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RPO market remains hot, report says

December 12, 2016

The global recruitment process outsourcing remained one of the fastest growing single-process HRO markets, according to research released today by Everest Group. Buoyed by a resurgence of growth in the North American market, RPO posted a strong growth rate of 17% in 2015 over 2014 to $2.4 billion.

The report attributed most of the global growth to new deal activity, which increased at a year-over-year rate of more than 18%.

“Across the globe, the key challenge in today’s recruitment landscape is the need to find and engage the required talent, especially for high-skilled roles, and buyers are expecting greater proactiveness and innovation from service providers in that regard,” said Arkadev Basak, practice director, business process services, at Everest Group. “Providers are responding to this opportunity by developing niche areas of expertise, adding talent advisory capabilities, and improving their internal efficiencies, by leveraging technology, providing targeted training, and addressing division of labor fundamentals.”

More than 40% of RPO deals are bundled with a technology capability, according to the report. In particular, many service providers are making dedicated investments in developing bundled RPO offerings that include advanced analytic services.

“Service providers are using technology as a productivity lever as well,” Ranjan said. “For example, we are beginning to see providers adopting robotic process automation to improve efficiency and save on costs, and we expect RPA adoption to rise rapidly in the future.”

Other key findings in the report:

  • Single-country RPO accounts for a majority of the deal activity.
  • Emerging RPO markets, such as India, China, Poland, and Colombia, which were mostly included as part of multi-country deals earlier, are now increasingly witnessing greater single-country deal activity, characterizing the growing maturity of RPO in these markets
  • While cost reduction is an important RPO driver, operational scalability and flexibility is what most buyers, especially the large ones, seek from an RPO engagement.
  • With growing maturity of the RPO market, inclusion of value-added services, such as employer branding, talent communities, workforce planning, etc., has almost become table-stakes in RPO, especially among second- and third-generation buyers
  • Service providers are increasingly offering separate, more targeted offerings around niche areas such as veterans, diversity hiring and outplacement.
  • Almost all major RPO service providers are investing in developing talent advisory capabilities.
  • The RPO market continues to remain intensely competitive and fragmented; it includes providers from all backgrounds including staffing, broader BPO, and pure-play RPO.

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