Everest: Recruitment Processing Outsourcing Market on the upswing

- India and China steadily emerging as buyer markets for RPO services

- MNCs looking to leverage offshore locations such as India for back-office RPO services

India, November 11, 2009 ─ Notwithstanding, the tough economic environment, the RPO market continues to grow at a healthy rate in terms of deal signings in the last few years. However, the nature of deals and the hiring volume has changed in 2009, according to Everest Group, a global consulting and research firm. While the offshoring leverage within RPO is currently lower than overall HRO, increasing cost pressures in the current economic environment has led North American and UK buyers to start receiving the back-office RPO services from offshore location such as India.

The study, Recruitment Process Outsourcing (RPO) – Moving Beyond the Pioneer Stage reveals that while India-headquartered suppliers such as Infosys, Wipro, and Caliber Point have already entered this space in the past two years, Western suppliers such as Momentum and PeopleScout are also leveraging India for delivering RPO services. The study also projects a marginal increase in deal signings this year compared to 2008, but decreased hiring volume is resulting in more selective, smaller-sized deals. More than half of the deals are inked by North American firms; however, adoption is on the rise by buyers in the United Kingdom and Continental Europe, particularly Germany and France.

"RPO is witnessing a fair amount of interest among buyers given the focus and specialization that RPO suppliers bring to the table." said Gaurav Gupta, Principal and Country Head, Everest Group. "While the hiring volumes are down in the current economic environment, the value proposition of RPO is still resonating with buyers that are looking for a cost-effective and flexible option to withstand the current turmoil and at the same time create an efficient and effective talent acquisition process that can be scaled up quickly when business environment improves."

Key insights of the study include:

* While China and India have significant potential due to large hiring volumes, the market is nascent as RPO is primarily adopted by MNCs with operations in these countries.

* Globally, buyer adoption is led by manufacturing, high-tech and telecom sectors

* A significant number of North American-headquartered large, multinational companies (MNCs) adopt RPO for their European and Asia-Pacific operations.

* Almost 75 percent of deals cover a single country only, with regional adoption on the rise in North American and EMEA regions driven by US- and UK-based buyers.

* While base fee plus variable charge is the most common pricing structure, there is an increase in pure variable pricing that allows buyers to scale up or down according to hiring needs.

* Compared to multi-process HRO, global sourcing is limited with offshoring occurring with a small number of mature RPO relationships.

"The majority of suppliers have an onshore-centric delivery system with many suppliers creating regional partnerships to broaden geographical coverage of the RPO solutions," said Rajesh Ranjan, Research Director and co-author of the report. "The RPO market is intensely competitive, and we've witnessed a lot of M&A activity as suppliers seek to enter the RPO market, strengthen capability and gain access to technology."

Source : Equity Bulls

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