2011: Barry Diamond's RPO Year in Review

  

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As 2011 was coming to a close, I sat down and made a list of my 21 RPO observations from the previous 12 months. However, since I never blog over 500 words (a self-imposed rule), I reduced my list by two thirds to just 7 key observations.

So here are my top 7 RPO Observations for 2011:

1. A group of RPO service providers talked a lot about total workforce solutions, but buyers were still mostly looking for standalone RPO offerings. In 2012, this should continue to help RPO service providers whose core product is Recruitment Process Outsourcing.
2. One of the most frequently asked questions of 2011 was about our recruiters and whether they were employees of Pinstripe or just contractors. All of Pinstripe’s recruiters are employees; however, I learned that, unlike Pinstripe, a majority of RPO firms are leveraging significant numbers of contract recruiters. This contractor “situation” results in higher recruiter turnover, less program continuity and greater hiring manager frustration.   
3. More potential clients asked for a cost per hire fee model is 2011. In addition, they also wanted us to ensure program reinvestment and resource continuity. I spent some significant time (successfully) explaining that a combination of fixed and variable costs can be the most optimal pricing structure for driving reinvestment, continuity, results and return on investment.
4. A major acquisition was completed by a large payroll services/human resource management organization. It seems this move will help them compete in some bundled HRO deals; however, the transaction may not benefit them as much in the Recruitment Process Outsourcing only deals. I’m watching this one closely as 2012 unfolds.
5. If a RPO provider was not measuring up, then incumbency meant very little last year. With many 1^st generation RPO contracts expiring in 2011, companies that went back out to RFP had clearly decided that RPO was the right solution; however, they also decided that they needed to find a new service provider.
6. There was both more talk and more actual global and multi-national RPO deals in 2011. In addition, any service provider who said they can do it all themselves globally without partners, lost credibility in the marketplace. RPO buyers are getting more and more sophisticated and their due diligence is leading them to more credible solutions.
7. The RPO market grew tremendously in 2011 and soon there will be a lot of press releases about 2011 results. As you read these announcements, please note that any service provider extolling their 10% or 15% or 20% or even 25% revenue increases, should also mention that they did not keep pace with overall industry growth by 10% or 15% or 20% or even 25%.

In conclusion, I perused of a lot of year end reviews about books, movies, restaurants, sports, politics, etc… and a frequent topic of discussion was whether or not it was a “magical” year.

So in your opinion, was 2011 a “magical” year for RPO? For me, it was really interesting but never quite reached the “magical” level.

Post contributed by Barry Diamond. Follow me on Twitter @bddiamond