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Are in-house recruitment teams the RPOs of the future?

Are in-house recruitment teams the RPOs of the future

 

#RecFest18 was a brilliant event from which several key industry themes emerged as heated debates that have continued long after the event finished. These conversations have been particularly focussed around the use of automation and the ongoing question of in-house vs agency recruitment.

In-House Recruiters

First, let’s take a look at in-house recruiters and what automated technology and commercial realities are driving them towards.

We all know that the majority of large employers are creating in-house recruitment teams. They are using agency fees to fund building their teams and investing heavily in tech stacks to improve efficiencies.

These in-house teams are increasingly sitting outside of HR departments and are also starting to become their own profit centre.

Along with improving the quality and the speed of hiring, they are also tasked with reducing costs, improving efficiency and reducing the percentage of hires from agencies.

What impact might this have on the future?

Well, if the finance department has anything to say about it, I suspect it won’t be long after the in-house teams are properly established that they start to bid for external work. This might be alongside suppliers or partners initially, but if they have sophisticated systems they could offer a very viable RPO solution to other companies as they will be very lean, cost effective and automation heavy.

If this happens those same finance people will realise that they suddenly have another business in their group. So, how long before they get their own brand?

And if times are hard, how long before those same in-house teams with an ambitious leadership team are either spun out on their own, floated or perhaps sold? I would imagine the big global recruitment groups would pay a premium for them.

And so, the cycle goes full circle.

The RPO Arms Race

In the meantime, the RPO’s themselves are in a technology arms race, not just with each other, but also with the employer in-house teams.

For both sides of the race, automation and new technology not only create competitive advantage in terms of winning new business, but also more profit by delivering the same for less.

Some RPOs will build their own systems (although history has shown this isn’t always the best plan as it is very expensive, requires a lot of specialist knowledge, and often can’t keep up with the independent solutions), some will acquire and others still will build and integrate third parties together.

In the long term, those RPOs who do this well could be very successful indeed as they will be able to offer a plug and play solution to companies who don’t want the risk of starting an in-house function. However, this will only work if they can demonstrate the best in class technology that delivers an effective and very efficient low cost alternative.

Longer term there will likely be much more consolidation. Not just between the RPOs, perhaps with the larger players buying in-house teams directly as well.

Where does this leave smaller contingent agencies?

Well, clearly life is going to continue getting more competitive and more fragmented. They will likely need to specialise further (volume business will be a thing of the past) and more difficult sourcing will be where they can add value and find work.

They will also need to adopt new technology – automation, sourcing and CRM especially. They will also need to think about how they can add value to their candidate community – perhaps through merging with niche job boards to gain access to candidates and to offer those boards who are struggling more revenue generation opportunities in a more competitive media landscape. Alternatively, they could set themselves up as mini RPOs aimed at the SME market place.

All in all, the recruitment market space, like the media one, is transforming through technology. Those early adopters are likely to do well, the rest will probably fall by the wayside.

As the saying goes “may you live in interesting times” – we are certainly doing that.

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