The Imperial Roman army, was almost 1.25 lakh strong. Recruiting 1.25 lakh employees even today is colossal, so one can only imagine the strategies Romans would have used to achieve this feat. It is said that Julius Caesar offered 300 sestertius to any soldier who would recruit another. This was one of the earliest forms of using employee referral to recruit. From referrals in the army to the usage of signage for recruiting workers during the Industrial Revolution, the world has seen the use of TVs and print media in the 1970s and 1980s, advent of computers and their usage for finding talent in the 1990s, and finally the social media in 2000s.
Even with all this innovation, the struggle to find talent remains a big issue. Business leaders realised years ago that recruitment is a specialised job and organisations created talent acquisition function outside the gambit of core HR. Talent acquisition teams help organisations scale with greater focus and improved outcomes. However, they operate largely with internal focus and have, over a period of time, become stagnant with solutions and delivery models that are unable to solve complex problems. The professional service support for recruitment teams is fractured and distributed, with almost 30,000 placement consultants supporting hiring needs of corporates by managing the sourcing part of recruitment.
For an economy slated to grow at 7%, there is bound to be more job creation. India’s formal workforce is expected to grow from 41 million in 2013 to 88 million by 2022. The RPO, or recruitment process outsourcing, promises to bridge that delivery gap.
So, what is an RPO?
RPOs differ from traditional placement consultants on three broad contours:
Scope: RPO manages multiple things in a recruitment process. These include demand management, sourcing management, process management, analytics and governance. Terms and outcomes: RPO engagements are long-term and focus on multiple outcomes, like transactional outcomes around SLA and KPI delivery, strategic outcomes like driving stakeholder experience and automation of processes, and long-term outcomes such as predictability and building market intelligence.
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Structure and commercials: Dedicated teams for a customer is the only way RPOs can deliver successfully and win customer confidence. This is one of the reasons we see different kinds of fees in RPO engagements, including position assigning fee, position closure fee, success-based fee, management fee, technology fee, and rewards and penalties.
Market size & penetration
The global recruitment market size is about $4 billion and is expected to grow to $12 billion by 2022. Also, 75% RPOs are ‘on demand’ models, where some parts of the recruitment process are outsourced. This model offers the customer organisation the flexibility to manage its recruitment needs. Another 25% are end-to-end RPOs, aiming for long-term gains. The utilisation of RPOs is among five industry verticals:
ii. IT & telecom,
iii. ITeS & BPO,
Of these, IT & telecom contributes to 25% of the share. The size of the recruitment market in India is about Rs 7,000 crore, of which only about Rs 250 crore happens through RPO contracts, which is just 3.5%. Other than this Rs 7,000 crore, recruitment is done by in-house teams and is estimated to have a potential of about Rs 5,000 crore.
Risks & mitigation
While the business potential for RPOs in a market such as India is promising, the lack of success stories poses a risk of losing out on customer confidence. Firms like Kelly Services, HirePro, Allegis and Randstad, who are evolving their traditional models of permanent placements to RPO solutions in India, have to use automation and high-order change management to create more success stories.
Organisations like PeopleStrong and others—born as RPO solution providers—have been able to retain the relationships and deliver on customer expectations. However, having more success stories across all service providers would help the RPO industry grow significantly.
While Rome, the Industrial Revolution, and the advent of TV and computers in recruitment process will always be remembered as stories that shaped this business, RPO as an industry needs some modern-day stories to be remembered of its own.
The author is vice-president & head, Recruitment Business, PeopleStrong, the HR solutions firm