predicts that although it may take time for the industry to climb back to its pre-recession level, spends on procurement outsourcing (PO) are expected to rise by at least 25% in 2010.
Earlier dominated by a few domestic players, namely Infosys, Wipro and Caliber Point, global firms such as Momentum and PeopleScout are now interested in entering this still untapped market. Hewitt Associates, that is arguably one of the oldest players in this sector managed to nearly double its profits on lower operating costs in the fourth quarter and has continued to add to its HR outsourcing kitty, even after losing key accounts to bankruptcy and mergers, reports Forbes. Meanwhile, Mercer, another global player in benefits administration outsourcing picked 20 new clients in recent months to its impressive roster of 570.
All this bodes well for the Indian vendors, that lead the pack according to Everest Group, despite the fact that RPO and benefit administration services in India still lack the maturity and competitiveness of their US, UK or Australian counterparts. However there is little doubt that as the RPO model matures, the survival of headhunters whose popular refrain is “We will add you to our database” will be under serious threat. After recovering from last year’s slowdown, mature RPO services will become adept at not just improving their delivery mechanisms but also providing value-added services. Once that happens, the industry will automatically begin to draw highly talented specialists in varied domains that it lacks now.
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