Weak Economy Slowingbut Not StoppingRPO

By Michelle Rafter

Jul. 18, 2008

The disappearance of jobs because of the poor economy is cutting into some U.S. companies’ recruitment process outsourcing endeavors, but the damage isn’t across the board and plenty of bright spots remain, according to employers and RPO vendors.

    While some companies with existing RPO contracts have trimmed hiring from expected levels for the rest of 2008, those de­fi­cits are being made up for by companies in industries that remain unaffected by hard times.

    The economy has not dampened recruiting efforts at Astra­Zeneca or its contract with RPO vendor the RightThing, which the Wilmington, Delaware, pharmaceutical manufacturer initially used to bump up its sales force by 800 representatives last year.

    Things are going so well that AstraZeneca expanded its initial contract with the RightThing to cover business-as-usual hiring in sales as well as sourcing for non-sales positions at the director level and below, according to Bill Warner, the company’s U.S. sales recruitment manager.

    Economic woes aren’t affecting pharmaceuticals and other growth industries, or industries such as retail that have high turnover and need to fill jobs no matter what, says Rebecca Callahan, RPO senior vice president at Spherion, an RPO industry leader. “They’ll look at outsourcing because it’s a more cost-effective way to do it,” she says.

    By contrast, RPO contracts in certain fuel-dependent industries, such as the airline business or tourism, have been hit hard, Callahan says. Because rising fuel costs have hurt their business, “Companies that thought they needed to hire 100 people now need zero, but five months from now they may need 500,” Callahan says. Shifting recruiting work to an outside vendor is one way to smooth out those drastic swings, she says.

    At Aon, an HR outsourcer that provides RPO as part of an overall HR outsourcing package, current clients are forecasting decreases in hiring activity, says Pat Tomlinson, the company’s RPO division practice director. But there’s no corresponding decrease in the level of interest that potential clients are showing in RPO, Tomlinson says.

    That’s especially the case for companies looking to fill jobs for IT, engineering and senior-level sales professionals. The U.S. unemployment rate is holding steady at 2 percent to 2.5 percent for such jobs, says Chris Kilpatrick, vice president at CDI Talent Management, a recruiting and RPO specialist and sometime partner of Northgate/ Arinso, a global HR outsourcing specialist. Companies “are looking for an RPO partner who can go out and find those people globally because the demand is so high,” Kilpatrick says.

    Any contraction in the U.S. job market is being countered by growth elsewhere, Kilpatrick adds. “Customers are pointing us internationally to the Asia Pacific region, where their growth is very robust,” he says.

    For every potential customer that’s holding off on possible RPO projects because they’ve stopped hiring, there’s another that’s ready to sign on because they’re restructuring or moving quickly into a new low-cost product area and need to staff up quickly, says Johnny Ramondino, Northgate/Arinso’s senior director of business development. RPO “is starting to prove recession-proof,” Ramondino says.

    For HR departments, RPO is a good way to weather an economic downturn, because instead of making recruiting a fixed cost, employers can pay as they go, says Lisa Rowan, HR and talent management services program director at market researcher IDC. “You have hedged your bets a little,” she says.

Workforce Management, July 14, 2008, p. 44Subscribe Now!

Michelle Rafter is a Workforce contributing editor.

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