If you didn’t pay attention to the news and only looked at the recent financial results reported by staffing and RPO providers, you’d think that everything is fine with the global economy. Let’s take a look at a few of the highlights including year-over-year revenue growth in Q2 2011 compared to Q2 2010 and some numbers of contracts awarded:
- Talent2 (fiscal year 2011 for period ending June 30) +26%, RPO +57%
- Kelly Services +16%, KellyOCG + 22.5%, and RPO ~+50%
- Kenexa +59%, RPO + 45%
- Manpower + 24%, ManpowerGroup Solutions +21% with 37 RPO deals closed in Q1 and 31 new RPO contracts awarded in Q2
- Pinstripe won or extended 15 RPO contracts in H1 (revenue not reported)
- SeatonCorp +20%, PeopleScout +95% with 9 new RPO contracts signed.
Why was growth and the number of contracts awarded so high when the sad reality of the news headlines is that there are debt problems, slowdown in GDP growth, and a continually high unemployment rate? Well, that is precisely why! There are several reasons including:
- Organizations who have had to downsize are turning to RPO because they don’t want to invest in hiring recruiters and associated staff only to potentially downsize again (i.e., it’s better to outsource recruitment to a vendor that can provide variable pricing and who can scale up or down quicker than the client)
- Obtaining better quality of candidates and quality of hire from an outsourcing specialist
- Allowing HR to work as a strategic partner and in-conjunction with the RPO vendor to engage employees and retain talent (instead of focusing on hiring)
- Wanting to get out of the technology management business, which isn’t usually a client’s core competency
- Reducing time to hire, improving hiring manager satisfaction, etc.
In addition to revenue growth from new contracts and renewals, growth comes from existing clients that have increased their hiring volumes. Other sources of growth are from contracts won in prior quarters that take several months before fully ramping up.
RPO does not look like it is going to slow down anytime soon. In NelsonHall’s HR Outsourcing Confidence Index, published in June, pipeline growth reported in the prior quarter was higher for RPO than all of the other HRO services.
At NelsonHall, we’ve seen an increase from buyers wanting to know who we see as the leading RPO providers by country and region. Buyers, are you evaluating outsourcing recruitment, if you haven’t done so already?
Gary Bragar, HR Outsourcing Research Director, NelsonHall
HRO Insights 
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