Recruitment Is Lucrative: Just Ask IBM, ADP & Korn/Ferry

moneyAlmost two decades ago, a new and powerfully profitable chapter in the history of staffing had just begun and quite a few industry insiders — the majority, really — didn’t recognize it. At the time, the word on the street, in boardrooms, at industry events and everywhere was “recruitment process outsourcing” (RPO). RPO was going to be the next big thing.

The Staffing Skeptics
Many of the staffing and HR executives I worked with in the early 2000s were incredulous. “It won’t last,” was the common refrain from those who believed that HR or enterprise outsourcing would be the bigger trend. “Recruitment is too small on its own. It’s just one little piece of the HR pie and not substantial enough to capitalize on widespread outsourcing movements.”

The Race for RPO
Meanwhile, my search firm was seeing a small but growing stream of inquiries from businesses looking to add RPO experts to their leadership teams. By 2005, it seemed everyone wanted in the game. The calls I got were no longer skeptical: “Find me a leader to build an RPO division,” was the most common request followed by “Find an RPO company we can buy.”

Early on, many business leaders didn’t have a full understanding of what RPO was, but they wanted to stay ahead of the innovation curve. Focusing on seasoned professionals in the outsourcing and HRO arenas, we began helping staffing and professional services firms bring on RPO expertise. Soon, a very competitive race for RPO leadership was on while the crowd of RPO skeptics got smaller.

Who Won? Just About Everyone
Today, RPO skeptics are long gone and a thriving RPO landscape remains. RPO has grown into a nearly $2 billion dollar industry with players that include a surprising array of global blue chip powerhouses. Just two years ago IBM, the technology juggernaut, acquired Kenexa, a human capital and technology firm with a highly profitable RPO arm. The year prior, payroll processing giant ADP bought RPO firm The Right Thing. Meanwhile, global talent solutions and executive search leader Korn/Ferry has spent years cultivating its company Future step into a recognized leader in RPO.

Leading enterprises like IBM, ADP and Korn/Ferry didn’t just take note of RPO; they got in on the action and the result has been a win-win for the staffing industry. Many staffing companies, from Addecco and Allegis Group to Randstad, incorporated RPO into their offerings to expand their reach and profits. Their RPO businesses, Pontoon, Allegis Global Solutions and Randstad Source right respectively, are leading the way in RPO’s next, big endeavor: globalization.

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Staffing companies big and small have also benefited from RPO’s high profile. Today, the business world better understands the complex challenges of recruitment and the true expertise and process excellence it requires. I can see that elevated respect as I look back at the early days of RPO. Back then, when businesses asked me to help them find RPO leaders and managers, they asked me to focus on the outsourcing industry only. They didn’t believe staffing industry executives had the knowledge or experience it took to lead and grow RPO. Today, when asked to help with an RPO executive placement, my clients ask for leaders who have both staffing industry and RPO experience. Respect for the knowledge, experience and vision of staffing leaders has grown alongside RPO.

Take Advantage of Key Overlaps
I think one of the most important lessons we can take by looking back at RPO’s evolution is to look for new opportunities where industries and ideas overlap. The staffing industry is rich in possibility and white space — room to innovate, create and drive an idea that changes the market. Just as outsourcing and recruiting industry overlaps spawned RPO and its enormous success, today there are many areas where staffing and emerging technologies and models overlap — mobile technology, online staffing, social recruiting, variable pricing, MSP/VMS, job matching technology, data analytics, etc. How your business embraces and takes advantage of the overlaps is the difference between simply competing in the industry and driving the industry (and your business) ahead.

MORE: How to recover from a bad RPO relationship

Lisa Maxwell
Lisa Maxwell is managing partner at Gerard Stewart, a global executive search firm.

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