Five myths of supplying talent through a third-party provider model
1. 5 myths of
supplying talent
through a third-party
provider model
A guide for third-party talent
managers and suppliers
Thorsten Koletschka
2. /02
“Suppliers that play a proactive part to deliver
genuine talent supply chain management to
clients in assisting third-party Program Offices will
undoubtedly position themselves best for growth
opportunities across multiple client programs.”
Teresa Carroll,
SVP & General Manager, KellyOCG
3. Introduction
Is this paper for you?
Whether you are a recruiter, an HR outsourcing firm or a niche talent supplier, this paper outlines
the key issues and misconceptions of delivering your service through a third-party versus directly
to an employer.
While many talent management agencies still provide their services directly to clients, third-party
programs are becoming more common in developed and rapidly emerging economies. The
“third-party” model for managing talent falls into a number of different categories, including
those managed by Managed Service Providers (MSP), Master Vendors (MV), Recruitment Process
Outsourcing providers (RPO) and Business Process Outsourcing providers (BPO). Regardless
of what the model is called, the experience of being a supplier within these models can be
significantly different to sourcing and managing talent directly for the client/employer.
Many suppliers have genuine concerns about operating through a third-party, and too few
third-party management firms understand these concerns and how to proactively address them.
Regardless of how you are providing talent to a client and where you sit in the talent supply chain,
this paper will assist in understanding how to deliver maximum value within a third-party model.
/03
4. /04
Definitions
Talent Supply Chain
Managed Service Provider
Master Vendor (MV): A staffing
Business Process
Management (TSCM): Is a
(MSP): A company that takes
supplier that takes overall
Outsourcing (BPO): the
proactive approach to securing
on primary responsibility for
responsibility for providing
outsourcing of specific business
and optimising talent supply
managing an organisation’s
clients with temporary staff. All
processes or functions to a third
and services through all input
contingent workforce program
orders will usually go first to
party based on concrete results
channels. It integrates the
and the various sourcing models
the master supplier to either be
or milestone plans rather than
management of both the
within it. Typical responsibilities of
filled or distributed to secondary
on time and material (often back-
permanent and contingent
an MSP include overall program
suppliers. Sometimes a master
office functions such as HR,
workforces to determine the
management, reporting and
supplier will not only provide
IT and some customer service-
optimal mix and strategic value
tracking, supplier selection and
a significant portion of the
related tasks).
of all human capital within
management, order distribution,
temporary staff working at the
the organisation.
and consolidated billing.
employer’s site but also manage
Program Office (for talent
Direct talent supply: This is
management): This is the
when individual recruitment
people, processes and
and HR companies work
Recruitment Process
technology set up by an MSP, MV,
directly with an employer to
Outsourcing (RPO): A third-
BPO or RPO provider to conduct
provide talent sourcing and
party specialist that undertakes
talent sourcing and management.
management services.
all or part of the end-to-end
an organisation’s contingent
workforce program.
It is the structure through which
recruiting process for clients/
all HR/recruitment suppliers
HR departments. It is often
are managed.
focused on recruiting permanent
members of a workforce.
5. /05
Why do clients outsource their
talent management to
third-party
Program Offices?
6. Why do clients outsource their talent management to third-party Program Offices?
Organisations make the decision to implement third-party talent
management solutions with the central aim of improving the
quality and the efficiency of their business.
Typically, a Program Office (under an MSP, MV, BPO or RPO agreement) will be tasked with:
• Improving the access to critical and sought-after talent through the active management and
development of the supplier network
• Enhancing the reporting, performance measurement and operational analytics of a talent
acquisition and utilisation solution
• Aligning a specific service or process with the broader strategic objectives of the organisation
• Strengthening program-level governance, transparency and risk management
• Managing change alongside existing business demands.
/06
The frustration of talent
supply is widespread
<10%
of leaders
outside of
North America
are satisfied
with their
access to the
right talent for
the job.
7. Why do clients outsource their talent management to third-party Program Offices?
/07
Talent supply and the Program Office.
The need to compete in a global marketplace—where access to the right skills at the right price
Buyer adoption of RPO/MSP
is now a critical capability—means more organisations are seeking innovation in the way they
MSP
RPO
recruit and manage talent. The creation of third-party Program Offices to manage talent supply is
80%
50%
a growing trend in most developed (and rapidly emerging) markets around the world.
40%
60%
This is largely because:
30%
40%
• Global access to talent is complex and constrained, requiring detailed demographic and
psychographic analysis
• Access to a higher number of niche talent pools is often required to meet skill shortages.
20%
and responsiveness in other categories. The access to and quality of talent is now a core
competitive issue.
There is a range of benefits that talent sourcing and management suppliers can access when
working as part of a third-party Program Office. Here, we explore the common myths of working
through a Program Office versus maintaining a direct relationship with clients/employers.
If Program Offices and suppliers are to achieve the talent management outcomes
clients are seeking, these are the myths they must proactively address and overcome.
10%
0%
0%
2007
• Clients are under increasing internal scrutiny to balance the need for operational efficiency
and cost savings in some categories with the need to adapt process to drive effectiveness
20%
MSP
RPO
2009
2011
2013 (p)
9. Myth 1: “Losing the direct client relationship will harm my business”
If a recruitment or talent management supplier has previously
worked directly with their client, moving to a relationship with
a third-party talent management Program Office can seem
like a “demotion”.
Often, suppliers work hard to develop strong relationships with their clients across all levels of
the organisation—from the sales team, account executives and recruiters right through to the
managing director. On the surface, the “disintermediation” of these relationships could appear to
limit the growth of the supplier’s business.
However, all parties involved must remember that the key reason clients outsource their
recruitment and talent acquisition functions is to allow them to focus squarely on their core
business. Therefore, the same logic can, and should, be applied to suppliers in the talent
supply chain.
Developing a strong sales capability naturally draws focus and resources away from the core
business of finding, securing and deploying talent. If Program Offices can remove the need for
suppliers to do this, more focus can be placed on the talent management and sourcing outcomes
/09
“If suppliers adapt to a third-party set up
as they do with any of their clients, an MSP
can truly be a door opener to more business
especially for smaller niche suppliers.”
Van Nguyen, Pauwels Consulting
10. Myth 1: “Losing the direct client relationship will harm my business”
/10
that the client is seeking. This will only occur, however, if the following issues within the new
“There was a time that I agreed with this but
relationship are proactively addressed:
once it is properly managed and structured it
may not harm the business.”
• Each supplier understands the business goals and objectives of the client and how they can
support productivity and efficiency goals
• Suppliers are provided with clear guidelines and expectations regarding their engagement
with the Program Office
• All suppliers have access to the right information and data to assist them in addressing
performance issues in a timely way.
All suppliers in the network must develop a shared understanding of where and how each
organisation’s strategy overlaps with the others, and how they can address gaps and capture new
opportunities. Ultimately, it is in the Program Office’s best interests to strengthen those suppliers
in the network because a strong supplier base is a key competitive advantage they can and
should deliver to the client.
Michael O’Brien, PEGlobal
11. Myth 1: “Losing the direct client relationship will harm my business”
Strategy tip for suppliers working with Program Offices:
When suppliers develop the same approach to managing their relationship with the Program
Office as they would with the client, and they build strong relationships at all levels, they will
maintain strong visibility regarding their growth opportunities with the client through a third-party
model.
Suppliers that wish to actively “sell” their business in a third-party arrangement should consider
ways to demonstrate and showcase their capabilities. Consider developing your own case studies
of specific recruitment outcomes that could be used by the Program Office. Far from eroding
your competitive edge, this can cement your business as a thought leader and also offers added
value in having you as part of any supplier network. Consider too that your third-party provider
will likely have diverse relationships with other clients and demonstrating a solutions-oriented and
innovative approach can lead to further opportunities.
/11
“Whilst maintaining a direct client relationship
seems instinctively right, we have found that
supplying through vendor neutral MSP models
increases supplier performance transparency,
resulting in high-performing suppliers
increasing their reputation and breadth of
supply with the client.”
John Kirby, Sentinel
13. Myth 2: “We will not have a clear view of what the client really needs.”
/13
Knowledge is power. Suppliers that lose the direct access to the
client often feel they are losing access to knowledge and that this
will impact their ability to perform well.
“With respect to understanding client needs,
However, clients often seek to establish Master Vendor or MSP programs to improve transparency
department or recruitment team. In recent
and reduce siloed access to data. RPO and BPO programs are often tasked with standardising
access to knowledge to ensure a more level “playing field” for suppliers.
supplying through an MSP model is of
course no different to supplying through any
centralised recruitment function such as a HR
years we have found that communication
channels have opened and we have enjoyed
greater access to clients’ line managers
Every business that manages multiple supplier relationships knows that performance varies.
and more frequent and enlightening
Understanding why this occurs, and what the barriers to success really are, is critical to any high-
briefings on clients’ businesses. A good
performing HR outsourcing arrangement.
communication structure and information
culture is key to a successful third-party
Even though direct access to the client is often removed from individual suppliers when a Program
provider model as it simply takes us one
Office is established, access to the right knowledge to ensure high performance from suppliers
step closer to a system that works.”
should improve, not deteriorate. This will only occur, however, if the following conditions are met:
John Kirby, Sentinel
1. The Program Office must regularly share relevant client information in a comprehensive way to
enable suppliers to understand and adapt to the changing requirements of the client, and to
fully comprehend the impact those changes will have on their workforce plans.
2. The Program Office must provide thorough briefs or requisitions for candidates that are
properly researched and matched to client needs as they evolve.
14. Myth 2: “We will not have a clear view of what the client really needs.”
3. The Program Office must have a process to deliver regular, timely and consistent feedback to
all suppliers on key metrics, including the quality of candidates.
4. Suppliers must be willing to engage in conversations with the Program Office to provide
feedback on market demand and supply of talent.
Data should be used proactively to drive continuous improvement when Vendor Management
or Applicant Tracking Systems are used effectively. Suppliers and Program Offices should look
to generate reports that will assist suppliers to make continuous improvements and adjust their
recruiting approach (which will result in higher fulfilment rates). Importantly, the timing of reporting
is the main issue here—waiting for a regular report may be too slow. Data should be used in a
timely way to inform the entire supply chain and to deliver a better result.
Strategy tip for suppliers working with Program Offices:
Take a second look at the ways in which information is shared between your organisation and the
third-party Program Office. How can this be improved? What data could be shared to ensure the
quality and timeliness benchmarks of talent requisitions are met?
/14
“A clear benefit that a good program office
can add is the setting of the rules that will
ensure the full visibility to all suppliers.”
Kieran Coughlan, Life Science Consultants
15. /15
Myth 3
“A good supplier just does the
job without asking questions.”
16. Myth 3: “A good supplier just does the job without asking questions.”
Maintaining a focus on consistent learning and innovation
is a central challenge for those managing any supply chain,
including the talent supply chain.
Nowadays, clients consistently challenge third-party Program Offices to improve the speed and
veracity with which learning is absorbed by supplier networks. This is a complex task, particularly if
we consider that talent supply networks now often have the following characteristics:
• they draw on talent pools that are global in scope
• they include an increasing number of niche providers with specific access to unique talent
communities
• they operate within the context of declining talent pools in key markets (in part due to the
ageing population and rapid development in key growth economies)
• they need to adapt rapidly to changing regulatory environments as well as changing business
strategies and their related talent solutions
• supplier business models are changing; brick and mortar operations and centralised models
co-exist in most talent supply chains—each delivering their own unique value propostion
With the complexity of many client talent requests increasing, and the pressure on talent
strategies to deliver higher performance at lower cost, third party Program Offices must take a
leading role in educating and motivating their supply chain to change and innovate.
/16
“Knowing what the right questions are
is a competitive advantage.”
Kieran Coughlan, Life Science Consultants
17. Myth 3: “A good supplier just does the job without asking questions.”
/17
Ideally, a central aim of a Program Office should be to educate suppliers to develop a clear talent
“Selecting the best candidates for a particular
access strategy that supports the client’s business objectives. Often, this is the difference between
requirement can be quite nuanced. Balancing
suppliers being able to provide clients with talent, not just people to complete the scope of work.
skills, experience, personality, availability and
cost involves compromise and to achieve the
Managing on-going change to talent supply as well as dynamic regulatory environments requires
best possible compromise we may need to
a higher level of insight to ensure that every talent decision is a quality decision. And clearly, this
ask a few questions. On occasions, we may
requires suppliers to engage in more dialogue, not less.
simply be conveying legitimate questions
A culture of innovation and continuous improvement is a goal that Program Offices should set
and concerns from candidates, which should
be given some consideration as candidate
within their supplier network. If suppliers outperform, that performance and the associated
engagement can make a big difference to the
learning should be leveraged by the entire network. We live in a growing “sharing” economy,
success of a hiring process.”
where reputation and knowledge are everything. How supplier networks leverage knowledge for
the benefit of the whole will become an increasingly relevant issue for high-performing supply
chains. Awards and recognition programs are a key element of many successful centrally managed
supplier programs, simply because great ideas improve the performance of the entire network.
John Kirby, Sentinel
18. Myth 3: “A good supplier just does the job without asking questions.”
Strategy tip for suppliers working with Program Offices:
Undertake systemic, regular gap analyses of your own talent demand and supply. What is
changing? What insights are you obtaining from candidates that might change the way you source
and deploy talent that the Program Office should be aware of? Critically analysing the changing
dynamics in your own talent pipeline and proactively providing them to your third party Program
Office can ensure the client’s expectations are not only well-managed but exceeded and potential
issues or bottlenecks are raised early. Rising wages for specific skill-sets, decreasing availability of
specific skills and declining candidate quality are all issues that must be strategically addressed
before they limit suppliers’ ability to access and deploy talent to the client. Suppliers are thus
asked to engage in more dialogue, not less.
/18
20. Myth 4: “The business strategies of individual suppliers are irrelevant.”
Many suppliers already understand their clients operate in an
increasingly fast-paced and complex business environment, yet
few suppliers nor managed service providers task themselves
with providing a “total” solution regarding their talent supply, HR
processes and project workforces.
The changing global marketplace is a challenge for clients to navigate, and third-party solutions
with the right supplier networks will have an increasing role in helping clients see their way
through their transition to flexible, operational models. If suppliers and third-party providers’
Program Offices are going to be able to deliver this, they will need to share and invest in each
other’s growth to strengthen and ensure talent supply in the right areas at the right price. Then,
they will be able to offer the total solution that more clients are seeking.
To do this, suppliers need to develop a clear strategy that aligns with the clients’ business
needs too.
Implementing new processes and systems, or finding new pools of labour are expensive ways
to solve potentially simple problems. So, suppliers and Program Offices must make it a joint
/20
“Open conversations and mutual
understanding are the key to a
successful collaboration.”
Kieran Coughlan, Life Science Consultants
21. Myth 4: “The business strategies of individual suppliers are irrelevant.”
/21
responsibility to find out where these opportunities already exist and where they will grow well in
“The business strategy of a
advance. They must consider joint questions such as these on a regular, ongoing basis:
supplier is the key to success.”
• What data do you have that can offer a more relevant view of your organisational capabilities—
Michael O’Brien, PEGlobal
beyond what you are delivering to this particular program?
• Where do you have staff that are under-utilised and could be redeployed across the network?
• What additional services can we offer the client together?
• Where can we reduce costs and risks to the client?
• Where can your delivery capabilities support active revenue generation or improved talent
utilisation for the client?
• How can clients benefit most from your knowledge regarding recent market rates and/or the
latest talent demand and supply developments?
Strategy tip for suppliers working with Program Offices:
Seek to measure and improve your own efficiency in more than just financial terms. Clients may
be willing to spend more to attract a specific type of talent if process efficiencies can be found
elsewhere. Or, if they understand that there is a need to invest into the creation of talent pools for
their most critical roles. Looking for ways to align your own business strategy to resolve current
or emerging issues for the client are critical for success over the long term and can assist you in
making the right investment decisions.
23. Myth 5: “I don’t invest in talent, the client does”.
/23
While it may be every supplier’s job to understand the talent
market they are operating within, few consider themselves to be
genuine investors in talent.
“We invest in the full lifecycle of our
Most suppliers see themselves as access points for talent, but do not recognise how critical it is for
Van Nguyen, Pauwels Consulting
them to invest in talent development independently (or at least ahead) of client requests.
Access to quality talent is now consistently the key benchmark for clients. Although speed of
requisitions will always be a highly visible metric, quality outcomes are gaining more attention.
This is why those suppliers that are operating in niche and low-supply markets must develop
longer-term relationships with talent—especially as the most critical roles in five years from now
may not even exist as a job today. So, accessing and combining the right skill-sets for future client
needs is becoming a critical business advantage. This is the only way to ensure suppliers have
access to the right talent with the right skills when client requests are made. If suppliers receive
the right feedback on the performance of their candidates from the third-party Program Office,
they can use those insights to assist talent to fit better with client requirements going forward.
Coaching candidates to help them perform well during the selection process is just one example
of “developing” talent, yet there are many others. The opportunities to develop talent in a costeffective way will depend entirely on the market and the type of talent required, but it can include
strategies to tap into emerging talent pools, including migrant diasporas and alumni networks.
talent, which enables us to build strong
relationships especially as most of
our talent works at client sites.”
24. Myth 5: “I don’t invest in talent, the client does”.
Helping candidates to improve specific “soft” skills, including language and communications
skills, may provide access to candidates with excellent technical expertise who may be missing
out on opportunities. Where suppliers can assist to improve soft skills—either by providing advice
or making strategic alliances with other training facilities—they will have a competitive edge
that clients need.
If suppliers expand their reach and access to talent, they will clearly have further growth
opportunities with the current client, or with other clients that the Program Office
organisation manages.
Strategy tip for suppliers working with Program Offices:
Look for strategic alliances with other organisations that may assist new talent pools to
differentiate themselves. Or, consider expanding your own offering as an organisation to deliver
higher quality candidates to the market. By gaining the right feedback on individual candidate
performances you should be able to address quality issues regarding talent suitability with a
relatively small resource investment.
/24
25. /25
“Maintaining a focus on consistent learning
and innovation is a central challenge for those
managing any supply chain, including the
supply chain of ‘talent’.”
John Healy,
VP, Talent Supply Chain Strategist, KellyOCG
27. Where to from here?
1. Define your unique position within the talent supply chain
Talent is still the key differentiator inside every business, every third-party managed talent solution
and every supplier—and that is why suppliers of talent remain most critical to organisational
success.
To ensure consistent, ongoing access to talent as a differentiating capability, clients have started
to build their unique talent supply chain strategies: This means, they are taking a proactive
approach to securing and optimising talent supply and services through all input channels
including the best suppliers. It is fundamentally about integrating the management of both the
permanent and contingent workforces to determine the optimal mix and the strategic value of all
human capital within the organisation.
Successful suppliers have already positioned themselves within these talent supply chains and
with third-party providers that proactively manage them. As a matter of fact, the client can
leverage a strong talent position across every market they operate in. When suppliers collectively
understand the fundamentals of each individual talent supply chain and position themselves with
their unique value proposition as part of one integrated framework, their service offering to the
end client is compelling.
/27
28. Where to from here?
/28
Talent Supply Chain Management
Temporary
Staff
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R
P
O
R
A
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E
S
T
R
A
T
E
G
I
C
P
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A
N
Independent
Contractors/
Freelancers
Operations
Workforce
AnalyticS
Human
Resources
Strategic
Workforce
Planning
Talent
Supply Chain
Management
Service
Providers
(SOW)
Alumni,
Retirees
and Interns
Procurement
Full-Time
Employees
29. Where to from here?
The real strength of an integrated talent supply chain solution is not just that it provides reliable,
just-in-time access to talent, but that it can be adjusted to meet the changing needs of clients. If
cost savings are required, the model responds. If a higher level of skill in one area is required for a
short time, the approach is adjusted to access it.
When the right people have the right conversations about talent, and they match their needs
to the overarching program strategy, they can truly optimise talent supply through all input
channels. This ensures the client meets their strategic objectives, and this is what strengthens
the competitive position of all suppliers within that network. For more on Talent Supply Chain
Management visit kellyocg.com
2. Make strategic investments in relationships
The quality of relationships between suppliers and the overarching Program Office is what makes
or breaks the outcomes for clients.
Suppliers should make strategic investments in talent and their access to it, while Program Offices
should make investments that remove barriers to suppliers in achieving these outcomes. The
Program Office should look to take the information, administrative and sales burden away from
suppliers to ensure they can concentrate fully on their core strength of talent acquisition.
/29
30. Where to from here?
The right relationships must be developed so that suppliers and those in the Program Office
work as consultants to each other. For example, recruiters should closely interact with the Vendor
Management Specialists (those in charge of order flow), while account managers should work
closely with the Program Office Managers. Both tiers of the supplier framework should have
executive sponsorship and visibility, and this united front should be the basis upon which the
client’s business can grow, become more efficient and innovate.
Both parties must focus on doing what they do best, and this is what the growth trajectories of
both organisations should be tied to.
3. Know what a high-performing program looks like
Some of the key issues suppliers should consider when joining or engaging in a specific program
include the following:
1. How many suppliers are/will be in the program? An unusually high number of suppliers
can be the sign of a poorly performing Program Office or a client unwilling to change to
the new rules of the talent market. Often, having more suppliers increases the cost structure
of the program and limits the ability of suppliers to fill a profitable share of orders. A
successful program is a sustainable one where suppliers can deliver efficiencies while still
making the profit they need to make to grow, innovate and deliver excellent service.
/30
31. Where to from here?
2. How will requisition requests be made and how targeted will they will be? Job titles
and labour categories need to be targeted to the right suppliers in the right locations to
ensure the suppliers have a good opportunity to fulfill them.
3. What is the margin risk? To achieve maximum efficiency, suppliers need to have control
over their margins. Suppliers should know if the margins will be calculated as a mark-up
rate or a bill rate before committing to a program. This transparency will help determine if
supplier efficiency will also improve supplier profitability.
4. How tailored will the program be? Where it makes financial sense, suppliers should be
able to align their service delivery model to the needs of the program(s). This can entail
anything from dedicating resources to service third-party managed accounts, aligning
compensation plans to the objectives of the program, or making adjustments to recruiting
plans and account management structures. The greater the ability for suppliers to respond
to the program, the better.
/31
32. conclusion
Client organisations want and need a broader, more holistic
view of their talent supply and demand. They need to know
how (and if) various talent strategies will help them meet
their business objectives.
As a result, the evolution in the supplier-client relationships continues, and now third-party
Program Offices are tasked with implementing a Talent Supply Chain Management approach with
the help of all suppliers within their talent sourcing and management network.
In high-performing programs, suppliers benefit from the continued guidance and consultancy
delivered by their third-party workforce solutions partners, which has proved to deliver economic
impact to the bottom line of the best performers and qualifies them for additional opportunities
within existing or new programs.
Clearly, the proactive management and optimisation of talent supply to meet the business
strategy is what clients need. However, this can only occur when all links in the chain of talent
supply understand how responsive their strategies need to be.
/32
33. conclusion
/33
Whether you are a direct supplier to a client now, or you already work through a third-party
Program Office, addressing these key strategic issues in the business models of each organisation
will ensure a better outcome for all.
After all, a well-managed third-party program can be a secure, supportive environment for new
investments in talent and in expanding the reach and scale of individual suppliers. Suppliers that
play a proactive part in assisting third-party Program Offices to deliver genuine talent supply chain
management to clients will then undoubtedly have access to growth opportunities across multiple
client programs.
Did we miss the point? Do you agree/disagree?
What are your personal experiences when
engaging through a third-party provider model?
And what can be learnt from them? We are
genuinely interested in your feedback and invite
you to further conversations. Please contact us at
suppdevelopteam@kellyservices.com
with “5 myths” in the subject line.
35. For more thought leadership go to talentproject.com
About the author
Thorsten Koletschka is Director EMEA Supplier Development and takes care of our strategic
supplier development in EMEA. He focuses on building strong relationships with our supplier
community in order to serve as its voice within Kelly and drives respective innovation and constant
improvement initiatives to ensure joint successes within our clients’ talent supply chains. Prior to his
current role, he held different business development, marketing and practice lead roles since joining
Kelly in 2007 and has more than 10 years of experience in different management and consulting roles
within the HR/Education sector.
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.
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