• Acquisition of Talent Technology, a recruitment and executive search solutions company by Kelly Services.
• Staff Dynamix located in Johannesberg, a provider of recruitment solutions was acquired by Primeserv Group.
• Kelly Services has increased its stake to 100% in Tempstaff Kelly, a Sony and Kelly Services JV in Japan.
• Sigmar Group acquired CCM International, specializing in the recruitment of doctors, registered nurses, midwives and allied health professionals.
• Horizon Outsourcing acquired Chesham Recruitment, Philippines. The acquisition is in line with Horizon Outsourcing's global expansion strategy. It will also enable Horizon to offer single window recruitment services to its clients.
• Adecco acquired German-based Tuja Group offering specialized and general staffing services.

Source: ValueNotes Outsourcing DealTracker

Demand for end-to-end services is also increasing as retention has emerged as a major challenge. RPO companies have acceded to this requirement by widening the scope of services from recruitment to boarding, training and induction.  
1)    The consolidation trend within the RPO segment indicates the huge potential that it offers. The industry players are looking to expand to new geographies and new services. The consolidation has also been encouraged by HRO companies looking to offer recruitment services as part of their portfolio. Given the size of the market, both pure play service providers and bigger companies with RPO as a component are expected to thrive.
2)    Clients are looking at deliverables that offer more than just savings in terms of quality, strategy and quantity. The main driver is that clients benefit from focused services, as a number of RPO companies offer industry specific services. Recruitment is however a strategic and sensitive issue, therefore for the RPOs to be accepted completely they need to come up with value propositions.
3)    Clients’ preference for risk reduction has resulted in RPOs giving them services with optimum controls and risk management in place. Clear processes and performance metrics make regulatory issues less difficult to deal with.
4)    While offshoring RPO has emerged as a major trend, it has also resulted in challenges. Though it has added value to the services and also reduced costs, global management and maintenance of standards are some of the key concerns. With cost reduction not being the only criterion, companies are looking at RPOs who will help them establish a strategy, partner them in their quest to find the best fits and recruit them. They will prefer organizations that have a thorough understanding of the industry and cultural issues as well.

The potential of this segment is huge considering the challenges of staffing and recruitment. These are the most cost and time intensive activities among all the HR functions. However, a number of companies are still wary of outsourcing recruitment functions. The RPOs must offer solutions that are attractive even for the small and medium size businesses. The efficacy can be established as retention rates improve, time to hire comes down and the clients can have the Human Resource departments work on other HR activities.

ValueNotes Outsourcing Watch: Insights for Investors is a unique news and analysis service from the ValueNotes Outsourcing Practice, focused entirely on outsourcing; This weekly publication analyses events in outsourcing, outsourcing companies, trends in the sector, impact of global competition from offshoring to established US companies, and emerging investment opportunities.

No responsibility is accepted for errors of fact or opinion. Neither the analyst nor ValueNotes has a position in the stocks covered above, or has received any payment in any form for this report. ValueNotes does not own or trade in the stocks of companies under coverage. ValueNotes does not provide investment banking services or investor relations' services to preserve the independence of its research. Neither ValueNotes nor the analyst incurs any liability arising out of use of the above information/ report. Reproduction in whole or in part without written permission is prohibited.

ValueNotes Outsourcing Watch articles are distributed through FinancialWire, an independent, proprietary news service of Investrend Information, www.investrend.com