James Caan’s eye for a good business idea is evident whenever he sizes up would-be entrepreneurs in the BBC’s Dragons’ Den. More than 20 years ago, he backed a “radical” proposal to set up a recruitment outsourcing company.

In 1985, Caan, the founder of the Alexander Mann Group, had a vision: to create a brand that would provide services to the human resources industry. It started with executive head-hunting, moving through the financial services and IT sectors. A software business was added. Then, about 11 years ago, Rosaleen Blair, now the chief executive of Alexander Mann Solutions (AMS), came along.

“Rosaleen identified that the market was going towards a business-process outsourcing model, where customers wanted an inclusive approach and service,” Caan says. “When she and I first discussed setting up an RO company it was a case of recognising that clients want more than a transaction; they need a relationship with a partner who helps and manages that process.” Blair set up AMS as an independent business within the Alexander Mann Group. “At the time, her approach and ideas were radical because nobody else was doing it,” says the television dragon.

Delve a little further and it becomes clear that it wasn’t easy. “It didn’t take off,” Blair says. “My biggest battle was to convince people that there was a market for RO. It was challenging because organisations weren’t ready for it.”

What is clear is that, for all the RO firms’ claims to be a panacea for recruitment ills, they are businesses first. “One thing that has done me proud over the past 20 years is constantly looking at change,” Caan says. “Companies evolve and you need to be conscious that the service you gave yesterday might not be appropriate today. My view has been to look at the market, look at buying patterns and what employers need to remain competitive.”

If you come at it from your customer’s point of view, Caan says, you can identify products and services they need – and it becomes an opportunity.

For Caan, RO was simply a byproduct of this business approach. Another is his current project – online software that allows local authorities to standard-ise the way they deal with recruitment agencies and track their performance. “The government sector is safe because it is unlikely to change its hiring habits in a downturn,” he says. “Local authorities still use multiple providers.”

As for the future of recruitment outsourcing, Blair says that people’s concerns – that the industry is not adding value to organisations, and an element of confusion as to what exactly RO is – are valid. “As an industry we need to do more about educating people. And RO is not right for everyone.”

She might ditch the RO tag, although she doesn’t know yet what she would replace it with, and for now it’s a handy indicator of the sort of work AMS does. Caan says that search and head-hunting are still the dominant recruitment models in the mid-range salaries market (the biggest market), but believes that “RO encompasses that into its solution”.

For now, these two entrepreneurs who helped form the industry are happy to still make money from it. If the tide turns against RO, however, there is little doubt that some careful rebranding and repositioning will take place.

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