Like most business process outsourcing endeavors, early adopters of recruitment process outsourcing (RPO) sought cost savings and solutions to some of their biggest hiring challenges. And since clients were scarce, nascent providers were willing to create unique models to address each customer’s needs.

As the industry’s customer base expanded, so have its wish lists. Amid a tightening labor market, and clear evidence that talent has a direct impact on the top and bottom lines, the needs of RPO clients have evolved from tactical to strategic.

However, meeting their latest round of demands requires even more extensive customization, as well as investments in people, technology and global capabilities. Moreover, the ongoing investments can hinder an RPO provider’s quest to achieve profitability. At the same time, providers want to meet customers’ requirements, looking for innovative ways to do so.

“Clients expect an increased level of strategic value and a total workforce solution,” says Taryn Owen, president of PeopleScout. “Modern KPIs (key performance indicators) not only measure our impact on talent acquisition, but our specific impact on business outcomes such as sales productivity or customer satisfaction.”

While mass customization can help service companies escape the commodity trap, it can be difficult to achieve and sustain. Here’s how successful RPO leaders are creating complex, customized delivery systems to satisfy their customers’ appetites for strategic solutions.

Holistic Workforce Management

Clients are not only looking for a more efficient hiring process but one that yields top performers and ensuing reductions in turnover and absenteeism. Ergo, RPOs must track activity across the entire employment continuum, identify issues and take mitigating steps by improving candidate quality and environmental fit.

For starters, line managers want to spend less time interviewing, explains Paul Harty, president of Seven Step RPO. “We used to submit five candidates,” he says. “Now they want to see three, and every person has to be hirable.”

To meet stringent time-to-hire requirements and reduce cycle time, Harty has invested in Six Sigma training for his staff and software that extracts and analyzes applicant tracking system data. His team hopes to eliminate roadblocks and delays by scrutinizing the time between each step in the hiring process.

Seven Step’s recruiters are also clarifying the hiring profile and resolving salary issues with the hiring manager before they commence a search. Applying the Six Sigma methodology from the outset helps to eliminate mistakes before a candidate reaches a customer. But Harty concedes that gaining agreement on the shelf life of an average employee can be tricky, so suffice it to say that benchmarking of employee tenure is still a work in progress.

Since RPOs help to define and carry out a client’s go-to-market strategy they’re expected to create robust pipelines, an awesome candidate experience and shepherd the company’s employment brand and value proposition to prominence.

With top candidates clearly in the driver’s seat, Owen has hired a social media expert, invested in a CRM system and launched online talent communities to nurture connections with passive candidates. And to keep cost-per-hire down, RPO leaders are investing in referral programs and college recruiting initiatives.

“If retention is an issue, we’re expected to solve it,” Owen says. “Talent shortages, skill gaps? We need to solve those problems too. It’s not enough to fill requisitions, we have to provide a total workforce solution.”

Four Things to Consider Before Launching an RPO

Although NelsonHall expects the outsourcing market to nearly double by 2018, RPO may not be the best fit for you or your staffing firm. Ask yourself these four questions before taking the plunge.

  • Do you expect an immediate return? You can’t manage your return monthly or even quarterly. RPO requires a full investment in client partnerships and a long-term view.
  • Is your approach strategic or transaction-oriented? RPO isn’t staffing, it’s business process outsourcing. It requires a strategic mindset and complete alignment with each client’s goals and culture.
  • Can you handle complexity? The contracts are complex and so are the delivery models. It takes the right kind of leadership to manage through this kind of complexity.
  • Are you willing to cannibalize staffing revenue? Cannibalism is inherent since RPOs often conduct seasonal or project hiring. Don’t get lured by RPO’s sexiness. Relationships are complicated.?

Flexible, Global Service Models

It seems no two clients implement RPO the same way. The formats range from partial outsourcing of specific processes to end-to-end solutions to co-sourcing and multiple vendor models. And while some clients engage an RPO to source exempt professionals, others offload the acquisition, onboarding and training regimens for large volumes of seasonal workers.

Sue Marks, founder and CEO of Cielo, has developed a “plug and play” system to facilitate the customization of each client’s delivery model.

Her collection of “plug and play” modules includes dedicated talent acquisition teams augmented by contract recruiters, supplemental recruiting centers and both on-site and near-site service options. And in light of the consumerization of recruiting technology, she gives candidates and hiring managers the option of sharing resumes and scheduling interviews via fax, mobile phone or online.

“We consider geographic location, whether we’re recruiting for exempt or non-exempt staff, the availability of talent, the nature of our recruiting partnership and other factors when deciding which modules and tools to deploy,” Marks explains.

“If I’m making this sound easy — it’s not,” she adds emphatically.

A scalable model is paramount for delivering RPO services in a profitable way, Owen says. For instance, her firm recently needed to ramp up and then scale down when a client added 3,800 nonexempt employees over a three-month period.

As companies expand their global footprints, they expect their RPOs to tag along. In fact, multi-country contracts will account for an estimated 35 percent of all RPO contracts in the near future according to analyst firm NelsonHall. Weaving global talent acquisition into the RPO fabric adds yet another layer of complexity to the creation of unique delivery models. The trend has also produced a recent spate of mergers and acquisitions.

Although some RPO leaders have entered into strategic alliances to increase their global reach, John Wilson, CEO of WilsonHCG, acquired a UK-based competitor in 2014 to meet his clients’ burgeoning demands for talent across Europe, Africa and the Middle East. He’s also invested in training to teach his staff the nuances of global talent acquisition.

“We’re continuing to make investments in people to meet our clients’ desires to work with a single, global partner,” he says.

Reporting and Analytics

Boosting the return on human capital investments requires sophisticated data gathering, data mining and analytics capabilities. In a nutshell, RPOs are being asked to provide a real-time window into every facet of the talent management lifecycle so business goals can be reached quickly and efficiently.

“We’re being asked to provide dashboards, reporting and increased transparency into the talent pool and the candidate experience,” Owen notes.

Once they master those initial requirements, clients expect their partners to forecast and prevent talent shortages by plotting career trajectories, spearheading workforce planning efforts and engaging in predictive and prescriptive analytics. Ultimately, they want to see next-generation metrics and algorithms that project flight risks, improve job performance and measure the business impact resulting from talent actions.

Achieving mass customization of workforce analytics not only requires a significant investment in technology and personnel but a highly flexible platform.

“Initially we tried to go with just one ATS and one HRIS system, but having an allegiance to a single provider limited our flexibility,” Wilson says. “Now, we’re technology agnostic. We select tools that match our client’s needs.”