Recruitment Process Outsourcing Market Size, Share & Trends Report

Recruitment Process Outsourcing Market Size, Share & Trends Analysis Report By Type (On-demand, Enterprise), By Service (On-site, Off-site), By Enterprise Size, By End Use, And Segment Forecasts, 2020 - 2027

  • Published Date: Aug, 2020
  • Base Year for Estimate: 2019
  • Report ID: GVR-4-68038-971-5
  • Format: Electronic (PDF)
  • Historical Data: 2016 - 2018
  • Number of Pages: 124

Report Overview

The global recruitment process outsourcing market size was valued at USD 5.48 billion in 2019 and is expected to grow at a compound annual growth rate (CAGR) of 18.5% from 2020 to 2027. The need for an effective recruiting process and reduction in overhead costs are the two primary factors driving the market growth. The Recruitment Process Outsourcing (RPO) service providers perform several tasks, from sourcing to selecting candidates and maintaining the quality of recruits. Service providers are implementing innovative technologies such as Artificial Intelligence (AI) and Machine Learning (ML) for self-scheduling interviews and automated screening of CVs to enhance their capabilities. Service providers are further channelizing on better candidate engagement through chatbots and other assessment tools. AI is expected to be a game-changer in the recruitment industry. It automates several tasks such as candidate sourcing, candidate rediscovery, employee reference, and diversity hiring to improve strategic workforce planning.

U.S. RPO market size

The growing attrition rate across several industries is one of the key factors working in favor of the RPO market. To remain competitive in the market, several service providers readily offer a replacement for any candidate that quits an organization in a very short duration. Moreover, the education system is rapidly evolving, providing hands-on industry experience and advanced skillsets to fresh graduates and post-graduates. As a result, the selection of the right candidate is becoming increasingly challenging for recruiters. The market is also benefitting from the increased focus of employers on core competencies and ways of reducing recruitment costs.

In the automation era, the companies are trying to increase or maintain headcount rather than reducing it. The companies invest in digital technologies, requiring a skilled workforce to perform new and complementary tasks to those done by machines. However, the labor shortage and difficulty in finding just-in-time talent are restraining the growth of the companies. As a result, the companies are outsourcing the hiring activity, which boosts the market growth. In order to bridge the gap between the new skilled workforce requirement and existing resources, few companies are upskilling their workforce to build the required expertise. Companies are also deploying diverse approaches to address this challenge, including developing a learning culture within the organization to provide career guidance training sessions. 

Amid the COVID-19 pandemic, the industry is witnessing a major change in operations. Companies are changing their recruitment practices to comply with the social distancing norms enforced across several regions to mitigate the risk of infection. Recently, Datum RPO, a U.K.-based workforce solutions provider, advised its clients and resources to take additional care while screening applicants, contemplating their location, and asking the backdated history of 14 days. Additionally, companies are emphasizing on using advanced recruiting solutions and digital assets to avoid in-person meetings.

Type Insights

The on-demand segment captured a revenue share of over 25% in 2019. SMEs are recognizing the benefits offered by RPO providers and are duly adopting the services for their recruitment needs. Owing to budget constraints, SMEs often prefer cost-effective recruitment models. On-demand RPO serves this purpose by providing flexible, scalable, and low-cost services on an as-needed basis. Using this model, the organization can scale up or scale down its recruiting capabilities, based on business demand. As a result, the on-demand segment is gaining traction and is likely to exhibit strong growth over the forecast period.

Enterprise engagement RPO, also known as full-scale or end-to-end recruitment process outsourcing, is a complete outsourced recruitment solution generally provided for multi-year contracts. It is a versatile solution that includes services such as candidate sourcing, screening, scheduling interviews, onboarding, monitoring, and conducting interviews. It reduces the burden of talent pooling, allowing organizations to focus on their core business activities. In the developed economies of the U.S. and the U.K., the demand for a full-scale RPO model, for hiring against targeted competencies, is high in Fortune 500 companies.

Service Insights

THE off-site RPO service segment held the largest revenue share of over 65% in 2019. Off-site recruitment process outsourcing provides a centralized hiring approach to client hiring for various locations. The recruitment firms work with the clients to provide the best talent across the globe. In this process, recruitment firms follow the best practices and personalized approaches to drive the optimal result and to encourage more diverse hiring. Different countries have different employment laws and hiring cultures, which must be considered in the recruitment process. Owing to their sound knowledge of the region and its culture and expertise in labor laws and standards, RPO firms play a crucial role in the international hiring process. These firms follow proper record-keeping, compliance regulations, and auditable processes and methods. As a result, multinational companies are embracing RPO services for their global recruitment programs.

The on-site RPO service segment is expected to witness a strong CAGR of 20.1% over the forecast period. On-site service is the extension of the company’s existing HR department. A recruitment service provider works with the company’s HR team to deliver a holistic hiring solution. Several end-use industries are widely adopting on-site services as it builds effective relationships among the recruiter and RPO firm, simplifies the hiring process by providing a single point of contact, and improves efficiency and effectiveness of the services. The on-site service model offers transparency to the client regarding recruitment fees and the number of agencies involved.

Enterprise Size Insights

The large enterprise segment captured a significant revenue share of over 68% of the recruitment process outsourcing market in 2019. There is an enormous demand for outsourced recruitment services in large enterprises across the manufacturing, financial services, and pharmaceutical sectors. A majority of this demand comes from Greenfield projects, wherein companies have limitations in establishing full-fledged HR departments and are looking for staffing partners that can offer end-to-end recruitment solutions. Moreover, large firms have a higher budget and require sophisticated services, including recruitment and other HR functions, 360-degree interviewing, recruitment audits, and applications.

SMEs often have a dedicated HR team performing recruitment tasks and other jobs such as payroll, training, and managing employee relations. These firms have comparatively less budget and quick turnaround time for recruiting candidates. However, SMEs face challenges in managing continuous fluctuations in the hiring process. SMEs are focusing on reducing the total recruiting cost and simplifying the recruitment experience for potential candidates, which has resulted in the increased adoption of RPO among SMEs.

End-use Insights

The BFSI sector captured the dominant revenue share of over 27% in 2019. The financial sector is evolving rapidly owing to digital disruptions, changing operating models, and new firms entering the market. Owing to the challenges associated with hiring and developing people with the required skills and knowledge base, financial institutes prioritize recruitment process outsourcing for recruiting top talent. The sector comprises insurance companies, commercial banks, co-operatives, asset management firms, venture capitalists, and other small financial bodies. The growth of these entities translates into substantial economic activities, leading to direct or indirect job creation. The stable economic growth and rising per capita income of developing countries are also driving the demand for financial services. As a result, credit, insurance, and investment penetration are rising among the lower-income group, signifying the sector's strong growth.

Global RPO market share

The healthcare sector is expected to witness substantial growth over the forecast period. The healthcare sector is relatively diverse, ranging from hospitals, enterprises, home health care services, community care facilities for elders, and medical and diagnostic labs. All these healthcare verticals require a skilled workforce to operate in a regulated environment. Personal care aides and home health aides are the fastest-growing occupations among the healthcare sector. The demand for healthcare services from the aging population and people with chronic conditions is expected to drive employment growth in the sector in the near future. Technological proliferation is further expected to create more employment opportunities in the healthcare sector, thereby driving the need for outsourced recruitment.

Regional Insights

North America captured the largest market share of over 42% in 2019. The U.S. dominated the regional market for the same year and is expected to retain its dominance over the forecast period. The U.S. economy is returning to normalcy, characterized by increasing employment rate and demand for higher education credentials and upskilling across new fields. Moreover, the healthcare and manufacturing sectors are generating new employment opportunities across the country, with healthcare as one of the fastest-growing sectors. Several government initiatives and favorable conditions have helped pull the U.S. manufacturing sector back on track, resulting in new jobs. According to the U.S. Bureau of Labor Statistics (BLS), employment in the U.S. is projected to grow by 8.4 million jobs to 169.4 million jobs from 2018 to 2028.

Canada, with its four provinces, Ontario, Alberta, British Columbia, and Quebec, contributes significantly to the North America RPO market. These provinces are mostly outsourcing their hiring needs, generating more than 50% revenue in Canada. Mexico showed optimistic growth over the last few years owing to the increased inflow of migrants from other South American countries. Employers in Mexico are planning to increase their staffing levels and maintaining a stable hiring process, which has resulted in generating promising growth opportunities for service providers.

RPO service providers are expanding their footprint in fast-growing regional markets, including the Asia Pacific. The growth is mainly driven by increasing investments across the various sectors by multinational companies as these companies are perpetually looking for ways to remain competitive in the market. Several recruitment outsourcings deals have been observed in the region on account of the growing labor markets like India and China.

Key Companies & Market Share Insights

The market is fragmented, consisting of global, regional, and national players. ADP, Inc.; Alexander Mann Solutions; Cielo, Inc.; Hudson Global Inc.; ManpowerGroup Inc.; Korn Ferry; PeopleScout (TrueBlue Company); WilsonHCG; and Sevenstep are some of the leading players in the market. These companies possess a diversified service portfolio catering to various industries. The emergence of new vendors in the RPO space is compelling existing players to differentiate their offerings according to industries, skillsets, size of the client organization, high volume or niche hiring, and geographies.

In the near future, further consolidation of shared service centers, an increase in blended services, and a rise in tailored solutions to meet client requirements are expected to transform the RPO business model. Advanced technologies and tools are expected to play a decisive role in influencing the competitiveness of the market players. Data analytics, unified platforms, and AI in RPO continue to evolve, and correspondingly vendors aspire to strengthen their tech capabilities by investing in these technologies. In November 2019, Cielo, Inc. the U.S. based recruiting service provider invested in Visage, an AI-based automated crowdsourcing recruitment platform, to empower its recruiters to identify and secure the best talent for its clients.

Leading vendors are also engaging in M&A activities to sustain in the increasingly competitive market. In December 2018, Permira Holdings Limited, a U.K.-based investment firm, acquired the majority stake in Cielo, Inc. The acquisition was intended by considering the continued growth of the RPO market. Some of the prominent players in the recruitment process outsourcing market include:

  • ADP, Inc.

  • Alexander Mann Solutions

  • Cielo, Inc.

  • Hudson Global Inc.

  • IBM Corporation

  • ManpowerGroup

  • Korn Ferry

  • PeopleScout (TrueBlue Company)

  • Pontoon Solutions

  • Randstad N.V.

  • Sevenstep

  • WilsonHCG

Recruitment Process Outsourcing Market Report Scope

Report Attribute

Details

Market size value in 2020

USD 6.32 billion

Revenue forecast in 2027

USD 20.8 billion

Growth Rate

CAGR of 18.5% from 2020 to 2027

Base year for estimation

2019

Historical data

2016 - 2018

Forecast period

2020 - 2027

Quantitative units

Revenue in USD million and CAGR from 2020 to 2027

Report coverage

Revenue forecast, company ranking, competitive landscape, growth factors, and trends

Segments covered

Type, service; enterprise size, end-use, region

Regional scope

North America; Europe; Asia Pacific; South America; MEA

Country scope

U.S.; Canada; Mexico; U.K.; Germany; France; China; India; Japan; Brazil

Key companies profiled

ADP, Inc.; Alexander Mann Solutions; Cielo, Inc.; Hudson Global Inc.; IBM Corporation; Manpower Group; Korn Ferry; PeopleScout (TrueBlue Company); Randstad N.V.; WilsonHCG; Allegis Group, Inc.; Sevenstep; Pontoon Solutions

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Segments Covered in the Report

This report forecasts revenue growth at the global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2016 to 2027. For the purpose of this study, Grand View Research has segmented the global Recruitment Process Outsourcing (RPO) market report based on type, service, enterprise size, end-use, and region.

  • Type Outlook (Revenue, USD Million, 2016 - 2027)

    • On-demand RPO

    • Function-based RPO

    • Enterprise RPO

  • Service Outlook (Revenue, USD Million, 2016 - 2027)

    • On-site

    • Off-site

  • Enterprise Size Outlook (Revenue, USD Million, 2016 - 2027)

    • Small & Medium Enterprises (SMEs)

    • Large Enterprises

  • End-use Outlook (Revenue, USD Million, 2016 - 2027)

    • BFSI

    • Healthcare

    • Manufacturing

    • IT & Telecom

    • Education

    • Others

  • Regional Outlook (Revenue, USD Million, 2016 - 2027)

    • North America

      • The U.S.

      • Canada

      • Mexico

    • Europe

      • Germany

      • The U.K.

      • France

    • Asia Pacific

      • China

      • Japan

      • India

    • South America

      • Brazil

    • The Middle East & Africa

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