Good news for RPO companies.

“Recruitment Process Outsourcing Annual Report 2010 – A Year of Rapid Growth and Intense Competition”, a recent report from the Everest Group, found that the RPO industry will continue to see large growth next year.

The RPO industry currently brings in about $1.1 billion in annual contracts, but that total is expected to increase by 25 percent to 30 percent during 2011, reaching anywhere from $1.38 billion to $1.45 billion. That comes on the heels of the industry’s tremendous growth this year.

“While we’re seeing explosive growth in new deal signings this year, deal sizes are smaller with buyers taking a selective approach along with lesser number of hires per deal,” Rajesh Ranjan, research director with the Everest Group, said. “Beyond direct cost impact, we expect to see more buyers look to achieve business impact by taking a more strategic approach with RPO and look for total workforce solutions, but adoption will be gradual due to lack of integrated solution availability. While the market is dominated by large buyers, we expect the mid-market to grow as these buyers look to scale up in an improving economy.”

Some highlights from the report include:

  • The RPO industry is strongest in North America, with companies there representing more than half of all recruitment process outsourcing deals, but the number of companies throughout Europe that are using RPO is continuing to increase.
  • North American multi-national companies accounted for the majority of RPO business in other geographies, while United States and European multi-national companies accounted for the majority of RPO business in the Asia Pacific.
  • The majority of RPO contracts continue to be single country.
  • The lack of comprehensive global RPO offerings led many companies to adopt a multi-vendor strategy.
  • The number of companies that adopted global sourcing during 2010 continued to increase, although they fell behind more mature HR outsourcing processes.
  • Manufacturing companies continue to use RPO the most, while use of recruitment process outsourcing in professional services, hotels, and education increased. Use of RPO in healthcare, high-tech, and telecom industries took a hit this year.

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