global trends in rpo and talent recruitment 2014

Global Trends in RPO & Talent Recruitment 2014

pam berklich

The Recruiting Challenge Map

Far from simply filling existing gaps as quickly and economically as

possible, recruiting has become a high-stakes competition to foresee

economic conditions and business projections, estimate critical talent

gaps as early as possible, and source the highest-quality talent available.

more than half (61%) of organizations

experience difficulty recruiting staff.

More than half (58%) plan to increase the use of recruitment firms for new hires in the next 12 months

Given the competitive landscape for attracting quality talent, we expect more companies to outsource recruitment; however it’s evident that many organizations still do not have a strong understanding of the outsourcing models available.

Only 46% are familiar with RPO

Only 26% currently outsource recruitment

anticipated future growth in hiring

73% plan to increase

internal full-time hires in the next 12 months

57% plan to increase

contingent hires in the next 12 months

reasons for difficulties recruiting staff

87% shortage of skilled

recruiting staff

49% salary

uncompetitive

30% location

undesirable

19% current

recruitment process

16% on-boarding

how companies intend to use an outsourced recruitment firm

86% sourcing, screening,

testing

45% applicant and recruitment performance

tracking

43% reference checking

17% vendor

management

/02

Global Trends in rPo & TalenT recruiTmenT 2014 was prepared by Kelly Outsourcing

and Consulting Group (KellyOCG®) in partnership with the Human Resource Outsourcing

Association (HROA), HR.com, the Shared Services & Outsourcing Network (SSON) and the

International Association of Outsourcing Professionals (IAOP) to provide a comprehensive overview

of the latest trends and insights from the global business community in regard to jobs, skills

development and recruitment.

The report is based on the views of senior hiring managers from small, medium and large

organizations from the Americas, Europe, Middle East and Africa (EMEA), and the Asia Pacific

(APAC) region. It provides a rare glimpse into the key decisions that will impact businesses,

particularly focusing on their workforce needs and the challenges they face in attracting and

retaining talent in an uncertain economic environment.

It also shines a light on the latest developments in the area of recruitment process outsourcing

(RPO) and reveals where businesses are headed in adopting innovative solutions to the growing

challenge of skills shortages.

PReface /03

pam berklich

Meeting the Recruiting Challenge: Even in the face of economic recovery in many global markets, recruiting top talent remains a major concern; in particular, a shortage of skilled labor continues to vex hiring managers.

the RecRuitinG challenGe /04

Accessing quality talent remains a top concern

As many recent studies confirm, among the biggest challenges HR professionals face is

recruiting quality talent. The 2013 PwC CEO Survey reported more than half of US CEOs say a

shortage of skills is a potential threat to growth this year.

Respondents to our RPO survey report similar frustration. Sixty-one percent say they experience

difficulty recruiting staff, and of those 87 percent blame a shortage of skilled recruiting staff in

the roles required. Other critical challenges include being unable to offer a competitive salary

(49 percent) and offering an undesirable work location (30 percent)—both of which only sustain

the all-important challenge of attracting and retaining top talent.



Experiencing difficulties recruiting staff? (% Yes)

Reasons for difficulties recruiting staff (multiple responses allowed)

0

20

40

60

80

100

0%

20%

40%

60%

80%

100%

87%Shortage of skilled recruiting

staff

49%Salary

uncompetitive

30%Location

19%Current

recruitment process

61%

figure 1: figure 2:

/07

Serious headwinds for recruiting professionals

A shortage of high quality talent is a serious problem for over two-thirds of companies. Sixty-

eight percent report talent shortages slow or stall the hiring process. Among other top factors

slowing the hiring process: hiring manager satisfaction (37 percent), time-to-hire (36 percent),

cost-to-hire (25 percent) and quality of recruiters (23 percent).

Not surprisingly more than a third (37 percent) report their organization’s average time-to-hire

is over 45 days, a statistic signaling that despite reports of high unemployment, a number of

roles are still very difficult to fill. (Time-to-hire is a difficult statistic to benchmark given variation

by type of hire, industry, company size, and outsourced vs. in-house recruiting. As a point of

comparison, however, the Society for Human Resources Management reports the average time-

to-hire for large organizations—those with more than 1,000 employees—is 43 days. Time to hire

for small organizations—defined as having fewer than 1,000 employees—is 29 days.)

the RecRuitinG challenGe

/08

Average time-to-hire Conditions that slow or stall the hiring process


30% | 30 days or less

34% | 31– 45 days

29% | 46–90 days

8% | Over 90 days

01020304050607080

0%

10%

20%

30%

40%

50%

60%

70%

80%

14%Performance monitoring

16%Technology

effectiveness

18%Poor

processes

23%Quality of recruiters

25%Cost

to hire

36%Time

to hire

37%Hiring

manager satisfaction

68%Quality of hires

figure 3: figure 4:

/09

Outsourcing HR functions still not practiced by most

Despite the growing complexity of HR functions, most companies still do not outsource HR

functions. Only 36 percent say they outsource part or all of the HR function. Among companies

that do outsource HR services, the categories most likely to be outsourced include payroll

(56 percent), recruitment (49 percent) and benefits (40 percent). (This relatively low level of

outsourcing may be attributed to the composition of our respondents, who are more heavily

weighted to small and mid-size companies.)


/10

Outsource part or all of the HR function (% Yes)

HR functions currently outsourced


36%

0

10

20

30

40

50

60

0%

10%

20%

30%

40%

50%

60%

9%Performance Management

16%HRIS

19%Compensation

20%Training

40%Benefits

49%Recruitment

56%Payroll

figure 5: figure 6:

Global Hiring Intentions: Hiring appears robust for the coming year, both for internal full-time labor as well as contingent hires.

hiRinG intentiOns /11

/12

Global hiring intentions

Nearly three quarters (73 percent) of companies surveyed plan to increase the number

of internal full-time hires in next 12 months, and 57 percent plan to increase the number of

contingent hires.

These numbers show robust hiring growth will continue across the globe in the coming year—

despite reported high levels of unemployment. This contradiction is something we at

KellyOCG have written about at length.

In the industrialized world, 40 million workers are unemployed according to the International

Labour Organization—yet more than ever, companies are suffering critical shortages of key

talent across the globe. A 2012 study from Oxford Economics shows the imbalance of talent

supply and demand across the globe will deteriorate over the next ten years due to shortages

in particular disciplines (e.g. so-called STEM jobs), as well as regional imbalances of labor

supply and demand. In particular regions, severe talent shortages will define the next decade.

For example, in the developed Asian economies the demand for talent in the business services

sector will increase by over 50 percent, while the demand for talent in life sciences within

hiRinG intentiOns

/13

the same region will rise by only 8.2 percent. In North America, the energy sector will

require a 22.7 percent bigger workforce, while the demand for talent in financial services will

drop eight percent.

Even in the face of relatively high levels of unemployment, recruiting professionals are still vying

to capture top talent—a heated competition that will not abate anytime soon.

hiRinG intentiOns

/14hiRinG intentiOns

Plan to increase number of internal full-time hires in the next 12 months?

Plan to increase number of contingent hires in the next 12 months?

73% 57%

figure 7: figure 8:

Understanding HR Outsourcing: As complexity of the talent management function grows, companies rely on outsourcing to fill gaps—particularly recruiting high-value professionals.

undeRstandinG hR OutsOuRcinG /15

/16

Outsourcing HR and recruitment

We asked companies whether they outsource HR activities. Specifically, we wanted to

understand to what extent companies outsource parts and portions of recruiting to multiple

vendors (e.g. screening, sourcing, assessments, interviewing), as well as whether companies are

using end-to-end recruitment process outsourcing (i.e. outsourcing the entire recruiting process

to a single vendor).

The complexity of the HR function—as well as the pressure to attract and retain high-value

workers—continues to stretch the resources and technology of in-house HR departments.

Not surprisingly, well over half (58 percent) plan to use third-party recruiting firms to engage

hires in next 12 months. Of those using recruitment firms to augment recruiting needs, the

most common applications include sourcing, screening and testing (86 percent), applicant and

recruitment performance tracking (45 percent) and reference checking (43 percent).

undeRstandinG hR OutsOuRcinG

/17

Plan to increase use of outside recruitment firms to recruit anticipated hires in next 12 months?

58%


How will you use an outsourced recruiting firm for hiring in next 12 months?

0

20

40

60

80

100

0%

20%

40%

60%

80%

100%

16%On-boarding

17%Vendor

management

43%Reference checking

45%Applicant and

recruitment performance

tracking

86%Sourcing, screening,

testing

figure 9: figure 10:

/18

In this case, third-party recruiting is a carved-out function, a tactic applied to parts and portions

of the recruiting function. Almost 70 percent use outsourced recruiting for less than a quarter of

their hiring—meaning outside assistance is likely only used for particularly challenging hires.

The majority of recruiting is still conducted within country borders. More than half of

respondents (56 percent) say less than 10 percent of vacancies are filled cross-borders.


/19

Portion of vacancies filled through a third-party provider

Portion of vacancies filled through cross-border recruitment activities

36% | Less than 10%

33% | 10%–25%

12% | 26%–50%

12% | 51%–75%

7% | 76%–100%

56% | Less than 10%

24% | 10%–25%

10% | 26%–50%

6% | 51%–75%

3% | 76%–100%


figure 11: figure 12:

/20

One step beyond external recruiting support is recruitment process outsourcing (RPO), which

was first introduced nearly 20 years ago. An RPO—typically a third-party vendor—manages the

end-to-end recruiting process, including on-boarding of new hires. It differs from traditional

staffing and recruitment outsourcing because (a) it assumes full ownership of the recruitment

process, including strategy, systems, methodology, and technology and (b) unlike traditional

outsourcing, the full continuum of recruiting activities (for all or a select group of skill sets) is

handled by a single vendor, which is solely responsible for delivering results.

In the hunt for high-value talent—and in particular so-called “knowledge workers” who work in

fields like engineering, technology and the sciences—companies are turning to RPO providers

to outmaneuver the competition. RPOs offer dedicated infrastructure and expertise to find and

secure scarce talent, and in many cases operate across multiple employment markets.

Familiarity with RPOs is still not the norm. Fifty-four percent say they are only somewhat familiar

or not at all familiar with RPOs. And only 26 percent fully outsource their recruiting/hiring

process using an RPO model.


/21

Overwhelmingly companies that outsource recruiting services hire vendors on a stand-alone

contract, separate from other HR outsourcing services (68 percent use a separate provider).

Companies are most likely to use a third-party recruiting firm to hire professional staff (50

percent), though third-party recruiting is also common in hiring temporary or contingent labor

(36 percent).


How familiar are you with Recruitment Process Outsourcing (RPO)?

Currently outsource recruiting/hiring process (% Yes)

Is recruitment outsourced as part of an HR outsourcing contract, or do you use a separate provider?

Do you outsource recruiting company-wide?(% Yes)

Do you outsource recruiting of professional talent? (% Yes)

26% 40% 50%

/22undeRstandinG hR OutsOuRcinG

32% | Part of an HR outsourcing contract

68% | Separate provider of recruitment outsourcing

14% | Not at all

40% | Somewhat familiar

25% | Familiar/ knowledgeable

21% | Very familiar

figure 13: figure 15: figure 17:figure 14: figure 16:

/23

Growth of recruitment outsourcing

Of those respondents who do not currently outsource a whole or part of the recruiting function,

40 percent indicate they would like to do so in the future. Areas of particular interest for

outsourcing include professional recruiting (48 percent), contingent or temporary labor (38

percent) and outsourcing all recruiting responsibilities (34 percent).

Overwhelmingly respondents cite “faster time-to-hire” as the key benefit of a third-party

recruiter partnership, followed by integrating multiple sourcing channels (58 percent) and lower

cost to recruit (51 percent).

These findings support a more general, growing interest among global companies to adopt

a talent supply chain management mindset. As the name suggests, talent supply chain

management (TSCM) is much like traditional supply chain management: directing a network

of suppliers and resources to ensure the optimal mix of price, access and risk. The high level

of interest in recruitment process outsourcing—including professional recruiting as well as

contingent and temporary labor staffing—demonstrates a greater degree of sophistication

about balancing the cost of recruitment against other critical variables, particularly access.

GROwth Of RecRuitMent OutsOuRcinG

/24

Whereas a decade ago outsourcing was usually a cost-savings tactic, in the future talent-related

outsourcing is as likely to be related to accessing top-flight talent or improving time-to-hire

ratios. In fact, in a 2013 Talent Supply Chain study sponsored by Kelly Services, companies

defined as best-in-class were three times more likely to ‘strongly agree’ they take greater risks

to secure the talent they need, and two times more likely to ‘strongly agree’ accessing high

quality talent when needed is more important than cost.

GROwth Of RecRuitMent OutsOuRcinG

GROwth Of RecRuitMent OutsOuRcinG /25

Would consider outsourcing part or all of recruitment process in future (% Yes)

Are there particular areas of the recruitment process you would outsource?

If yes, what would you expect a vendor/partner to help you achieve?

40%

Responses only by those who may outsource recruiting in future. Responses only by those who may outsource recruiting in future.

0

10

20

30

40

50

0%

10%

20%

30%

40%

50%

48%Professional

38%Contingent/temporary

34%Company-wide

0

20

40

60

80

100

0%

20%

40%

60%

80%

100%

88%Faster time

to hire

58%Integrate multiple sourcing channels

51%Lower cost of

recruitment

32%Manage or limit

number of third party providers

27%Gain

access to technology

figure 18: figure 19: figure 20:

/26

Growing the range & depth of the recruiting expertise

For many global organizations, recruiting the right talent at the right time is the single most

influential factor driving growth and innovation. In the 20th century, capital was the basis of

advantage, but in the 21st century, talent will drive global advantage.

Far from simply filling existing gaps as quickly and economically as possible, recruiting has

become a high-stakes competition to foresee economic conditions and business projections,

estimate critical talent gaps as early as possible, and source the highest-quality talent available.

All of this is part of a larger trend toward managing talent needs holistically across all categories

of work—a discipline called talent supply chain management.

Outsourcing recruiting is no longer primarily about carving out an existing internal function

and giving it to the lowest-cost provider. Rather, outsourcing recruiting allows organizations to

access niche expertise that is simply too difficult or too expensive to grow in house. Third-party

recruiters and RPOs offer companies expertise in particular disciplines or geographies, import

effective processes and procedures, and present regulatory and risk-management expertise.

What’s more, RPOs allow companies to make intentional decisions about whether to prioritize

cost savings, access to talent or risk-control (or some optimized mix of the three) depending on

the category of work and area of expertise.

cOnclusiOn

Far from simply filling

existing gaps as quickly and

economically as possible,

recruiting has become a high-

stakes competition to foresee

economic conditions and

business projections, estimate

critical talent gaps as early

as possible, and source the

highest-quality talent available.

/27cOnclusiOn

Companies we surveyed are optimistic about the benefits of outsourced recruiting. Eighty-

eight percent believe outsourced recruiting offers faster time-to-hire, 58 percent say outside

providers integrate multiple sourcing channels, and 51 percent cite lower cost of recruitment

using a third-party provider.

Despite the opportunity, it’s evident from the survey that many organizations still do not have

a strong understanding of the outsourcing models available, nor the opportunities therein.

Only 26 percent are currently outsourcing the recruiting/hiring process using something like

an RPO model, and 54 percent report being only somewhat familiar or not at all

familiar with RPOs.

Given apparently strong growth in hiring (73 percent to increase number of internal,

full-time hires and 57 percent to increase contingent hires in the coming 12 months), and

the competitive landscape for attracting quality talent, we expect organizations may

increasingly look to external recruiting partners to augment their own capabilities or fully

outsource the recruiting function in the years ahead.

/28

RESPONDENT PROFILE

A total of 385 individuals responded to the 2013 Global RPO survey. Respondents hailed from

a broad range of industry sectors across the Americas (60 percent), Europe, Middle East and

Africa (EMEA) (17 percent), and Asia Pacific (30 percent). Participants also represent a broad

cross-section of industry sectors, including professional services, information technology,

financial services, retail, manufacturing and life sciences.

The largest share of respondents (63 percent) had fewer than 500 employees within their

organizations, while 16 percent had from 1,000 to 5,000, and 14 percent had more than 5,000.

1: Respondents’ Regions of Responsibility

2: industRy sectoRs 3: size of oRganization

MethOdOlOGy

Based on number of full-time employees

Respondents could select more than one region so totals exceed 100%

0

20%

40%

60%

Asi

a-Pa

cific

EMEA

The

Am

eric

as 0%

5%

10%

15%

20%

25%

Oth

er/

Non

-sp

ecifi

ed

Reta

il

Life

Sci

ence

s

IT&

T

Hig

h-te

ch

Food

&B

ever

age

Fina

ncia

lSe

rvic

es

Ener

gy,

Oil

& G

as

Educ

atio

n

Che

mic

al/

Petr

oche

mic

als

Bus

ines

sSe

rvic

es

Aut

omot

ive

0

10

20

30

40

50

60

Asia-Paci�cEMEAThe Americas0

5

10

15

20

25

Other/Non-speci�edRetailLife SciencesIT&THigh Tech ManufacturingFood & BeverageFinancial ServicesEnergy, Oil & GasEducationChemical/PetrochemicalsBusiness ServicesAutomotive

Less than 500

501–1,000

1,000–5,000

More than 5,000

exit

about the author

PaM BeRKlich is the senior Vice President, direct hire Practices, KellyOcG.

Pam leads the direct hire Practices which includes Recruitment Process Outsourcing

(RPO), executive search services, and talent sourcing services and direct hire for

Kelly’s clients globally.

for more thought leadership go to talentproject.com

about kellyocg

KellyOCG® is the Outsourcing and Consulting Group of workforce solutions provider Kelly Services, Inc. KellyOCG is a

global leader in innovative talent management solutions in the areas of Recruitment Process Outsourcing (RPO), Business

Process Outsourcing (BPO), Contingent Workforce Outsourcing (CWO), including Independent Contractor Solutions,

Human Resources Consulting, Career Transition and Executive Coaching, and Executive Search.

KellyOCG was named in the International Association of Outsourcing Professionals® 2013 Global

Outsourcing 100® list, an annual ranking of the world’s best outsourcing service providers and advisors.

Further information about KellyOCG may be found at kellyocg.com.

http://www.talentproject.com

http://www.kellyocg.com