Everest Group PEAK Matrix for RPO Service Providers Focus on Futurestep July 2012
Introduction and scope Everest Group recently released its 2012 Recruitment Process Outsourcing (RPO) Service Provider Landscape and Capability Assessment report. This report analyzes the changing dynamics of the RPO landscape and assesses service providers across several key dimensions. As a part of this report, Everest Group updated its classification of 20+ service providers on the Everest Group Performance Experience Ability Knowledge (PEAK) Matrix for RPO into Leaders, Major Contenders, and Emerging Players. The PEAK Matrix is a framework that provides an objective, data-driven, and comparative assessment of RPO service providers based on their absolute market success and delivery capability. Everest Group also identified six service providers as the 2012 RPO Market Star Performers based on the strongest forward movement demonstrated on the PEAK Matrix year-on-year. Buyers can use the PEAK Matrix to identify and evaluate different service providers. It helps them understand the service providers relative strengths and gaps. However, it is also important to note that while the PEAK Matrix is a useful starting point, the results from the assessment may not be directly prescriptive for each buyer. Buyers will have to consider their unique situation and requirements, and match them against service provider capability for an ideal fit. This document focuses on Futurestep s RPO experience and capabilities, and includes: Futurestep s year-on-year movement on the RPO PEAK Matrix Everest Group s assessment of Futurestep s delivery capability and market success Detailed RPO profile of Futurestep 2
Everest Group defines RPO as transfer of ownership of all or part of recruitment processes or activities on an ongoing basis HR strategy Employee relations Regulatory and compliance Global mobility Performance management Learning Recruitment Compensation Benefits Payroll Employee data management HR information systems and reporting Employee contact center Strategy Judgment-intensive Transaction-intensive Recruitment Strategic consulting Sourcing Applicant tracking Screening Pre-employment testing Employment offers / selection management Background checking On-boarding Vendor management For this study, we include RPO deals in which: A minimum of four or more recruitment processes are included The outsourcing deal is active and is at least one year in deal length The deal scope should not be limited to only temporary hires The buyer employee size is 3,000 or more This study does not include out-tasking arrangements (typically handled by recruitment agencies, staffing companies, or executive search firms) that are managed on a project-by-project basis rather than through an ongoing, long-term arrangement Source: Everest Group (2012) 3
Market success Futurestep is an RPO Star Performer 2012 based on strong forward movement over time on the Everest Group PEAK Matrix Change in Futurestep s positioning on Everest Group PEAK Matrix for RPO in 2011 Major Contenders Emerging Players 2011 Futurestep 2010 Delivery capability Leaders Futurestep s RPO market success in 2011: Strong organic growth Signed 6 new RPO deals and renewed 2 RPO deals in 2011 Increased the number of active RPO clients to 23 (nearly ~30% YoY growth) Growth drivers Strong growth came from retail and energy & utilities sector Enhanced global presence by winning deals in North America, the UK, continental Europe and Asia-Pacific Strategic priorities for 2012 Focus on value-driven RPO (vs. a costcentric RPO value proposition) Continued investment to capture multicountry/global RPO opportunities Futurestep s capability growth in 2011: Scale: More than doubled the annual number of hires managed through sustained new deal signings and renewals Scope: Enhanced geographic scope through new deals signings across regions and four multi-continent deals. Delivery footprint: Expanded their global delivery footprint by adding new locations 4
25 th percentile Market success 75 th percentile Everest Group PEAK Matrix 2012 RPO market standing Performance Experience Ability Knowledge Everest Group Performance Experience Ability Knowledge (PEAK) Matrix for RPO Leader Major Contenders Pinstripe 75 th percentile Leaders The RightThing ManpowerGroup SourceRight Solutions PeopleScout KellyOCG AMS Kenexa Major Contender Emerging Player Star Performer Seven Step RPO Talent2 Volt Momentum Futurestep Aon Hewitt Hudson RPO Hays Capita Resourcing Emerging Players Yoh CDI&WorldConcert Ochre House Allegis Group Services IBM Accenture 25 th percentile RPO delivery capability 1 (Scale, scope, technology, and delivery footprint) 1 Service providers scored using Everest Group s proprietary scoring methodology given on page 12 Source: Everest Group (2012) 5
Market success Futurestep Detailed assessment of RPO capabilities Futurestep is a Star Performer and Major Contender on Everest Group PEAK Matrix for RPO RPO market share 1 Major Contenders Emerging Players Market success assessment Percentage share by number of contracts 2% 3% 2010 2011 Futurestep Delivery capability Leaders Percentage share by annual number of hires 1% 2% 2010 2011 Delivery capability assessment Assessment dimension Rating Remarks Scale Scope Technology capability Delivery footprint Overall Overall remarks Moderate number of clients and number of annual hires; decent FTE strength Good industry coverage with strong market share in consumer and energy & utilities; functional coverage; Good experience in multi-country deals; minimal experience in blended RPO space Medium IT capability; ability to support multiple technology platforms; high investment in recruitment technology Global delivery footprint; moderate usage of offshoring Futurestep is recognized as a 2012 Star Performer as it witnessed strong organic growth in terms of number of new deal signings and capability advancements It is one of the few service providers that has good experience in providing large multi-country RPO services on its own Not the least expensive option, but pricing is reflective of a more strategic and consultative approach. Organizations looking for a tailored approach, especially involving exempt hires, will find the offering more appealing Although with wide coverage and good capabilities across multiple regions (especially EMEA and Asia Pacific), it needs to further improve scale in the Americas Limited capability to handle temporary hiring requirements in the overall RPO construct is one of the key gaps in its offerings 1 Based on contractual and operational information as of September 2011 Source: Everest Group (2012) 6
Futurestep RPO service capability and strategy Company profile: Founded in 1998, Futurestep is a subsidiary of Korn/Ferry, an executive recruitment firm. Futurestep s portfolio of services includes RPO, project-based recruitment, mid-level recruitment, and consulting services. It acquired Newman Group, a talent acquisition and management consulting firm, in 2007. Headquarter: California, U.S. Leadership: Byrne Mulrooney, CEO; Tim Nelson, President, Asia Pacific; Mark Lee, Managing Director, EMEA RPO; Jan Mueller, Managing Director, EMEA Solutions; William Sebra, President, North America; Roberto Spuri, President, South America Website: www.futurestep.com Partnership RPO service provider: None HRO service provider: None Recent RPO-related developments/announcements December 2011: Futurestep announced permanent RPO contract win with Nestle, Italy December 2011: Signed/renewed a three-year, multi region RPO (EMEA, NA, and ANZ) with Treasury Wine Estates November 2011: Futurestep Australia announced a three-year permanent and contingent (RPO) contract with the Australian renewable energy company, AGL October 2011: Futurestep launches new global brand Talent with Impact Current RPO technology strategy Overview: Futurestep offers both proprietary and commercial off-the-shelf solutions such as Taleo and Lumesse Talentlink Other capabilities Blended RPO 1 Outplacement Employer branding Analytics Asia Pacific EMEA Americas RPO headcount: 133 RPO headcount: 115 RPO headcount: 130 Total RPO delivery FTEs = ~378 Current RPO market segment focus Buyer segment: Targets both the mid-market (3,000 to 15,000 employees), as well as the large market segment (>15,000 employees) Geography: North America, South America, EMEA, and Asia Pacific Functional capabilities within key RPO areas across regions Coverage self Through partners Not offered Regions North America EMEA Asia Pacific South America Strategic consulting Sourcing Applicant tracking Screening Pre-employment testing Selection management Background checking Onboarding Vendor management 1 Inclusion of both permanent and contingent hiring with a single service provider Source: Everest Group (2012) 7
Futurestep RPO client portfolio RPO experience Total number of current RPO clients : 23 Total number of annual hires managed : 17,585 hires Major RPO clients RPO split of hires by type of hires Frequency of inclusion of geographies in RPO deals RPO split of clients by industry RPO buyer-size mix 100% = 17,585 hires 100% = 23 clients 100% = 23 clients 100% = 23 clients Temporary 3% 97% Permanent Asia Pacific EMEA North America South America 12% 40% 40% 48% Public 7% 7% Financial services 13% Energy Healthcare 20% 33% Consumer 20% Hi-tech & telecom >15,000 employees 40% 60% 3,000-15,000 employees Source: Everest Group (2012) 8
Futurestep Key RPO delivery locations Calgary Vancouver San Francisco Los Angeles Chicago Dallas Atlanta Houston Toronto Montreal New York North Virginia Washington D.C. London Brussels Paris Lyon Madrid Zurich Frankfurt Warsaw Geneva Milan Delhi Mumbai Pune Bangalore Wuhan Beijing Tokyo Wuxi Shanghai Hong Kong Kuala Lumpur Singapore Buenos Aires Brisbane Sydney Melbourne Auckland Wellington Source: Everest Group (2012) 9
Appendix 10
25 th percentile 75 th percentile Everest Group classifies the RPO service provider landscape based on its PEAK Matrix Performance Experience Ability Knowledge (PEAK) Matrix Everest Group Performance Experience Ability Knowledge (PEAK) Matrix for RPO Market success 2 Major Contenders 2 nd or 3 rd quartile performance across market success and capability 75 th percentile Leaders Top quartile performance across market success and capability 4 th quartile performance across market success and capability Emerging Players 25 th percentile RPO delivery capability 1 (Scale, scope, technology, and delivery footprint) 1 Service providers scored using Everest Group s proprietary scoring methodology given on page 12 2 Based on a combination of total number of RPO clients, recent successes, buyer satisfaction, and total number of hires managed Source: Everest Group (2012) 11
Market success Service providers are positioned on Everest Group PEAK Matrix based on evaluation of two key dimensions Measures success achieved in the market. Captured through a combination of total number of RPO clients, recent successes, buyer satisfaction, and total number of hires managed Major Contenders Emerging Players Delivery capability Leaders Measures ability to deliver services successfully. Captured through four sub-dimensions: Scale Scope Technology capability Delivery footprint Measures the scale of operations through: Overall company revenues Number of current RPO clients RPO FTEs Number of hires managed Measures the scope of services provided through: Breadth of RPO services Geographic scope Number of industries served Experience in blended RPO Measures the capability and investment in technology through: Overall technology capability Investments in developing RPO technology Recruitment-technology maintenance experience Usage experience of recruitment platforms Measures the delivery footprint and the global sourcing mix through: Delivery footprint across four regions Offshore delivery capability 12
Market success Everest Group identified six service providers as RPO Star Performers 2012 based on the strongest forward movement over time on the PEAK Matrix Methodology Everest Group selected Market Star Performers based on the relative year-on-year movement of each service provider, on the PEAK Matrix Year 1 Service provider Year 0 In order to assess advancements on market success, we evaluated the performance of each of the 20+ service providers on PEAK Matrix across a number of parameters including: Increase in number of RPO clients Growth in recent successes Increase in number of hires managed 2012 RPO Market Star Performers Capability In order to assess advancements on capability, we evaluated the performance of each of the 20+ service providers on PEAK Matrix across a number of parameters including: Annual growth in scale Increase in scope of services Expansion of delivery footprint Technology enhancements / investments The top-quartile performers on each of the parameters are identified and the Star Performer rating is awarded to the service providers with: The maximum number of top-quartile performances across all of the above parameters and At least one area of top-quartile performance in both market success and capability advancement The Star Performers designation relates to year-on-year performance for a given service provider and does not reflect the overall market leadership positions. Those identified as the Star Performers may include Leaders, Major Contenders, or Emerging Players 13
FAQs (page 1 of 2) Does the PEAK Matrix assessment incorporate any subjective criteria? Everest Group s PEAK Matrix assessment adopts an objective and fact-based approach (leveraging service provider RFIs and Everest Group s proprietary databases containing providers deals and operational capability information). In addition, these results are validated / fine-tuned based on our market experience, buyer interaction, and provider briefings Is being a Major Contender or Emerging Player on the PEAK Matrix, an unfavorable outcome? No. PEAK Matrix highlights and positions only the best-in-class service providers in a particular functional/vertical services area. There are a number of providers from the broader universe that are assessed and do not make it to the PEAK Matrix at all. Therefore, being represented on the PEAK Matrix is itself a favorable recognition What other aspects of PEAK Matrix assessment are relevant to buyers and providers besides the PEAK Matrix position? PEAK Matrix position is only one aspect of Everest Group s overall assessment. In addition to assigning a Leader, Major Contender or Emerging Player title, Everest Group highlights the distinctive capabilities and unique attributes of all the PEAK Matrix providers assessed in its report. The detailed metric level assessment and associated commentary is helpful for buyers in selecting particular providers for their specific requirements. It also helps providers showcase their strengths in specific areas What are the incentives for buyers and providers to participate/provide input to PEAK Matrix research? Participation incentives for buyers include a summary of key findings from the PEAK Matrix assessment Participation incentives for providers include adequate representation and recognition of their capabilities/success in the market place, and a copy of their own profile that is published by Everest Group as part of the compendium of PEAK Matrix providers profiles 14
FAQs (page 2 of 2) What is the process for a service provider to leverage their PEAK Matrix positioning, or Star Performer status? Providers can use their PEAK positioning or Star Performer rating in multiple ways including: Issue a press release declaring their positioning/rating Customized PEAK profile for circulation (with clients, prospects, etc.) Quotes from Everest Group analysts could be disseminated to the media Leverage PEAK branding across communications (e-mail signatures, marketing brochures, credential packs, client presentations, etc.) The provider must obtain the requisite licensing and distribution rights for the above activities through an agreement with the designated POC at Everest Group 15
About Everest Group Everest Group is an advisor to business leaders on the next generation of global services with a worldwide reputation for helping Global 1000 firms dramatically improve their performance by optimizing their back- and middle-office business services. With a fact-based approach driving outcomes, Everest Group counsels organizations with complex challenges related to the use and delivery of global services in their pursuits to balance short-term needs with long-term goals. Through its practical consulting, original research and industry resource services, Everest Group helps clients maximize value from delivery strategies, talent and sourcing models, technologies, and management approaches. Established in 1991, Everest Group serves users of global services, providers of services, country organizations, and private equity firms, in six continents across all industry categories. For more information, please visit www.everestgrp.com and research.everestgrp.com. 16
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