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Recruitment Process outsourcing work Market Booms Despite Economic Downturn



Recruitment Process Outsourcing (RPO) is growing rapidly and has the potential to be a multi-billion dollar market, taking advantage of the trend towards single process deals in human resources outsourcing.


This is according to the latest report by independent market analysis firm Datamonitor. The report ‘Opportunities for recruitment process outsourcing in a changing HRO market’, estimates the global RPO market in 2007 to be worth $720m and forecasts it will grow by 22% in 2008 to $880m, surpassing the $1bn level in 2009. According to the report, demand is predominately from Fortune 1000 companies in the US, but the market is growing rapidly in the UK and continental Europe and is beginning to gain traction in the Asia Pacific region. 

Increased quality of candidate is key, but cutting costs will become a major factor

While recur vendors claim to reduce costs by up to 40% in some cases, it is the lure of recruiting a higher quality workforce that is driving growth. Although the strategic importance of recruitment means quality will remain of utmost importance, it is likely in an economic downturn that it is those who can deliver on both quality and price that will succeed. “Despite the expectation that outsourcing will thrive as companies search for ways to cut costs, increased unemployment will result in lower business volumes which will be reflected in the variable price nature of recruitment process outsourcing work contracts. But, this will be mitigated by the increasing demand for jobs in recruitment process outsourcing from new clients,” says Patrick O'Brien, IT and BPO analyst at Datamonitor and author of the report. “For jobs in recruitment process outsourcing to continue its rapid growth in the near term, vendors may have to go to market by pricing more aggressively as recruitment will need to be seen as a primary function for easy cost reduction among company processes.” 

Outsourcing provision of RPO will increase despite vendor reticence

Recruitment process outsourcing vendors are split over the use of offshore provision. Many players have little experience or understanding of how to derive the fullest benefits from the jobs provided in recruitment process outsourcing, while others see it as unworkable in jobs’ recruitment role which require constant contact with both the client organization and, using the client’s brand, with candidates. 

Approximately half of recruitment process outsourcing vendors have some offshore jobs base, mainly carrying out tasks around name generation, sourcing, early screening of resumes and other administrative duties. A few have moved tasks which involve contact with the candidate offshore as per customer demand. 


“While there is a lot of resistance from vendors, the increasing competitiveness of the market and the growing focus on cost cutting in the economic downturn will push vendors into examining ways in which to begin to increase the use of offshore delivery,” says O'Brien.

Recruitment process outsourcing awaits global breakthrough 

The first half of 2008 has seen a wave of acquisitions as vendors attempt to build out their recruitment expertise, technology capabilities and geographic footprint. A number of competing vendors still need to broaden their capabilities, and many of the larger vendors are looking to expand further overseas. 


Some companies have put forward global request for proposals (RFPs), but these have subsequently been split into regions and handed to different vendors. The one-vendor global deal has not arrived yet, but a number of vendors believe that a breakthrough will occur in the next 12 months. The key reason for the break-up of global RFPs has been the fact that vendors do not have the capabilities to deliver on an international basis. Many have taken heed and are busy investing in international expansion, acquiring companies, building a global set of processes and forming partnerships with vendors in other regions.     

Datamonitor’s report, ‘Opportunities for recruitment process outsourcing in a changing HRO market’, provides an in-depth examination of the trends associated with the jobs within the recruitment process outsourcing  market, which is the fastest growing sector of HRO. It examines what impact of the slowing economy could have on RPO, opportunities for global RPO contracts and use of offshore delivery. 


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