An RPO and MSP Combo: The Best of Both Worlds

As I read through HRO Today magazine’s recently published Baker’s Dozen Top Managed Service Program (MSP) providers, it struck me positively to see many companies such as Manpower Business Solutions, Hays, Allegis Group Services, SourceRight Solutions and Adecco on the list. That’s because those providers are also recruitment process outsourcing (RPO) providers.

In different mixes and offerings, the MSP solutions include contingent workforce management, program and vendor management, temporary staffing, employee process management and other services.

There are two primary reasons why provision of both RPO and MSP solutions from the same vendor is valuable to the marketplace.

Flexible Staffing Solutions from a Single Vendor

As NelsonHall and many others have written about quite a bit lately, permanent recruiting has largely been on hold due to the recession, replaced with utilization of temporary hires and contingent workforces. As we’ve also written about numerous times, HRO buyers are increasingly opting for service delivery consolidated under the aegis of a single provider. Thus, the ability to tailor multiple recruiting solutions to meet client’s evolving needs results in a win-win for both providers and buyers.

Employee Attrition

Per a Manpower study released earlier this week, 80 percent of 2,000 North American hiring managers surveyed believe less than five percent of their employees will voluntarily leave the company in 2010. But a survey from Manpower subsidiary Right Management revealed 60 percent of employees intend to pursue new jobs if there is improvement in the economy this year. This huge delta aside for a moment…while it’s not feasible that more than half of employees will leave their current jobs, what if it is more than the five percent employers expect? A contingent workforce must be leveraged simply to keep the business running.   

The bottom line is that vendors and buyers both gain value from a workforce solution that meets clients’ dynamically changing needs, whether it be for temporary or contingent employees through an MSP offering or permanent employees via RPO. Buy-side HR executives, are you ready to meet your company’s current and future workforce needs?

Gary Bragar, Lead HRO Analyst, NelsonHall

Multi-Country, Single Provider RPO Contracts Gaining Traction

Recruitment Process Outsourcing (RPO), just like all other HRO process areas, has been impacted by the recession and lower hiring volumes. And revenue recovery and growth will be further impacted by the lagging nature of hiring after a recession. However, those RPO providers with multi-country capabilities are better positioned to tap into today’s limited opportunities, and will have the opportunity to fare better than their single-country counterparts when hiring volumes return.

NelsonHall’s 2007 and 2009 RPO Market Analysis studies found that multi-national buyer organizations are increasingly seeking single-provider RPO solutions for reasons including: 1) Standardized technology and consistent processes, which results in increased efficiencies and reduced cost; 2) Consolidated reporting from one system, which results in better data quality; and 3) Reduced provider management efforts.

While RPO providers can gain global delivery capabilities via partnerships, as discussed in my July 22 blog, we are also seeing individual providers win multi-national RPO deals. Their ability to win these contracts are due to a number of factors including increased local presence and knowledge of where and how to attract local talent, technology to support multi-country recruiting efforts and ability to provide onsite support.

Examples of recent multi-country RPO deals include:

•  Kenexa on October 26 announced it was awarded an RPO contract by LSG Sky Chefs, a corporation with 30,000 employees in 49 countries. Using a hybrid model of onsite and service center delivery, Kenexa will provide LSG with global recruitment services which are expected to reduced costs due to centralized recruiting and deliver a better candidate hiring process.

•  PeopleScout on November 2 announced it won a multi-million RPO contract with Covance, a global drug development company with 9,600 employees in 20 countries. PeopleScout will perform hiring services for professional and hourly positions for Covance in North America, South America, Australia and Asia.

•  Pinstripe on August 18 was awarded an RPO contract by Agilent Technologies for the provision of complete end-to-end RPO services from job requisition through on-boarding for exempt and non-exempt employees in the U.S., Canada, Mexico and Brazil.

To underscore providers’ acknowledgement of the importance of single provider multi-country and global RPO capabilities, Manpower on October 30 announced a realignment which combines its HRO and RPO groups into a dedicated business unit, Manpower Business Solutions (MBS), to strengthen its outsourcing service offerings. RPO services are delivered in 20 countries today. As part of the combined group, MBS can further leverage Manpower’s reach, in 80 countries today, to increase its RPO delivery footprint.

I believe this is the tip of the iceberg in that we will see more global RPO contracts being awarded over the next several years. Providers with the capability to support multi-country RPO will see increased opportunities to win new business and expand existing domestic-only hiring contracts for multi-national and global clients.

Gary Bragar, Lead HRO Analyst, NelsonHall