Partnering for Multi-Geo and Global RPO Capabilities

As we identified in our 2007 RPO market analysis and reaffirmed in our May 2009 RPO report, the ability to deliver RPO services on a global basis is a critical success factor for the provider community in order to serve the needs of buyers looking for recruiting support beyond domestic regions and to buoy their own revenue growth.

While some RPO providers have acquired others to expand their geographic delivery capability, we are also seeing a handful of partnerships forming among pure play RPO, and RPO and multi-process, providers. Examples include KellyOCG and IBM, Spherion’s RPO division and Spring Group’s RPO division – named hyphen – and Pinstripe and Ochre House.

The most recent announcement came from U.S-based The RightThing, which on July 14, 2009 announced it partnered with U.K-based Alexander Mann Solutions to enhance its global RPO delivery capability. The RightThing is immediately leveraging this new partnership by expanding its existing contract with Medlmmune, headquartered in the U.S., to provide hiring services for the company’s Cambridge and Liverpool (U.K.) and Netherlands locations.

As buyers look to reduce costs and the number of suppliers they work with, we’ll see an increasing number of global RPO RFPs. We’ll also see an expansion of existing domestic-only RPO contracts into more geographies, if buyers are happy with their existing provider and it can offer a multi-geo or global solution.

Therein lays the opportunity, and the rub, for RPO providers. To meet the increasing need for global RPO capabilities, domestic-only suppliers that want to expand will need to determine where and when to do so, and whether organically or via partnerships.

Would-be global RPO providers considering the partnership approach must carefully balance the benefits of lower start-up expenses, quickly obtaining the requisite knowledge on local laws and legislation, and insights into how to best source talent in the region with the inherent risks including how to ensure consistency and quality of services and technology integration into a virtual single platform.

We don’t anticipate seeing more than a few additional large partnerships forming in the next year. But perhaps there will be more niche partnerships, such as Kenexa’s partnering with R&J Management Consultants in April 2009 – forming Shanghai Kenexa – to extend its RPO presence in the Chinese market. In the meantime, global RPO by partnership should be explored and entered into cautiously by providers and buyers alike.

Gary Bragar, Lead HRO Analyst, NelsonHall

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