Recruitment Process Outsourcing Market Analysis Report By Type, By Service, By Enterprise Size, By End Use And Segment Forecasts From 2020 To 2027

Industry Insights

The global recruitment process outsourcing (RPO) market size was worth USD 5.48 billion in 2019. The market is anticipated to register 18.5% CAGR over the forecast duration, 2020 to 2027. Factors such as the growing need to reduce overhead costs and an effective recruitment process are driving the growth of the market. RPO service providers accomplish several tasks such as selecting candidates and ensuring the quality of the recruit. By using innovative technologies such as machine learning and artificial intelligence, service providers automated the processes of CVs screening and interview scheduling. Further, using assessment tools and chatbots, service providers are focusing on engagement with better candidates.

Increasing the attrition rate across enterprises is a key factor supplementing the growth of the market. Service providers are offering a replacement for any candidates who quit on short-term notice. This helps companies in staying competitive in the market. In addition, with changing education systems, candidates are more equipped with skill-sets and hands-on experience than ever. Therefore, selecting the right candidate is becoming a challenging task for companies. A growing focus by employers on reducing recruitment costs and core competencies is also bolstering the market growth.

Companies are increasingly focused on hiring the right talent to perform a specific task. However, problems such as labor shortage and difficulty in finding the right talent are adversely affecting companies’ growth. Owing to this, the demand for outsourcing is gaining more traction than ever. To bridge the talent gap, companies are also focusing on providing career guidance training sessions.

Type Insights

In 2019, the on-demand segment accounted for the highest share in the RPO market with more than 25.0%. Small and medium enterprises are recognizing the advantages of RPO providers and increasingly adopting outsourcing services. On-demand recruitment outsourcing service providers offer scalable, low-cost, and flexible solutions. Depending on the demand of business, organizations can scale up and scale down their recruiting capabilities. Therefore, the on-demand category is anticipated to register significant growth over the next few years.

On the other hand, enterprise engagement RPO, alternatively known as end-to-end and full-scale recruitment process, provides complete solutions related to recruitment. These solutions include screening, candidate sourcing, scheduling interviews, monitoring, and onboarding. Thereby, this process reduces the burden on enterprises and allows them to focus on their core competencies. The demand for full-scale recruitment processes is high among fortune 500 companies in developed countries such as the U.K. and the U.S.

Service Insights

In 2019, the off-site RPO segment accounted for the maximum share of more than 65.0% in the market. This service offers a centralized approach for hiring clients for different locations. In this, the recruitment firms collaborate with clients to provide the most suited talent globally. Recruitment firms follow personalized approaches for diverse hiring. Different countries across the globe have different labor laws and hiring policies. Recruitment firms are well aware of these laws, which help them in identifying the best talents in a particular region while adhering to regulations. Owing to this, multinational companies are increasingly adopting RPO services in their recruitment processes.

On the other hand, the on-site RPO service category is estimated to register over 20.0% CAGR from 2020 to 2027. On-site service is the additional extension of the enterprises’ existing HR team. In this solution, recruitment service providers work with companies’ HR for effective hiring. For simplifying their hiring processes, various companies are adopting these practices. The on-site service segment provides transparency about the number of agencies involved and hiring fees.

Enterprise Size Insights

In 2019, the large enterprise accounted for more than 68.0% share in the recruitment process outsourcing market. Various large enterprises such as pharmaceuticals, financial services, and manufacturing are increasingly incorporating recruitment outsourcing practices. Greenfield projects, which limit companies in the establishment of their full-fledged HR department, are encouraging companies to collaborate with recruitment service providers for end-to-end recruitments. In addition, high budgets and the need for sophisticated services are further driving the growth of this segment.

On the other hand, SMEs are expected to witness moderate growth as they have a dedicated HR team that performs multiple tasks such as hiring, onboarding, training, and others. In addition, SMEs have low budgets for recruitment. However, challenges in hiring the right candidates and continuous fluctuation in the workforce demand are encouraging SMEs to incorporate RPO services.

End-use Insights

In 2019, the BFSI sector accounted for the highest share of more than 27.0% in the market. The financial sector is continuously changing owing to changing operation models and digital disruptions. Therefore, due to the challenges in recruiting the right candidates and reduce the overall recruitment cost, a large number of financial services companies are opting for recruitment outsourcing services. BFSI firms include commercial banks, management firms, insurance companies, asset management firms, and co-operatives. Growth in these sectors leads to the creation of various direct and in-direct jobs. Often, these sectors require candidates with the desired set of skill, where recruitment agencies play a crucial role in selecting the right candidate.

On the other hand, the healthcare segment is likely to register considerable growth over the forecast duration. This sector is diverse in nature and includes hospitals, home-care services, enterprises, and healthcare laboratories. These healthcare verticals require a skilled workforce who can work in a regulated environment. In addition, the healthcare sector is witnessing considerable growth owing to the outbreak of COVID-19 and the increasing prevalence of chronic diseases.

Regional Insights

In 2019, North America held the largest share in the recruitment process outsourcing market with more than 42.0%. The United States was the leading shareholder in the region and projected to maintain its dominance over the forecast duration. The country's economy is returning to normalcy and the demand for a skilled workforce is increasing. Healthcare sector is one of the highest growing sectors in the country while the manufacturing sector is witnessing robust growth. As estimated by the U.S. Bureau of Labor Statistics (BLS), from 2018 to 2028, there would be around 8.4 million jobs in the U.S. Therefore, growing job opportunity and rising manufacturing and healthcare sectors are projected to drive the demand for recruitment outsourcing in the region.

Canada, on the other hand, has a significant share in the market with its four provinces Alberta, Ontario, Quebec, and British Columbia generating considerable employment opportunities. These provinces together account for almost 50.0% share in the Canadian market and mostly outsource their recruitment needs. Mexico is also generating increasing demand for staffing solutions and anticipated to offer lucrative growth opportunity for the market over the next few years.

The Asia Pacific is anticipated to register noticeable growth owing to the expansion of multinational companies in countries such as India and China. India is considered a talent hub with a huge number of working professionals and a large population in the age group of 25 to 35. In addition, several multinational companies are aiming to set their footprint in the country owing to the availability of low cost and effective workforce. Thus, Asia Pacific offers a lucrative opportunity for the growth of the market.

COVID-19 Impact Analysis

The RPO market has been adversely affected owing to the outbreak of COVID-19. The pandemic has led to a major change in the recruitment processes, as companies are required to adhere to the social distancing norms. For example, a U.K.-based recruitment service provider, Datum RPO advised its resources and clients to be proactive in screening the applicants and check for the details such as their location and past 14 days history to adhere to the COVID-19 norms. Moreover, companies are implementing advanced recruitment solutions to avoid direct in-person meetings while recruiting a candidate.

Recruitment Process Outsourcing Market Share Insights

The global market is characterized by the presence of several regional and international players. Leading market players are IBM Corporation, Korn Ferry, Manpower Group Inc., Wilson HCG, Sevenstep, People Scout, Cielo, Inc., Pontoon Solutions, and ADP, Inc. among others. These companies provide diversified services and take care of various recruitment needs. However, with the entry of new players in the market, existing players are focusing on diversifying their product portfolio. It is estimated that the rise in the blended services and tailored solutions are projected to transform the RPO industry. In addition, market players are also focusing on mergers & acquisitions to gain competitive advantages over their peers. For example, Permira Holdings Limited made an acquisition of Cielo, Inc. in December 2019 to consolidate its position in the market.

Report Scope

Segments Covered in the Report

This report forecasts revenue growth at global, regional, and country levels, and provides an analysis of the latest industry trends in each of the sub-segments from 2016 to 2027. For this study, Million Insights has segmented the global recruitment process outsourcing (RPO) market report based on type, service, enterprise size, end-use, and region:

• Type Outlook (Revenue, USD Million, 2016 - 2027)
    • On-demand RPO
    • Function-based RPO
    • Enterprise RPO

• Service Outlook (Revenue, USD Million, 2016 - 2027)
    • On-site
    • Off-site

• Enterprise Size Outlook (Revenue, USD Million, 2016 - 2027)
    • Small & Medium Enterprises (SMEs)
    • Large Enterprises

• End-use Outlook (Revenue, USD Million, 2016 - 2027)
    • BFSI
    • Healthcare
    • Manufacturing
    • IT & Telecom
    • Education
    • Others

• Regional Outlook (Revenue, USD Million, 2016 - 2027)
    • North America
        • The U.S.
        • Canada
        • Mexico
    • Europe
        • Germany
        • The U.K.
        • France
    • The Asia Pacific
        • China
        • Japan
        • India
    • South America
        • Brazil
    • The Middle East & Africa