The concept of recruitment process outsourcing (RPO) and managed service provider (MSP) programmes is picking up pace in these markets. Historically pioneered by West-headquartered organisations that had a presence in APAC, the RPO and MSP markets have reached a tipping point where many locally headquartered buyers have started embracing these solutions.
Some of the critical aspects influencing talent acquisition in APAC include:
- Diverse demands are driving growth of RPO and MSP, especially the economic surge. Most APAC countries have experienced rapid economic growth in recent times. Consequently, companies operating here have also grown at a rapid pace leading to a sharp increase in demand for talent. Increasing the number of successful examples in the market is adding to the popularity of RPO and MSP. In the more developed but slow-growing economies, shifts in the talent landscape are driving an increase in outsourcing models. For example, the rapid conversion of talent from permanent to contingent workforce in Australia is causing organisations to look at a MSP programme. An increased openness in Japan around the concept of outsourcing is driving up RPO adoption there.
- Maturity levels vary greatly by region. APAC is a heterogonous market where the level of awareness and adoption varies significantly from country to country . In general, RPO has seen more traction than MSP in APAC. Everest Group’s analysis shows that while Australia accounts for almost half of the market and is clearly the most mature, Singapore and Hong Kong are next, as these countries host the regional headquarters of many firms. China, India, and Japan are emerging markets witnessing heightened activity. Other markets are relatively smaller and are in early stages of maturity (see image 1).
- The market is experiencing growth. Everest Group’s research shows that APAC accounts for nearly 10 to 15 per cent of the global talent acquisition services market (North America is the biggest market, followed by Europe) and is the fastest growing. The strong growth is primarily attributed to heightened activity in the emerging markets of China, India, and Malaysia. Australia, while accounting for almost half of the market, is showing signs of maturity and is expected to grow relatively slowly (see image 2).
- Multi-country deal activity is more common. An interesting aspect of the APAC market is the high occurrence of multi-country deal activity. Most global companies present here tend to operate across multiple countries in the region and, more often than not, enter into a multi-country arrangement to fulfil all their regional talent requirements. Barring Australia, most APAC countries are generally included in a multi-country construct (see image 3).
- Local firms are earning market share. The market for talent acquisition services in APAC was pioneered by regional/local arms of firms that had their headquarters in the West. However, this trend is undergoing a rapid change, as many locally-headquartered firms have started to adopt such services in a big way.
- Diverse challenges call for unique solutions. APAC is a heterogeneous market, and Everest Group’s conversations with enterprises in different countries have found varying needs necessitate building different solution models. Significant pricing differential prevails in the region, which requires for a well-thought-out delivery strategy. This also calls for a differentiated technology strategy, as most global solutions may not be viable in low-cost countries within the region. There are also challenges in terms of languages and regulations,
which may make it almost impossible to do business without some sort of local presence.
- The service provider landscape is diverse. Given the tremendous potential, many global service providers have already made a foray into the market. Some did it through acquisitions, while others went the organic route. Given that the market is inherently different from the West, many country-level service providers have also made quite a name for themselves. These local providers understand the regional sentiments well and have developed strong in-country delivery presence.
—Arkadev “Arko” Basak, practice director of Everest Group