By Nikki Edwards & Gary Bragar

In recent industry discussions around talent acquisition, we have identified a number of interconnected trends that are having a significant impact on talent acquisition markets. Here, we take a look at three key trends, and at how HRO vendors in the talent acquisition space are responding.

Socio-economic trends

An ageing, yet multi-generational workforce made up of Baby boomers, Generation X, Generation Y/Millennials and Generation Z (all of whom have different views on how they should work), is complicating the war for talent: it is no longer just focused on permanent hires and contingent workers, but incorporates more complex models such as Statement of Work (SOW), Independent Contractors (ICs)/Freelancers, and the rise of the ‘gig economy’ (where an individual may be working on multiple gigs at any one time).

Vendors are responding by focusing on creative pooling for talent acquisition outsourcing (both RPO and MSP), looking across gender, diversity, veterans, alumni, women returners, university, sectors, geographies, skills, etc. Some MSP vendors are offering services procurement management solutions (managing SOW, ICs, direct sourcing), and offering services around clients’ employer value proposition, and strategic workforce planning, to attract talent.

Talent acquisition trends driven by market maturity

The availability of larger corporations with whom to initially engage in talent acquisition outsourcing is nearing saturation point in the mature markets of U.S., U.K., much of Europe, and Australasia.  These corporations, having been the first to consider talent acquisition outsourcing , are now three or four generations into an outsourcing model and no longer offer the growth opportunities they once did. Consequently, new opportunities lie in the mid-market space, and in newer territories (Latin America, Malaysia, China, etc.).

Cost savings made in first generation contracts are more difficult to achieve in subsequent generation contracts. Eking out further cost savings has led buyers to seek ‘total talent management’ (using one provider to manage all talent acquisition, rather than two separate providers for RPO and MSP) or more blended/tailored models (by geography, industry, business function, etc). However, with the levels of cost savings in decline, being innovative and adding value become the key drivers.

Vendors are responding by:

• Shifting towards the mid-market space and/or new territories
• Shifting towards total talent acquisition/management or blended/tailored models
• Enhancing client operational effectiveness/program optimization
• Adding extra services (consultation, insights, client engagement, training, high-touch, legal/compliance, security clearance)
• Shifting the focus of metrics to measure the effectiveness of talent acquisition outsourcing services (including rate management, innovation, strategic guidance, quality, diversity, talent retention).

Technology trends

There is no ‘one-size-fits-all’ talent acquisition technology – rather, there’s a plethora of siloed talent technologies (ATS, VMS, FMS, gig platforms, talent pooling) for different segments (RPO, MSP, Freelancers, etc.) developing at different rates and with multiple providers in each segment (some of whom will fall by the wayside). Consequently, there’s a growing trend for talent acquisition outsourcing vendors to become system integrators to access relevant data across many systems. In some cases, they are developing proprietary APIs to sit across different technologies via a single interface to access relevant data across systems. However, there is also a trend among vendors for establishing technology partnerships with providers of the latest talent technology, rather than develop proprietary solutions from scratch.

But, of course, the big technology story in HR is RPA and AI, with cognitive capabilities emerging. Cognitive tools, including IBM Watson Talent, can help recruiters prioritize and work on filling requisitions based on complexity, skill requirements, data from talent systems, how the job was filled in the past, external market insight, and what the talent supply looks like. RPA and analytics/AI are increasingly being applied to MSP and RPO to improve candidate targeting and quality. This includes analysis of candidate profiles on social networks to determine who is more likely to be receptive to solicitations for jobs, and analytics that show which combinations of words in a job posting generate the most response (and linking them to the quality of the candidates who were ultimately hired).

Nikki, Gary, and NelsonHall’s other lead HRO analysts, Amy Gurchensky and Pete Tiliakos, will be keeping you abreast of all major developments in HRO throughout 2017. To find out about NelsonHall’s extensive research plans for HRO in 2017, contact Guy Saunders.