Recruitment Process Outsourcing (RPO) is growing rapidly and has the potential to be a multi-billion dollar market, taking advantage of the trend towards single process deals in human resources outsourcing.

The report “Opportunities for recruitment process outsourcing in a changing HRO market” estimates the global RPO market in 2007 to be worth $720m and forecasts it will grow by 22% in 2008 to $880m, surpassing the $1 billion level in 2009. According to the report, demand is predominately from Fortune 1000 companies in the US, but the market is growing rapidly in the UK and continental Europe and is beginning to gain traction in the Asia Pacific region.

While RPO vendors claim to reduce costs by up to 40% in some cases, it is the lure of recruiting a higher quality workforce that is driving growth. Although the strategic importance of recruitment means quality will remain of utmost importance, it is likely in an economic downturn that it is those who can deliver on both quality and price that will succeed.

RPO vendors are split over the use of offshore provision. Many players have little experience or understanding of how to derive the fullest benefits from RPO, while others see it as unworkable in recruitment services which require constant contact with both the client organization and, using the client’s brand, with candidates.

The first half of 2008 has seen a wave of acquisitions as vendors attempt to build out their recruitment expertise, technology capabilities and geographic footprint. A number of competing vendors still need to broaden their capabilities, and many of the larger vendors are looking to expand further overseas.

Some companies have put forward global request for proposals (RFPs), but these have subsequently been split into regions and handed to different vendors. The one-vendor global deal has not arrived yet, but a number of vendors believe that a breakthrough will occur in the next 12 months. The key reason for the break-up of global RFPs has been the fact that vendors do not have the capabilities to deliver on an international basis. Many have taken heed and are busy investing in international expansion, acquiring companies, building a global set of processes and forming partnerships with vendors in other regions.