While the RPO concept has taken a healthy shape in the Western countries, in India however, the RPO sector is currently at its infant stage.

Implications: A recent study claimed that the global BPO industry will be worth $230 billion by 2012 and India stands to gain $50 billion of that global pie.  This boom may be in the wake of an U.S. economic downturn as employers who have historically shied away from offshoring may now become more receptive to the idea to cut costs. After the business process outsourcing and knowledge process outsourcing boom, the corporate sector in India is steadily gearing up for a new concept - RPO, which is recruitment process outsourcing. It aims at taking the burden out of the head-hunting. While the RPO concept has taken a healthy shape in the Western countries, in India however, there are only a few RPO firms currently catering to the needs of various domestic as well as multi-nationals in hiring employees for them.  The RPO sector in India is currently at its infant stage. 

Analysis: As recession looms in the Western economies, RPO growth may slow a bit but not much.  A recession does not change the need to screen and process candidates.  Less hiring may mean less RPO fees, however, employers will continue to compete for the best employees. RPO has been largely free of the controversial failings of the other areas of BPO. Most buyers are reasonably happy and feel they can manage the talent strategy of their company while using a vendor for sourcing and processing.

RPO programs emerged more than a decade ago. The earliest RPO programs were project-driven staffing programs that were typically defined by number of positions filled. They almost never extended more than one year, and the provider team provided an adjunctive capability to the internal staffing department. RPO providers quickly got smarter and more efficient. In a short period of time, they evolved and focused on moving more output per recruiter per hour than in-house staff.

In the late 1990s, annual programs began to emerge where RPO players could supplant in-house functionality. These programs were considered pilots at first with annual renewals, progressing to three-year deals, and lately to seven- to 10-year deals.

There are 70 or more RPO providers in the market, with 13 top providers. Despite some questionable players in the market, buyers have not pulled back much in taking on RPO. The reason: too many benefits to ignore, and as more employers sign deals, providers are gaining momentum and helping the industry to mature more quickly. In turn, buyers benefit from cost efficiencies and improved service.

But just as the HRO market was once incapable of comprehensive service delivery, the RPO segment is quickly maturing, and it may be only a matter of time before the providers develop global competencies. Future solutions will lead to alliances between software and selection providers or more M&A transactions this year in an effort to acquire global competencies and establish global presence.

RPO providers will look to add more to their bundles this year, which currently include: Requisition development with hiring management; sourcing; screening; interview scheduling; requisition management; management of offer processes including offer presentation to prospective candidates; management of onboarding processes; reporting and metrics for staffing operations; workforce planning support; staffing department budgeting support; employment brand development consulting and program management; employment advertising budget coordination and advertisement strategy development; advertisement creation and placement; and contingent or temporary staffing.

The quest to find top candidates, especially for leadership and managerial roles, is prompting more companies to plan investments in talent management technologies, according to a recent report by a human resources consulting firm. By 2010, one-third of companies plan to upgrade or otherwise make changes to their talent systems to better aid succession planning. Another one-third of companies want to improve recruiting processes, while 29 percent aim to bolster their in-house learning functions. The research is part of a 2007 HR Technology Trends report, a biennial survey that was released in October 2007. It compiled responses from 182 large U.S. corporations. Those are dramatic increases from the previous survey on talent management in 2005. Tight labor markets and the looming retirements of older workers have fueled interest in talent management, a term for an integrated approach to managing various human resources processes, including recruiting, hiring, onboarding, training, performance management, leadership development and workforce planning.

Workforce Management applications, including recruitment and performance management are among the fastest-growing products within the HR software arena, which is itself the fastest-growing category of business software.  Thirty-five percent of companies with 2,500 employees or more are in the process of implementing analytics software, (software as a service SAAS), making it the top category among 12 types of HR-related applications.  Thanks to factors including fear of talent shortages, revenue from the programs referred to as human capital management applications is slated to rise 11 percent annually between 2006 and 2011, to $10.6 billion.

Small to mid-size companies may not outsource their human resource department due to cost; however, they are more likely to invest in workforce analytics software products to help draw conclusions from its human resources data. These tools are vital for strategic talent management tasks, which include recruiting the right employees, measuring their performance, helping them develop and compensating them effectively. To make smart decisions around hiring, promotion and pay, firms ideally need to sift quickly through data such as performance reviews, salary levels and even store revenue.

Workforce management applications may soon replace outsourcing human resource departments.