Trends in Managed Services 2015 and Beyond

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1 Trends in Managed Services 2015 and Beyond Consolidating services, technology developments and strategic partners

2 Jo Lindsay, Director of Projects, Reed Talent Solutions 2015 will be the 18th year I have spent working within the recruitment industry and specifically Managed Services. Meeting the increasingly complex and challenging requirements of clients and the ebb and flow of candidate and client led markets (both dynamic concepts in their own right) have been the only constants during that period. The speed and degree of change has arguably accelerated since the Great Recession hit, as clients have been able to drive more competitive margins, and the appetite for efficiencies in both the private and public sector has driven recruitment providers to be evermore innovative in the solutions and services provided. The march of technology has been relentless, with the move of recruitment advertising online and proliferation of smart phones and tablets changing the way candidates and employers engage. As we move into the second half of this, the second decade of the 21st century, what better time to reflect on what has gone before and what 2015 and beyond might hold. Consolidation of staffing categories is complete. It s time to consolidate recruitment services. The last 15 years has seen the rise and rise of multi category, temporary workerstaffing contracts. Financial services and utilities organisations were pioneers, coming to market with large Managed Service agreements. They first consolidated their expenditure on clerical and more junior roles with single suppliers, seeking and achieving savings through economies of scale and by leveraging their full purchasing power. Later, the deals involved more complex and diverse supply chains that embraced new vendor management technology and recognised the greater commercial flexibility required to provide professional interim workers within the same contractual framework. The Gershon report was the catalyst for the wide adoption of Managed Service arrangements within the public sector and in particular, local government. The improving unemployment figures in the UK and more buoyant jobs market may quickly halt the downward pressure seen on agency margins over the last few years. The candidate led market will return, however the appetite for client organisations to reduce costs associated with temporary labour shows no sign of waning and with most of the economies of scale exploited and purchasing power maxed out, what next? Within the public sector, a new breed of large framework arrangements are already in development and operation. They offer the participating organisations reduced procurement costs but also lower margins derived from improved purchasing power and the ability to secure more favourable contractual terms than may be negotiated by a single entity. Such collective agreements have never really found a place in the private sector, but companies will of course face the same challenges. The emergence of contracts covering multiple recruitment services may therefore gather pace in The recruitment industry itself is an architect of this phenomena, with recruitment

3 businesses acquiring, evaluating and engaging talent on behalf of client organisations, with little discernable difference between business processes supporting permanent or contractor hires. The more flexible employment market and employee preference for lucrative contract work in sectors with skills shortages has led to recruitment businesses choosing to manage contractor and permanent talent in similar ways. Quite simply, procurement professionals have identified another opportunity to further consolidate expenditure on recruitment by combining temporary and permanent Managed Services, inclusive of agency supply, direct sourcing and recruitment process outsourcing (RPO) arrangements. Moreover there is very little reason to object, as much of the best practice from both areas can be shared. Add to this the common sense approach that comes from having a single employee brand proposition, a single talent database, consistent internal and external recruitment processes as well as integrated reward policies and the potential benefits are clear. Goodbye to critical suppliers. Hello to strategic partners. The consolidation of temporary and permanent recruitment models is just the tip of the iceberg. Organisations can derive further benefits from seeking out additional services that can be bundled and delivered by a recruitment provider. Allied services such as pre-employment vetting, learning and development, provision of recruitment technology, outplacement and redeployment, the wider remit of talent mobility and identification of future leaders, along with more obvious stable mates such as provision of Assessment and HR consultancy delivered by Occupational Psychologists all lend themselves to delivery by Recruitment Managed Service Providers. After all, they have a vested interest in making these services combine harmoniously to deliver against an organisation s overall talent management objectives. Recruitment Managed Service providers are often considered critical suppliers, representing large levels of expenditure as they account for temporary and contractor wages, but this move to consolidate additional services surely will see them begin to be rightly considered as strategic partners, not because of the contract values that the relationships represent but because they are delivering against talent strategies. There will be those organisations who baulk at putting all their eggs in one basket. However, it was not that long ago that IT solutions providers would have faced the same challenge, yet in 2015 a strategic IT partner will be commonplace. The key to success will be selecting the right strategic partner. The benefits to be derived from integrating all recruitment services through a single partner are great and as such worthy of consideration. Essentially, this consolidation of services brings a greater propensity for the partner to influence and deliver improved business outcomes rather than simply delivering against defined outputs. Today at REED we talk about time to perform in role, not time to hire, and instead of cost, return on investment.

4 The technology question As alluded to in the opening lament of this discussion document, technology has played an increasing role in recruitment over the last 20 years. The last ten years has seen the applicant tracking system and vendor management system marketplaces mature and the solutions develop to offer not just greater functionality for stakeholders, both candidate and client, to interact with the recruitment process but an ever greater insight into the outputs of recruitment activity. The Technology challenge yet to be really met by any provider is how to deliver a best in class temporary and permanent recruitment managed service using a single platform. Whilst there are outstanding products in both marketplaces, the best vendor management systems lack the richness of recruitment and selection functionality to truly support end to end permanent recruitment activity, as applicant tracking systems do. Meanwhile, the best applicant tracking systems fail to provide complex timesheet and associated payroll integrations to support large and complex temporary managed services. The traditional Management Information format will surely take a last gasp breath in 2015, with recruitment providers and clients alike wanting to harness the power that so called big data offers, to not only review performance metrics but provide insight into HR strategy and how HR metrics translate into improved business performance. REED was an early adopter of technology within our core recruitment service, creating our job board reed. co.uk in 1995, creating a single talent database across our business in 1997, and launching our proprietary managed service software to clients in We continue to innovate and 2015 will see us launch new and exciting additions to our portfolio of technology that supports recruitment managed services.

5 For more information... On any of the services listed above, or for more information around our bespoke HR consultancy and recruitment process outsourcing solutions, please contact us

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