Asia Pacific, Talent2, and HRO

Asia Pacific is the emerging market of the most interest to HRO service providers, especially RPO vendors. Most of the big names in HRO/RPO are building or expanding scale there to take advantage of the higher than average growth rates. ADP and NorthgateArinso are well-established in the region, and Futurestep, GP, Kenexa, ManpowerGroup, Mercer, and Towers Watson have all made recent acquisitions in China, Hong Kong, India, and Australia as the fastest way to get more feet on the ground in this expanding market.

Still considered an emerging market, some Asia Pacific countries are already mature including Australia and Japan, while others are truly experiencing the first rush of growth. Each country has different needs and challenges and HRO service providers need to bring a lot of service line experience and local knowledge to the table. While one industry needs a high volume of entry-level employees to meet demand, another, a bit further on the maturity scale, needs management-level employees with the experience to manage and continue growth of a more complex enterprise.

Newer entrants should not forget that there are regional providers already on the ground; one of the largest is Talent2, which covers the entire area and a bit beyond. Talent2 has continued its solid pace of contract wins across the Asia Pacific region. An example from the public sector is contractor procurement and management for 13 agencies of the Queensland government. In the private sector, contract wins included payroll, RPO, and learning, and cover Australia, China, Hong Kong, Japan, Malaysia, and even the Middle East.

With ~1,700 employees, Talent2 supports 30 countries in 30 languages from its 46 offices and service centers located across 19 countries. With its scale and services it should be no surprise to find that Talent2 is, according to NelsonHall, the HRO leader in Asia Pacific.

Perhaps it is reasonable then that Talent2 has attracted interest from investors wanting to take it private. Morgan & Banks Investments (MBI) and Allegis Group have entered into an agreement to acquire the company, which will remain operationally as Talent2 if the deal is successful. MBI represents current major stakeholders and Allegis is already a Talent2 RPO partner. It will be interesting to see if privatization allows Talent2 to fuel even more growth in and outside of the Asia Pacific region.

Linda Merritt, HRO Research Analyst, NelsonHall

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RPO Edging Toward Global

As a follow-on to my November 22 blog on the happenings at the recent HRO Europe Summit, a question posed by an audience member to me and my fellow RPO panelists Alexander Mann Solutions, SourceRight Solutions and a professor from Lancaster University deserves a deeper look. The question was, “We hear about RPO going global. How should global RPO be defined, as compared to how people are using this term, and is a shift occurring?”

NelsonHall defines global RPO as hiring in two or more continents. And in that context, on the panel I said very few global RPO contracts have been awarded to date. There have been some multi-country contracts awarded within a given region, and a few North American contracts that include some hires in Central, Latin and South America, but not much beyond that. But, in a “we’re getting there” moment, I was able to cite that just two days earlier: 1) FutureStep was awarded a truly global RPO contract by Cummins Inc. to provide RPO services in North America, Europe, Africa, Asia Pacific and South America; and 2) Allegis Group Services and Talent2, in partnership, were awarded a multi-continent RPO contract by an unnamed global financial services company to provide RPO in several locations in North America and Asia Pacific.

And just last week, Manpower was awarded a large global RPO contract by Rio Tinto to provide approximately 11,000 hires per year in North America (US, Canada), Asia Pacific (Australia, India), Europe (France, U.K.), Middle East, South Africa and South America. Granted, three is not a crowd when it comes to critical mass of contract type indicators, but I do think we’re finally beginning to see RPO edging toward global.

As I identified in my 2009 RPO report, one of RPO buyers’ top vendor selection criteria is the ability to provide global delivery, including in-region recruiters. Subsequently, my critical success factors recommendation was that if providers did not already have a global presence, it would be prudent to begin pursuing a global recruiting partnership with vendors that could provide recruiters in countries and regions where new hires are needed. Since then, we’ve seen a number of such partnerships emerge, including the December 3, 2010 announcement of Adecco and the Beijing Foreign Enterprise Human Resources Company (FESCO) establishing a joint venture to take advantage of the emerging markets growth potential in China, and provide global RPO to multi-national corporations based in China per Adecco’s presence in 60 countries.

I believe we will see continued demand by global clients to have one provider manage all of their recruitment needs, and that, in turn, we will see many more global RPO contracts signed in 2011. However, getting buy-in and cooperation from business leaders in local countries is a massive change management issue requiring significant attention, care and effort. Providers can help prospective clients during due diligence to quantify current costs, time to hire, hiring manager satisfaction, attrition and other metrics to help make the case. 

Buyers and providers will be watching the success of these new global deals; and if they are indeed successful, they will create the impetus for increased global RPO demand in 2011 and beyond.

Gary Bragar, Lead HRO Analyst, NelsonHall