Everest Group experts will highlight the outsourcing options for RPO, key buyer adoption trends, recent solutions and deal characteristics, evolving supplier landscape, and the implications for both buyers and suppliers.

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Today’s webinar Upcoming webinars
Recruitment Process Outsourcing (RPO) – Pricing Model Alternatives
Moving Beyond the Pioneer Stage
Date and time:
Synopsis: March 16, 2010
Everest experts will highlight the outsourcing 10:00a.m. CST / 11:00a.m. EST
options for RPO, key buyer adoption trends, recent
solutions and deal characteristics evolving supplier
characteristics, Speaker:
landscape, and the implications for both buyers and Ross Tisnovsky, VP – Research, Everest Group
suppliers.
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2. Q&A
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3. Introductions
Katrina Menzigian Rajesh Ranjan
Vice President Research
President, Research Director
Everest Group Everest Group
kmenzigian@everestgrp.com rranjan@everestgrp.com
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4. Recruitment Process Outsourcing
(RPO): Moving Beyond the Pioneer
Stage
g
February 23, 2010

5. Contents
Market definition and overview
Buyer adoption and solution characteristics
Supplier landscape
Key takeaways
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6. There are three kinds of sourcing models used for
recruitment services
Scope of this study
Low Degree of outsourcing High
Out-tasking Selective/componentized Comprehensive
model outsourcing model outsourcing model
Key Can include one or more Includes components of recruitment End-to-end outsourcing of
characteristics recruitment processes process; can be front-office recruitment process to the
Short-term project-based (employer branding, sourcing, etc.) supplier that includes both
work or back-office components ( pp
p (applicant front-office and back-office
Typically restricted to one tracking, offer letter management, components
type of hire at a time technology management, etc.) Ongoing long-term
(e.g., executive hire, temp Ongoing long-term (multi-year) (multi-year) relationship
hire) relationship Typically includes almost all
Restricted to external Can include one or more types of types of hires
hires; does not include hires for in scope component
in-scope Includes both external and
internal hire management Can include both external and internal hire management
internal hire management
Consideration The need is specific and In some specific recruitment The buyer wants to
for adoption one time processes, buyers need expertise transform the entire
Buyers want to keep on an ongoing basis recruitment function
direct control over the The buyer wants to tip its toe in the The buyer wants to expand
recruitment process outsourcing model the value creation beyond
the “selective” model
Most frequently used Frequently used in the current Least frequently used
Prevalence environment currently but gaining
traction
Source: Everest Research Institute (2009)
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7. We define RPO as transfer of ownership of all or part
of recruitment processes or activities on an ongoing
basis
Strategy
Judgment-intensive
HR Transaction-intensive
Recruitment
strategy
Strategic consulting
Employee relations Sourcing
Regulatory and compliance Applicant tracking
Global mobility Screening
Performance management Pre-employment testing
Learningg Employment offers/
Recruitment selection management
Compensation
Background checking
Benefits
On-boarding
Vendor management
Payroll
Employee data management
HR information systems and reporting
Employee contact center
For this study, we include RPO deals in which:
A minimum of four or more recruitment processes are included
The RPO deal is active and is at least one year in contract length
The buyer employee size is 3,000 or more
It is a stand-alone deal and not part of multi-process HRO deal
This study does not include “out-tasking” arrangements (typically handled by recruitment agencies, staffing companies,
or executive search firm) that are managed on a p j
) g project-by-project basis rather than through an ongoing long-term
yp j g g g g
arrangement
Source: Everest Research Institute (2009)
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8. The single process HRO market is compartmentalized
with different segments at varying levels of maturity;
recruitment is moving beyond the “pioneer” stage now
pioneer
Evolution in the single process HRO market
Benefits
Payroll
Employee data
management
on
Market value creatio
Increasing adoption
Evolving specifications and
Slower adoption rates; however,
supplier capabilities
growth and scale still available
Increased M&A and partnerships
Accepted model(s) and
among suppliers to expand
standards
t
capabilities and quicken
Well-established specifications
time-to-market
and supplier capabilities
Consolidated market dominated
Performance by a few players
management
Learning
Recruitment
Pioneer Emerging rapid growth Reaching maturity
Maturity
Source: Everest Research Institute (2009)
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9. There are multiple drivers for RPO; cost reduction and
scalability gained prominence in the current economic
environment
Low High
Business drivers Traditional Current Brief case example
A New Zealand-headquartered co-operative group realized more
Cost reduction than 30% cost savings through recruiting agencies consolidation
along with process reengineering in an RPO model
A leading North America Pharmaceuticals company met its
Scalability fluctuating recruitment needs, typical of a pharmaceutical
environment, and hired close to 3,000 people by taking the RPO
route
Not satisfied with the recruitment services of its HRO service
Move towards best- provider, a leading British defence, security, and aerospace
of-breed options company moved the recruitment function to a specialist RPO
provider
Improving
I i RPO helped a leading global communication provider to reduce
recruitment time-to-hire from four months to 32 days, increase the offer
process acceptance from 30-90%, and increase the internal hiring by 20% for
its European operation
A U.S.-based national pharmacy automated the application process,
Access to better built pre-screening tools to quickly identify high quality candidates
pre screening candidates,
technology and provided online information to hiring managers about candidate
status, and resumed banks and phone interview notes through the
implementation of a new Application Tracking System (ATS) tool and
web portal as part of RPO engagement
After a U.S.-based brewing company acquired a UK-based
U S -based
Enhancing
company, RPO helped it launch and communicate its brand leading
employer branding
to increase in application by 50%
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10. Contents
Market definition and overview
Buyer adoption and solution characteristics
Supplier landscape
Key takeaways
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11. North American buyers are the leading adopters of
RPO. The adoption trend is increasing in the UK and
Continental Europe
Buyer adoption trend by signing region
Number of deals
100% = 88 96
South America 7%
16%
Asia Pacific 17%
8%
Continental Europe 3%
UK 19% 22%
North America 53% 54%
2006-2007 2008-2009
Sample size: 184 RPO deals signed between 2006 to July 2009
Source: Everest Research Institute (2009)
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12. Buyers increasingly look to expand the country
coverage in their RPO deals
Geographic scope of RPO adoption
Number of deals
100% = 85 91
Global 8% 8%
(Multiple continents) Regional
14% 19% (Multiple countries in the
same continent)
Local
L l 78%
(One country only) 73%
2006-2007 2008-2009
Sample size: 176 RPO deals signed between 2006 to July 2009
Source: Everest Research Institute (2009)
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13. Large buyers are the major adopters of RPO. The
adoption in the upper end of the mid-market is
increasing
Buyer adoption trend by size of organization
Number of deals
100% = 81 94
58%
>15K employees 65%
8K-15K 20%
13%
employees
Mid-market 3K 8K
3K-8K
22% 22%
employees
2006-2007 2008- July 2009
Sample size: 175 RPO deals signed between 2006 to July 2009
Source: Everest Research Institute (2009)
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14. There are four technology models used in RPO with
varying degree of prevalence
Low High
Increasing role of technology in RPO offering
One-to-one model One-to-many model
Increasing role of technology in RPO
Tie-and-run Technology ATS Platform-based ATS
support/ replacement/ solution
augmentation implementation
Brief Supplier leverages Supplier maintains Implementation of a A pre-configured,
description existing Application buyer owned existing new ATS is bundled hosted ATS solution
Tracking System ATS in place. Supplier with process owned and
(ATS) in place to may also provide outsourcing. While maintained by the
manage recruitment proprietary tools that technology ownership supplier.
supplier Typically
process. Buyer serve as “add-ons” resides with buyer, offered in ‘pay-as-
retains the around the periphery of supplier provides you-go’ model with
ownership as well as the existing ATS to offer upfront both technology and
the maintenance of value add services (e.g., implementation and process pricing
ATS tools may link to
y ongoing maintenance
g g bundled into one
external job portals) price
Prevalence
Technology Typically created and
Typically not tied to any
specificity offered on a specific
specific recruitment software
ATS
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15. In the current environment, buyers increasingly push
for a variable pricing model to better align the hiring
cost to hiring volume
Pricing structure trend
Number of deals
100% = 56 36
Other 2% 5%
Fixed price 9% 8%
Variable p ce
a ab e price 25%
33%
Base fee plus 61%
variable price 56%
2008 2009
Sample size: 92 RPO deals signed between 2008 and July 2009
Source: Everest Research Institute (2009)
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16. Core recruitment processes are most commonly
included in RPO deals
Inclusion of recruitment processes within RPO deals
Percentage
Strategic consulting 78
Sourcing 95
Applicant t ki
A li t tracking 94
Screening 98
Employment offers/ 91
selection management
Pre-employment testing 74
Background checking 76
71
On-boarding
68
Vendor management
Sample size: 184 RPO deals signed between 2006 to July 2009
Source: Everest Research Institute (2009)
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17. While offshoring is relatively nascent in RPO, use of
low-cost geographies does increase as RPO
engagements mature
Use of offshoring within RPO
Number of deals
100% = 53 58 59
66%
86%
No offshore component 92%
34%
Includes offshore
14%
component 8%
Deals in 1st Deals in 2nd Deals in 3rd
year year year
Sample size: 170 RPO deals signed as of July 2009
Source: Everest Research Institute (2009)
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18. Contents
Market definition and overview
Buyer adoption and solution characteristics
Supplier landscape
Key takeaways
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19. Suppliers in the stand-alone RPO market come from
different backgrounds
Pure-play RPO background Contracting/staffing background
RPO market
space
Multi-process HRO background Executive search background
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20. Reflective of the market maturity, the RPO market
continues to witness several M&As and
partnerships ILLUSTRATIVE
Partnership examples M&A examples
Between RPO
suppliers
Capital
Consulting
Between RPO and
B t d
multi-process HRO
suppliers
Between RPO
supplier and
technology vendors
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21. Buyers need to carefully evaluate RPO suppliers as
their capabilities vary significantly along key delivery
dimensions
Scale
Company/RPO revenues
Number of RPO deals
Number f
N b of RPO FTEs FTE
Recent success
Number of hires managed per year
Geographic delivery footprint Scope
Delivery footprints across four key Overall RPO Breadth of RPO services
regions (North America, South delivery Geographic scope
America, Europe, and Asia Pacific) capability Industries served
Offshore capability RPO centricity
RPO/HRO partnerships
Technology capability
Recruitment technology partnerships
Recruitment technology platforms
(ERP, best-of-breed, proprietary)
usage experience
Recruitment technology maintenance
gy
experience
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22. Contents
Market definition and overview
Buyer adoption and solution characteristics
Supplier landscape
Key takeaways
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23. Key takeaways for buyers and suppliers of RPO
For buyers
Buyers need to have a clear understanding of RPO and its value proposition
Buyers looking for a global RPO solution should look at not only the self-capability of suppliers but
also at their combined capability through regional partnerships as well
In the ongoing economic environment, potential buyers need to look closely at the financial stability
of the suppliers as well as other M&A developments in the supplier landscape
Buyers seeking early cost savings need to look at offshoring as one of the key levers
For suppliers
Suppliers will have to continue to educate buyers on RPO and its value proposition
Continued investments in strengthening and broadening service offerings should be the focus at this
time – partnerships can b a valuable t l i achieving thi goal
ti t hi be l bl tool in hi i this l
Creation of a standardized RPO model is key to long-term success
Offering a broader suite of services such as internal hiring management and outplacement services
g g g p
could help suppliers differentiate and manage volatility in uncertain economic times
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24. Q&A
Attendees will receive an email with a link to download today’s webinar presentation. To access a
recorded audio version of this webinar, please contact Mark Williamson,
mark.williamson@everestgrp.com
For advice or research on RPO, please contact Everest:
Katrina Menzigian, kmenzigian@everestgrp.com
Rajesh Ranjan, rranjan@everestgrp.com
For background information on Everest, please visit:
www.everestgrp.com
www.everestresearchinstitute.com
Thank you for attending today
To ask a question during the Q&A session
Click th
Cli k the question mark (Q&A) button located on the floating tool bar in the bottom right of your
ti k b tt l t d th fl ti t l b i th b tt i ht f
screen. This will open the Q&A Panel
Be sure to keep the default set to “send to a Panelist”
Then, type your question in the rectangular field at the bottom of the Q&A box and click the send
button to submit
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