Take an ordinary Ford Focus. Put in a fancy new stereo, stick a spoiler on the back and tint the windows, and what do you have? A supercar or a Ford Focus with bits stuck on it? Now try selling that Focus. For a boy-racer interested in bells and whistles, it could be the dream car. For a family needing a reliable runabout, the spoiler could be an immediate turn-off.

It’s a matter of perspective. Firms providing no-frills recruitment outsourcing (RO) are purveyors of a quantifiable service that can be measured in terms of cost per hire and employee turnover. But what about RO companies offering much more – talent management, retention advice, training, market research and so on? Are these add-on services the equivalent of a spoiler and tinted windows, designed to make customers think they’re getting something special, or do they provide genuine added value?

Some would argue that the add-ons have always been part of RO, or recruitment process outsourcing as it is sometimes called. “When I started in RPO 11 years ago we were using rudimentary technology – automated CV passing, applicant experience management software – that you would expect any recruitment management system to have now,” says Lewis Cohen, a management solutions consultant at business services outsourcer Ceridian. With the technology becoming a given, RO providers can concentrate on additional services to help to improve a company’s all-round recruitment and retention.

Sue Brooks, a director of RO provider Ochre House, believes that customers are driving the development of the industry. “A few years ago the customer would talk to us in quantitative terms: cost per hire, efficiency metrics,” she says. “Increasingly they are talking about how to improve business performance. Customers wanted to introduce those things in to our relationships.”

A cynic would suggest this merely proves that customers are realising there’s not much value to be had in pure, technology-based RO alone, and it’s only worth something if there is a consultative angle to it.

In addition, RO firms – many of which have been born and brought up in economic boom times – are perhaps only now appreciating fully that if the business world puts the brakes on hiring, and recruitment services are all that the outsourcing providers are able to offer, they are going to be in trouble.

“In these times, it’s good to analyse internal processes,” says Erica Briody, who heads international RO for business solutions company Kenexa. “If companies aren’t in recruitment mode, let’s do line manager training on attracting candidates and work on increasing the talent pipeline.”

RO providers need not fear overstretching themselves because they can if necessary outsource what they have been asked to do by a client to yet another provider. “We’re seeing more outplacement in the current climate,” says Vanessa Forster, sales and marketing director of Origin HR, an RO specialist. “We’re increasingly being asked to offer more outplacement and that’s a new revenue stream for a lot of organisations. We partner with an outplacement consultancy. You can’t be all things to all people, but you can offer the service.”

The larger human resources providers that have RO as just one of their services, such as Ceridian and Kenexa, evidently feel more secure about offering extended consultancy-type services because they have the expertise and the reputation to do this. Smaller organisations set up during the RO boom are having to find ways of surviving when recruitment gets slow.

The best advice for navigating this confusing terrain may be to take a leaf out of the book of one of Kenexa’s clients, the business software company SAP. It had a well-established, standardised recruitment model in the Americas, but needed assistance when it wanted to extend the model to Europe, the Middle East and Africa. Mark Steinke, global vice-president of recruiting, says that he needed to increase the number of recruiters in Europe from 19 to 106. In July 2007 he contracted Quorum, the company that became Kenexa’s RO arm, and eventually the recruiters brought in by Quorum became employees of SAP.

Steinke continues to work with Kenexa on candidate skills assessments because, he says, he doesn’t have the expertise in his own company. But it is all on his own terms. “We have a very well-defined recruitment model and methodology. It’s not perfect but it works well,” he says.

Steinke’s approach means that he has got exactly what he wants from his RO provider, and is now buying only the add-ons that he needs. The lesson is not to lose sight of the fact that your business is best placed to make the decisions about what extended services, if any, should be bought in.

Building a healthy relationship

The membership division of Bupa, the private health insurer, suffered from a culture clash when it first tried outsourcing recruitment for call centre staff in 2006. The original supplier couldn’t understand that “our people aren’t selling a product”, says Phil Knight, head of HR for Bupa UK Membership.

“They’re dealing with people who are suffering from health problems or calling on behalf of someone who is.”

The company switched to Ochre House, with a two-year deal to source all Bupa Membership’s hires of less than £40,000. The contract contains 22 key performance indicators that it has to satisfy. Bupa works with a dedicated Ochre House talent manager, and has found retention rates have improved. “Ochre House has changed our thinking about where to attract people,” says Knight. “Before, we went through agencies; now we attract primarily through the web.”

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