| Q: Firstly, Rebecca, let's start from the beginning: what | | | | be in the next few years? |
| is recruitment process outsourcing (RPO) and how | | | | A: Like I said, it's in validation mode. There's a lot of |
| does it differ from traditional recruitment via an | | | | different numbers that validate the size of the market |
| agency? | | | | anywhere from $350 million to half a billion dollars; |
| A: I would say there are varying definitions. When we | | | | anywhere from forty per cent to eighty per cent |
| define the recruitment process of outsourcing, it is | | | | growth annually, so that gives you an idea of how it is |
| taking your internal recruiting processes and | | | | still being defined. I will tell you that with those numbers, |
| outsourcing them to one vendor, and you even do that | | | | the low end of that range is too low; it's probably |
| across multiple skill sets or potentially a specific skill set. | | | | somewhere in the middle range: that will tell you for an |
| The key difference between a recruitment agency | | | | early-stage market, it's considerably fast-growing. I |
| and RPO, is when you choose to outsource your | | | | think the job-growth overseas and the lack of skilled |
| recruiting, you have done that across the typically | | | | workers in the US covering the retired baby boomers |
| across that entire value chain. So, whether it's from the | | | | are going to draw more attention to outsourcing in the |
| very beginning when it's sourcing and screening, right all | | | | next twenty four months. |
| of the way to onboarding and all the pieces and parts | | | | Q: Which industries are most active in RPO at the |
| in between, that is outsourcing a process - and the | | | | moment? |
| provider will typically make improvements on your | | | | A: Insurance, hi-tech, finance. The skill-sets that are the |
| process, they will make investments in technology to | | | | most active are IT and engineers, I would say across |
| help you validate and manage that process. | | | | all industries; I would say anything IT- or |
| The provider also brings contractual obligations with | | | | engineering-related is very popular. Followed by nurses |
| service level agreements, so whether it' s a diverse | | | | - in the US anyway, because there's a shortage - and |
| slate of candidates, or it's time to fill or it's reduction to | | | | pharmacy. |
| turnover, etcetera, there are a variety of things that | | | | Q: To what extent can RPO be offshored, and is this |
| we bring contractually to manage that. And we | | | | happening? |
| typically don't work on a percentage salary; we | | | | A: It is starting to happen. I think all of the providers in |
| typically work on a cost-per-hire basis and/or a | | | | the US are looking to take advantage of what's |
| management fee in combination with that. But the key | | | | happening in different parts of the market, but there is |
| difference when you talk about a traditional recruitment | | | | not one RPO company that has full-scale operations |
| agency, they are typically finding you one or two | | | | across the globe. I think you will see some |
| positions, and they are bringing you a candidate and | | | | consolidation in the market to take advantage of that, |
| charging you a percentage salary. All they're really | | | | and you'll see a lot of partnering coming up here. |
| doing is bringing you a candidate, or multiple candidates | | | | Q: Is there a basic point of company size where RPO |
| if you have given them multiple positions. They're not | | | | becomes uneconomical? |
| handling the entire process beginning to end. | | | | A: If people are looking to hire less than fifty people, |
| Q: And you would expect your clients, basically, to give | | | | even less than a hundred people annually it may not |
| you all of their recruitment - to fill all their vacant | | | | be economical, but it really depends on the complexity |
| positions? | | | | of your skills sets. If you are having difficulty finding |
| A: Typically clients give us all of their skills - and we | | | | chemical engineers and you rely on generating |
| have a lot of customers where we have their entire | | | | revenue, whether you need 50 or 300, that could have |
| skills of the enterprise - or they give us specific skills. | | | | a significant impact to your business. |
| For example, they may choose to give us all of their | | | | Q: Isn't there a danger that companies using RPO lose |
| sales reps, because it's a big pharmaceutical company | | | | a degree of control or independence? What's your |
| and they hire three thousand of them a year, and they | | | | accountability? |
| feel that that capability is best outsourced. | | | | A: There are the service level agreements that we |
| Q: So you need people within your organization who | | | | agree to contractually; that's why it's rarely just a |
| understand - in this example - the pharma business; | | | | couple of positions, it's typically more than fifty and we |
| you need enough people who comprehend and are | | | | are contractually obligated to fill the role, so we may |
| familiar with the industry. Is it the case that if you as a | | | | decide in advance with you that you need the positions |
| company don't feel comfortable within that industry | | | | in fifty days, or once you give us the requisition we |
| you simply won't offer such positions? | | | | have fifty days to fill it. If we don't, there are typically |
| A: Potentially; if it's clinical for example and you've | | | | penalties associated with that not happening. |
| come to our organization and asked us to recruit | | | | I do think by the way that it is a valid concern - that |
| nurses, well given the time to find nursing recruiters and | | | | clients believe that they may lose control - but most of |
| to understand those potential certifications etcetera, | | | | our clients have found they actually have more control |
| we can't gather the expertise in a short enough time | | | | because they have more control over resources: |
| frame to do a really good job for the customer, so we | | | | being able to scale them up and down as necessary |
| wouldn't specialise there and we have partners and | | | | versus their old model. Their old model may just have |
| other vendors that do. | | | | had two or three or four recruiters in their office and |
| We have over five hundred - probably closer to six | | | | then all of a sudden they realise, based on business |
| hundred - recruiters, and the reality is that across that | | | | needs, they have to wrap three hundred sales people. |
| skill-base of recruiters we have purposely recruited for | | | | They are out of control in that example because they |
| a multitude of skill sets, whether that's pharma, IT, | | | | don't have the method to do that; we do. One of the |
| insurance, or finance. We look at a recruiting base in | | | | key reasons that folks decide to do outsource |
| two ways, horizontally and vertically; so we'd look at | | | | recruiting is to take advantage of that ability to scale it |
| industry experience, then experience within a specific | | | | up and down. They have more control. |
| skill. And then we acquire those skill sets; we may | | | | Q: Is there also a potential problem with confidentiality |
| have them do something else if we don't have the | | | | (ie, RPO providers might have access to psychometric |
| customer base that is associated with those skills yet, | | | | details etc of high-level employees) and is there |
| or we'll use them as those customers come. | | | | legislation in place to prevent this problem arising? It |
| Q: How long have you guys been in the business? | | | | seems that there could potentially be a problem, and |
| A: Spherion have been in the recruiting business for | | | | you'd have to be far more confident outsourcing this |
| over sixty years, we have had the outsource recruiting | | | | than you would taking people on to be internal |
| division for six years. We are a $2.5-billion publicly | | | | recruiters, wouldn't you? |
| traded company, and we're really made up of five | | | | A: Yes... This doesn't actually come up too often, but |
| divisions that support staffing and recruiting, whether | | | | we do have one client that has some fairly high-level |
| that is commercial staffing, IT staffing, traditional | | | | positions in which we are gathering some confidential |
| recruitment agency, recruitment outsourcing or | | | | data up-front. There's a couple of points here. One is, |
| high-end office professionals. I think our greatest | | | | when we act as the outsource provider, one of the |
| success as a division is the list of compelling brands | | | | key differences between us and a recruitment agency |
| that we have had in an early-stage market; we have | | | | is that we do not own the candidate. The candidates |
| large Fortune 500 clients who have outsourced all of | | | | are owned by the client; we may bring the technology |
| their recruiting to us, in really what is considered an | | | | but we operate on a database that ultimately belongs |
| early stage market. So to be able to have that | | | | to a client. So we may have access to it, but we don't |
| confidence, not only in us, but in the value proposition, | | | | own that data: that is a key issue. |
| and leading that in the industry, I think that is pretty | | | | The other point is that typically when we have |
| compelling. | | | | higher-level-type positions where the confidentiality is |
| Q: How do you find potential candidates - how do you | | | | really key - and this is true for a lot of clients - we |
| market your services? | | | | have some subset of dedicated resources so the |
| A: A few ways: we do try traditional marketing, and in | | | | information is not available to the masses. If you're in |
| fact being a market leader, we're involved in the RPO | | | | an account that has a dedicated team associated with |
| Alliance Board and a lot of other things that sort of | | | | it, then they are the only six people that are going to |
| drive what is going on in the market place, and as a | | | | see the data. We provide all of the possible checks, |
| result of that we're well known in the industry and | | | | background, we have them sign NDAs etcetera, so |
| customers call us. There's not a lot of players here; | | | | we don't open the data to the masses. |
| we're one of the largest, if not the largest, so there's | | | | Q: And is there any legislation in place, or is this a new |
| clearly some assistance there. We have a full sales | | | | subject? |
| organization that targets clients both by vertical, and by | | | | A: Not really, there isn't; this is always a problem. Even |
| skill-sets from time to time; and then we do all of the | | | | as you use independent agencies, particular in a very |
| traditional marketing as well, whether those | | | | high-end firm that is potentially looking for a higher-end |
| advertisements or conferences or our own top | | | | candidate, you have always had that problem. Which |
| leadership trying to educate the market on the industry. | | | | really today is protected by non-disclosures. |
| So we really run the gamut on all of those things. We | | | | Q: How do you feel about operating in, let's say, India, |
| can also go to a client making recommendations on | | | | China and maybe the Philippines, what precautions |
| how to proceed and then build an offering for them. | | | | would you be taking to ensure the integrity of your |
| We really customise the solution client by client, just | | | | data - and your client's data? |
| because some of our clients tend to be so large that a | | | | A: We primarily operate with partners in these |
| traditional model may not work. | | | | overseas markets, because the laws vary so greatly |
| Q: Let's broaden things a little: what's driving your | | | | country by country, whether it's a privacy protection |
| industry right now? | | | | law, or a law of how you handle the candidate. So, |
| A: On the whole, it's clear in the US that there is a skills | | | | rather than trying to enter a market and trying to |
| shortage; the baby boomers are retiring and are | | | | understand those legal issues, we may actually |
| leaving a gap of skilled workers. Then there's the | | | | operate with a partner who is specific to that country |
| growth in particular verticals in IT, healthcare nurses | | | | who understands those rules and regulations. |
| and pharmaceuticals. That's driving a lot of the market | | | | Q: So they would have signed up to the same |
| clearly in the United States. In the global markets as | | | | agreements as you at Spherion? |
| we start to see the RPO landscape grow - and it is | | | | A: They would sign up to the same agreements as us |
| dynamic - I think we would still tell you that it is still in | | | | - the overall SLAs around the contractual obligation |
| validation mode, as people really start to understand | | | | time to fill, technology and what have you - but when it |
| the value of the proposition and collate the reasons to | | | | comes down to recruiting in that specific country, we |
| use RPO. A lot of US job growth is taking place | | | | actually have them handle the specifics because they |
| overseas, and it's all about how do I attract those | | | | understand the law. We actually contractually obligate |
| workers and get my hands on that talent; and it's | | | | ourselves to those, but with the assistance of our |
| becoming one of the key drivers. | | | | partners so we don't go misrepresenting. |
| Q: How popular is RPO, and how popular is it going to | | | | |