Early Q2 Earnings Reports Indicate Very Solid Year-Over-Year Results in Staffing and RPO
With the 2Q10 earnings reporting season underway, all to-date announcements point to a good quarter for HRO, particularly in staffing and RPO. For example:
This morning, SFN Group (formerly Spherion) announced a company-wide revenue increase of 25.6 percent in the second quarter of 2010, as compared to the same quarter a year ago. And revenues for its outsourcing business, SourceRight Solutions – which provides RPO, managed service programs and professional continent services – were up 100 percent year-over-year, with its RPO services revenue up 80 percent year-over-year.
Additionally, on July 21 Manpower reported revenue growth of 20.9 percent year-over-year for 2Q10, and SeatonCorp on July 15 announced revenues for its RPO business increased 53 percent in the first half of 2010.
While we still need to hear from the likes of Kelly Services, Adecco, Kenexa and others, results are positive thus far, and I believe they will continue. Even though unemployment is likely to remain high throughout the year, as indicated by NelsonHall’s quarterly Outsourcing Confidence Index, demand remains strong for RPO as companies look to outsource their recruitment functions for improved quality of hire, scalability and lower cost. And even with the bad unemployment numbers, there will always be pockets of hiring not only to backfill attrition, but also in high growth industries where new jobs are needed and in companies that downsized to the bone during the recession.
Further reason for optimism: the headline of a July 19 Workforce Management article read, “Workforce Staffing Could Hit Pre-Recession Levels in Two Years at Many Large U.S. Firms.” (You can read the article by registering for free at: www.workforce.com.) The article, per results of a recently-completed Accenture survey, stated that just over half of large, recently downsized U.S. companies plan to boost staffing and reach pre-recession levels by 2012. The survey also found that only 13 percent of executives plan to reduce their employee base over the next 12 months, and that the percentage of U.S. companies focused primarily on investment in growth-oriented activities, such as hiring, will rise from 24 percent today to 37 percent within the next 12 months.
Yet, the article also stated the planned growth won’t come easily, quoting David Smith, the survey’s managing director, who said, “A lack of relevant skills may present a hurdle for companies as they position themselves for growth. Companies need to rethink how they equip employees with the skills required to be competitive today.” Hmmmm….could this signal a resurgence of outsourced learning? If I were a betting man, I’d say the odds were there.
Gary Bragar, Senior HR Outsourcing Analyst, NelsonHall