By Kay Colson

For years, solution providers have been offering both employee and non-employee search services. There has been much talk about one powerful integrated talent acquisition solution. A few buyers have embraced it; but thus far, not enough have done so for it to be considered a major trend in how companies find and engage talent.

Meanwhile, managed service provider (MSP) and recruitment process outsourcing (RPO) activity are well-charted, each utilizing their respective technologies and distinct service delivery philosophies. Despite a multitude of reasons for a shift toward one talent solution, including global demands and increasing C-suite focus on continued critical skills shortage, we have yet to see a mad dash signaling this as the Next Big Thing … at least not yet!

Behind the Blend

Talent availability is a mixed bag. Too few of the many available workers have the specific, hard-to-find skills needed. Global expansion and subsequent competition for the best talent are creating an extreme need for greater geographical reach and speed.

Further, since the recession, more workers are willing to take contingent jobs and many companies have become more likely to utilize contingent workers, making non-employee workers a larger percentage of the total workforce than in the past. As a result of this new labor landscape, these companies are taking a more strategic approach to workforce planning to better manage this evolving “blended view” of their overall human capital investment.

Multiple recruiting channels — readily accessible and flexible to changing needs — are required to achieve a competitive edge. In the ’90s, job boards changed recruiting “from a pole-fishing operation to a net approach”; now, the Internet and mobile technology have enabled a “global interactive supply web” required to build robust talent pools aligned to changing needs. The entire process is dependent on skilled professional recruiters enabled by innovative technology.

Infrastructure technology (vendor management systems, requisition management systems, applicant tracking systems) connects all parties to the process, providing global capability and now mobile access. And there is increased demand for robust hiring processes to be integrated with those systems, such as assessments, on/offboarding, employee versus non-employee decision assistance, background checks and more. Further, big data is a must. This includes a common view, analytics and business intelligence across all talent pools and databases (permanent and contingent).

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“The blended workforce model — formally integrating both your RPO and CWS talent acquisition and management programs into a single seamless solution — is not new in practice to many organizations,” says Matthew Rodger, U.K. managing director, Alexander Mann Solutions. “We’ve found this to be particularly true for clients within both EMEA and APAC. More often than not, a client will be looking to leverage their talent inventory, move from a reactive to proactive strategy to attract, engage and retain talent, create more insightful management information, or just reduce their overall vendor management overhead and leverage better pricing.”

MSP solutions are now highly developed as a way for organizations to drive cost efficiencies and manage contingent engagement risks, particularly in the U.S., similarly in the U.K., and to some extent continental Europe and other regions of the world. RPO continues to gain acceptance and penetration as a tool for more effective recruitment. As the effectiveness of these two solutions is recognized, other talent-driven models, i.e., statement-of-work, independent contractors, HR outsourcing, business process outsourcing, talent consulting, etc. have gained acceptance. While cost is still a factor, the ability to find quality talent is becoming a competitive imperative.

Integration Issues

In truth, there is one significant reason talent acquisition integration has taken time to gain acceptance: The two underlying solutions were built and evolved very separately over a long period of time. Their foundational components vary — who buys and manages the talent, service delivery philosophies, technology used and pricing structures — and must be accommodated to fully realize all the benefits available. However, we have learned from early adopters it is possible to work through the differences over time.

Value proposition. The primary value proposition for MSP is generally cost reduction and risk management through improved structure and controls. The RPO value proposition is better and faster sourcing of qualified candidates with the additional promise to reduce costs through less agency usage. Both solutions require improved recruiting by the provider and/or a stable of expert sub-suppliers. Operationally, migration to an integrated approach to leverage recruiter knowledge, sourcing costs, brand and more complete candidate pools seems logical, but that is not always the case.

Different strokes. The split of responsibility for MSP and RPO within organizations is a significant obstacle to integration, i.e., procurement primarily takes the lead on MSP and human resources for RPO. Staffing suppliers also have their biases. Operationally blended solutions can result in an integrated team, but sometimes different service delivery methodologies prevent that. However, there is encouragement in general for cross training and communication, a potential interim step toward full operational integration managed externally or internally.

Technology variations. RPO technology (ATS/ RMS) provides a fairly straightforward database system that drives workflows to manage all requisitions for talent and the candidates recruited to fill them. In some cases the client owns the ATS/RMS contract and in others the provider does. System fees are paid directly to the system provider; and in the event the RPO provider owns the contract, technology fees are included in the RPO per hire pricing. MSP technology (VMS) is much more complex, driving those same processes, as well as the collection and approval of hours worked by the contractors. VMS fees are charged as a percentage of spend through the system and in most cases deducted from staffing supplier payments for contingent work services rendered.

Focused on recruiting, RPO technology systems and tools provide more robust features for finding, assessing and onboarding requirements. Once these features have been used to deliver permanent hires, clients see the value and show interest in consistent use of those same features across all talent acquisition activity.

Currently, most integrated solutions work with two separate systems and use business intelligence tools to integrate the candidate databases for reporting and analytics. There is also system development under way to support the entire process. For instance, Peoplefluent began developing TalentUnity in 2012 based on the U.K. market’s repeated urging to address this integration issue. It provides the user a single sign-on with ability to open and work a requisition in either or both systems simultaneously, the ability to tap features within the RMS for VMS hires (posting on client career site, conversion to permanent status, access to assessment or onboarding features), and reporting/analytics across both systems. To date it is the only commercial product developed to support an integrated talent acquisition solution. It was released in late 2013.

If the TalentUnity and other emerging technology systems prove to effectively support the integrated solution, technology would be positioned as a true enabler for broader adoption.

Pricing. Traditional MSP pricing is marketdriven and based on a percentage applied to contingent worker total wages. RPO pricing is based on estimated delivery costs for “in scope” skill sets and billed based on client preference for a fixed management fee, a variable per hire fee or a combination of both. Integrated solutions tend to bill each part of the solution in accordance with the traditional pricing models described.

During our research we learned of one integrated solution for which both permanent hires and contingent engagements are billed using the RPO model approach. Once selected, contingent workers are billed at a payrolled rate and later conversions made are at no charge. This type of creative solution potentially enables greater adoption.

A Tale of Two Geographies

Adoption of the combined services varies between the U.S. and U.K.

United Kingdom. U.K. companies have been more likely to combine MSP and RPO for some time. “We find our European clients tend to be more apt to deploy integrated solutions when dealing with the talent mismatch and the skilled labor shortage,” says Sarah Peiker, U.K. RPO practice lead EMEA, ManpowerGroup Solutions. “There is more interest now in finding and deploying the skills needed, even when that requires a different way of looking at the overall workforce.”

The U.K. market is less fettered by employment law than its European neighbors and integrated solutions may be aided by the recent AWR legislation, which forces companies to align titles, job descriptions and compensation for contingent and permanent positions in order to maintain compliance with the AWR’s equal treatment mandate.

Additionally, U.K. companies view MSPs more as a talent acquisition service than a cost-savings tool; therefore, expanding a current recruiting solution creatively isn’t a great leap. This has driven a more open-minded and creative approach to dealing with the shortage of skilled labor. Here are some examples:

Aviva Plc. — 1,000 to 1,500 permanent hires and 375 to 650 contingent workers under management annually. U.K. insurance provider Aviva engaged Hyphen (now part of Adecco) for MSP services in 2008, and added RPO in 2011. Hyphen utilizes an integrated team but maintains separate technologies. All recruiting efforts are supported by Avature, HireVue and automated selection and assessment tools.

“We needed our partner to expand the search for talent, to ensure a view of all talent both active and passive,” says Shelley Cushway, U.K. recruitment lead, Aviva Plc. “The metrics and information now available is something we never had access to before.”

Standard Chartered Bank (SCB) — End-to-end, integrated resourcing solution to manage total workforce acquisition. SCB sought an advanced service delivery model that would attract top talent, streamline workflows and processes and engage stakeholders, while reducing costs and increasing quality. The high-touch service that Allegis Global Solutions has provided since 2009 spans multiple countries and supports all recruitment needs; permanent and temporary, front- and back-office functions, up to board level, under one blended RPO/MSP model.

United States. Staffing companies have been pitching integrated solutions in the U.S. with limited success. Smaller firms requiring high volume placements are buying, while Fortune 1000 companies are not. The reasons are not entirely clear, but some believe it is due to the entrenchment of high volume MSP solutions and the belief that these two processes are too different to combine for high volume hiring. There are also concerns around meeting requirements for government contractors to track Equal Employment Opportunity Commission compliance and diversity activity for employee hires.

Cegedim — 100 to 200 permanent hires, 800 to 900 contingents annually. Allegis Global Solutions began providing healthcare IT provider Cegedim with an MSP solution in 2006 and added RPO in 2009. Cegedim sought a platform that enabled both scalability and optimal use of talent with one strategic partner at the helm. Allegis maintains separate, but cross-trained teams each utilizing different systems. Future expansion may include Central and South America.

Similarities. Success in both regions seems to be primarily with midsize engagements. There are two main reasons: First, smaller firms are less likely to have a strong market brand that drives workers to them and frequently they pay less; therefore they must be more creative and nimble in order to compete for talent they need. Second, smaller spend carries less concern about “putting all their eggs in one basket,” something commonly avoided by procurement professionals in larger organizations. Perhaps as these successes are better publicized and technologists step up to provide integrated enabling solutions, inertia may begin to crumble.

“Providers must be prepared to blend their service delivery philosophies,” says Tracey Friend, U.S. VP, direct workforce solutions, Agile•1. “This is critical for a total workforce solution to succeed.”

Going Forward

Some market analysts predict potential integrated solution savings of 15 percent to 35 percent beyond savings derived from MSP and RPO installed on a standalone basis. In addition, the integrated solution will drive much broader strategic, financial and operational benefits.

From an operational standpoint the landscape is already changing. Organizations are seeking assistance with incremental programs such as the assistance to examine and reconsider candidates who were runners-up in the initial recruitment process; or the development and deployment of borderless talent pools.

Darren Simons, U.S. global managing director, Allegis Global Solutions, offers his view on further migration: “Delivery success will be highly dependent on the maturity of the supplier’s operational structure, specifically globally integrated MSP and RPO delivery teams, combined with more strategic leadership and change management capability.”

The impact from leveraging knowledge, reach, tools and structure across the entire workforce spectrum is common sense and the potential benefits limitless. It’s only a matter of time until customers, trusted staffing partners and technology experts pull it all together into more holistic, integrated talent acquisition management programs designed to deliver the varied workforce required today.

Kay Colson, senior associate with Brightfield Strategies, can be reached at