Recruitment process outsourcing (RPO) has been variously described in the UK and US trade press as “a hot area”, “the best thing since sliced bread”, “an explosive market” and “dripping gold”.
Start speaking to recruitment outsourcing providers and things become more complicated. Some companies embrace the term RPO and emblazon their website with it; others proudly provide a service that you or I might think of as RPO because it involves outsourcing the recruitment process of their clients, but steer clear of the term for reasons best known to themselves.
“I think people are getting hung-up on labelling,” says Rosaleen Blair, chief executive of Alexander Mann Solutions. “For us, RPO is about trying to provide a long-term strategic solution for organisations. There are a lot of practical solutions out there that are being labelled as RPO, but I don’t think anyone has a monopoly on the definition. Depending on who you talk to, it means different things.”
Perhaps this is why other firms choose not to use it to describe what they do. Andy Dolby, managing director of Barkers Resourcing, says: “RPO has become an easy, accepted label to put on a broad portfolio of different activities. But we have made a conscious decision not to describe what we do as RPO. Recruitment process outsourcing sounds like a throwback to 1990s management consultancy-speak of business process re-engineering, which is very much about driving process efficiencies. RPO sounds like something that is confined to the delivery of process efficiency.”
He describes “the O bit, the outsourcing bit” as extremely provocative. “I think HR directors find outsourcing hard to reconcile in their own minds,” he says, “and also hard to sell to their internal teams as a positive. Therefore it generates an uncertainty about getting people like us involved, which creates a barrier to it happening.” His company prefers to use phrases such as ‘strategic resourcing partnership’.
Barkers is not the only company to have identified the word ‘outsourcing’ as problematic. Richard Pearson, founder and managing director of ResourceBank, believes that a lot of companies are uncomfortable with the term. “They’re happy to outsource their IT because they don’t quite understand it and believe that other people could do much better than they could,” he explains. “With resourcing, they think they could probably do it themselves if they focused on it. There’s a natural reluctance to outsource what you consider to be the lifeblood of your business.”
Pearson has a point. Hertfordshire County Council’s recruitment services are provided mostly by Manpower, which has just won the contract to continue providing these services for another five years. But despite the success of this model (it saved £3 million in its first five years), Alan Warner, director of people and property at the council, admits that “not 100 per cent” of his organisation’s employees are won over by the idea of outsourcing – perhaps not surprising given that the council has 28,000 staff. “We have a robust quality assurance system and we follow through any issues that go wrong,” he says. “And of course things go wrong – we’re a big organisation. But people always think that if something goes wrong it’s because you gave [the service] to this [external] organisation.”
However, Warner points out that it’s how you put things right that is important, and he wholeheartedly stands by the decision to outsource: “Always, you’re working from a business case. I always look at this stuff from the point of view of what’s in it for the council.” He says that HR is there to support the frontline services that the public cares about and votes on: education, social care, roads and libraries. “So if an option comes along that says you can do better or more for the council by outsourcing, you’ve got to look at it seriously. I don’t think ‘we must do that because it’s the latest fad’.”
Nomura, the financial services group, uses Resource Solutions for all its temporary and contingent recruitment, much of which is carried out through agencies. But Larissa Apsley, an HR adviser at Nomura, says that outsourcing is not particularly popular among agencies and preferred suppliers. “Agencies in particular will always prefer to deal with line managers directly,” she says. “Having to deal with HR creates a bottleneck that they feel they can’t control. Having an external outsource provider is even worse. They feel far too removed from the role they’re trying to recruit for.”
Apsley’s company tries to overcome this by forging good relationships between outsource provider, managers and agencies: “We have regular recruitment evenings that Resource Solutions arranges for us so the agencies have the opportunity to meet all of the business, and we’re not draconian – we don’t mind them swapping business cards. Whenever there’s a new piece of recruitment we’ll get the agencies in to meet with that manager so they can hear at first hand what the role is about.”
So, while the bad connotations of the word outsourcing might explain why some organisations steer clear of describing their services as such, what do other clients make of the angst over the definition of RPO? Well, they don’t seem to be that bothered. They know that they want to employ someone to help with their recruitment, but whereas 10 years ago they might have been satisfied with a straightforward agency or master vendor solution (where a company oversees and manages all agency contacts), they are starting to understand that the scramble for talent in a population where people of working age are decreasing means they have to be more sophisticated about finding the staff they need.
Claire Silvester, head of HR at Aliaxis, an umbrella organisation for companies that make products for the building industry, is clear about what she wants from ResourceBank, the RPO provider for her firm. She was given the task of centralising the HR functions of all the different companies in the group and brought in ResourceBank to “give the quality of our processes a bit of a leg-up” and, “to be honest, so that I wouldn’t have to do too much slog internally”. ResourceBank employs 120 people a year on Aliaxis’s behalf, has set up a resourcing centre across the organisation, recruits directly from the marketplace and, Silvester estimates, is going to save the company £90,000 a year. “RPO means making sure that our company brand is recognised in the candidate marketplace,” she says, which is at odds with some of the definitions haggled over by the big recruitment outsourcing players. To Silvester, getting exactly the service she wants is what’s important, not what it’s called.
Interestingly, some clients aren’t even aware of the term RPO, although the service they want from their outsourcing provider could probably be labelled as that. Andrea Rodgers, HR business partner at Scottish Widows Investment Partnership, describes the service that Origin HR provides her firm with as outsourcing, although it includes on-site consultants, direct sourcing and strategic input from the consultants.
So, would Rodgers say that the term RPO could be applied to Origin’s service? “I’d like to think the service we have is more tailored and looks at the need of the client, rather than just processing,” she says. “Processing to me sounds too much like a streamlined process framework that you wouldn’t operate without. Maybe the term is appropriate for different industries – larger scale, perhaps call centres or manufacturing industries, where you’re hiring high volumes.”
Paul Mallinson, managing director at Hays Resource Management, says: “Yes, we are aware of the debate about who is truly an RPO provider. What we believe is that categorisation is irrelevant. The term has been created by providers who wish to differentiate themselves from the rest while avoiding the issue of service quality.”
He says Hays’ research shows that the market and customers rate “their provider on factors such as experience, sector knowledge, resources, staff skills, know-how and global reach. These are the factors that are decisive when choosing a partner who will deliver. Clients’ increased understanding of their RPO supplier as a strategic partner should not be underestimated.”
The fact that a lot of clients aren’t concerned about what they call the service doesn’t help in finding a definitive meaning of the phrase – it’s no wonder there’s confusion over the term when so many different types of firms claim to be providing it. But there seems to be enough hunger out there among clients to sustain it.
Phill Brown, services director at Arinso International, certainly thinks so. “Different organisations have different requirements and there does tend to be a bit of snobbery about the term RPO, inasmuch as RPO is given to be the ultimate goal – outsource everything,” he says, referring to the end-to-end solutions usually provided by “pure-play” organisations. “In many ways, that’s the best thing. But there are a lot of benefits that companies can get without having to go 100 per cent outsourced.”
A good example of this is Schroders, the asset management company. When Mark Cowie took over as head of resourcing two and a half years ago, he had a frank review of his company’s relationship with its RPO provider, Resource Solutions. They were “very much placed as an outsource organisation when I started, which wasn’t doing them any favours”, he says, as they weren’t integrated into the HR team.
Resource Solutions looks after Schroders’ temporary and contract recruitment and it also used to look after the firm’s permanent staff through agencies. As part of his review, Cowie asked the provider to put a proposal together for recruiting permanent staff directly from the marketplace, but he eventually chose to take this function in-house. “It was to build manager buy-in, plus it was cheaper,” he says. “It depends on the requirements and structure of the company and how much time it is willing to invest in setting up a whole new department.”
The arrangement that Schroders has with Resource Solutions means the recruitment manager on site from the RPO provider is also part of Cowie’s HR team – a deliberate strategy on Cowie’s part. Such integration is emerging as a defining feature of the RPO-client relationship. Claire Silvester at Aliaxis refers to her RPO provider account manager as “embedded” in her team, even though the manager works from ResourceBank’s headquarters. Most other clients also talk about the strategic input of their RPO provider’s staff – not necessarily at the level of deciding how many people are needed in what part of the organisation, but on an operational level, advising managers on how best to define what they want from a new recruit and generally bringing their recruitment market expertise into the organisation they’re serving.
Perhaps it is this kind of relationship that recruitment providers are trying to articulate by using such terms as RPO. The recruitment market is definitely evolving, thanks to changing demographics, an escalating war for talent and a corporate world that is becoming increasingly sophisticated about what it wants from its outsourcing providers. Some players in the recruitment market have been quick off the mark, keen to brand this slightly new approach to recruitment – a combination of direct recruitment services, employer branding and the provision of consultancy services – as RPO.
Meanwhile, other companies that already offer something close to this approach are simply aligning their services to what more and more clients want. n
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