HR heads for low hiring costs with RPO
Published: Jul 29, 2008
Singapore – The lure of recruiting a higher quality workforce with reduced hiring costs is driving the growth of the recruitment process outsourcing (RPO) market in the Asia-Pacific region.
With the economic downturn and the war for talent inhibiting companies’ recruitment efforts, obtaining improved quality of talent whilst cutting costs is a major factor for HR. This has led to a boom in the RPO market as outsourcing allows HR to move to a variable cost model when demand for recruitment services fluctuates a lot within a company. Patrick O'Brien, business process outsourcing analyst for Datamonitor, says, “The level of comfort larger companies have with shared services has eased the way company-wide recruitment can be outsourced.”
According to the Opportunities for recruitment process outsourcing in a changing HRO market report by the market analysis firm, the global RPO market will be worth S$1.2 billion in 2008 and exceed S$1.4 billion in 2009. While demand is predominantly from Fortune 1000 companies in the US, the UK and Europe, O'Brien estimates the demand for Asia-Pacific region to reach S$177m in 2008.
O'Brien attributes the growing demand to RPO vendors who can provide candidates from a larger and higher quality pool of candidates than individual organisations. He says by being focused on recruitment, these vendors can “provide a variable price model”. This allows HR to save on hiring costs as O’Brien says a company using an internal recruiting team “will have lulls in the number of positions to be filled, especially in a downturn”.
With RPO set to continue its rapid growth in the near term, HR can look forward to further savings to their recruitment budgets as vendors may have to start pricing their services more aggressively. O’Brien cites “the increasing competitiveness of the market and the growing focus on cost cutting in the economic downturn” as push factors. He concludes, “Recruitment will need to be seen as a primary function for easy cost reduction among company processes.”