To Drive Value, Human Capital Leaders Turn to Outsourced Solutions

Key to rapid innovation and commercialization in the medtech industry is widespread use of outsourced services for design and development, manufacturing, and sterilization. Many organizations, especially startups, leverage external solutions to accelerate time to launch or reach critical milestones in their funding strategies. By doing so, manufacturers of all sizes are able to optimize operating budgets while ensuring access to leading technologies and processes without losing focus on core competencies.

With the growth of talent scarcity in the labor market, however, interest in outsourced HR services is rising—specifically, support for hiring of permanent employees or procurement of temporary workers. With so many organizations struggling to find the people they need to innovate, it’s inevitable product delays will occur. More concerning is growing competition from other industries for in-demand skills such as data scientists, AI specialists, and Internet of Things experts.

As a result, we see explosive demand for services such as recruitment process outsourcing (RPO) and managed services programs (MSP), two well-established solutions to address the pressing talent needs of organizations worldwide. As global economic recovery and the Great Resignation gain momentum, employers are leveraging outsourced services to rapidly deploy the people resources they need. In fact, global RPO demand grew at a double-digit rate last year and is expected to remain strong this year.¹

Why are companies investing more in these types of solutions, and how have they alleviated the headaches associated with building a world-class workforce? Let’s take a look at the benefits and challenges with an external approach.

Creating Value Through RPO

RPO is a broad family of solutions many companies have embraced for more than 20 years. This service can be delivered through internal resources, an external provider, or both. Its benefits are many, and the current iteration is the most sophisticated to date. Employers engage in these types of solutions to address a variety of needs, but it always comes back to value creation.

Depending on the type of program, an RPO relies on a partner organization to perform some or all of a company’s recruitment activities, including employer brand building, talent marketing, sourcing, screening, interviewing and scheduling, internal mobility management, job offer presentation—even on- and offboarding. A solution provider may oversee the entire candidate lifecycle or just parts of it, be involved in recruitment of some or all roles for a client, and support a part or all of the business. An internal RPO may operate under its own budget with P&L reporting within the organization.

Nearly every mid-sized and large manufacturer relies on its talent acquisition team to recruit the people resources it needs, but like many other areas of the business, considerable investments are needed to be effective. Just as manufacturing requires people, process, and technology, the same is true for talent acquisition.

Recruiters are one of the most in-demand roles today² and many medtech organizations struggle to find individuals with knowledge of the medical device industry. The process of recruitment is also increasingly complex as more companies focus on creating a positive talent experience, or candidate journey, as a way to win over job seekers.

Randstad Sourceright’s 2022 Talent Trends survey of 900 human capital and C-suite leaders found more than three-quarters (77 percent) of those in the life sciences industry say talent experience has become even more important now than in the past 12 months.³ Notably, focusing on diversity, equality, and inclusion was mentioned by more respondents (73 percent) as a way to enhance the talent experience than any other initiative. Leveraging technology to raise candidate engagement was also cited by a majority, with 63 percent investing in more tools for this. Sixty percent also reported investment in RPO or MSP to enhance the talent experience.

While some organizations have created internal recruitment functions to meet talent acquisition demands, most instances are through an external partner. This approach maximizes value because it requires significantly less internal investment while ensuring access to world-class practices and expertise. Just as contract manufacturers can leverage economies of scale to optimize their capital investments, the same can be said of RPO solution providers. Significant budgets are needed to pilot and implement the newest AI and automation tools for candidate matching, engagement, and management. Only organizations with significant hiring volumes can justify such spend. Those with lower volumes can still access these resources through an RPO, which in many programs also helps companies optimize their HR technology stack.

Service providers have developed efficient and effective processes to identify and attract not only active candidates (those actively seeking new employment), but also passive ones (those open to opportunities but not actively looking). RPOs are especially effective to reach passive talent through various measures such as creating talent pools and continuous engagement with workers.

This is important as passive candidates are a much larger source of talent, according to Randstad’s 2022 Workmonitor survey of 27,000 working adults in 34 markets around the world.⁴ Less than one-quarter (22 percent) said they were actively searching while more than twice as many (48 percent) were passive candidates.

Beyond identifying suitable candidates, RPOs also offer attractive recruitment rates due to economies of scale and other process efficiencies and effectiveness. For example, unlike recruitment agencies that charge a high fee typically based on the first-year salary of the role, RPOs usually charge a monthly management fee in addition to a fee for each hire, resulting in a more economical alternative.

An RPO is a scalable solution that allocates more recruitment resources during high demand and curtails them when hiring slows. This enables organizations to quickly fill roles without the onboarding delays associated with adding new recruiters in an internal model.

Creating Agility Through MSP

While an RPO is an ideal solution for outsourcing recruitment of permanent hires, an MSP is designed to help companies better manage their contingent or non-permanent workforce. More recently, a growing number of companies are considering augmenting their permanent staff with temporary resources that can be deployed quickly and cost effectively. Some do so to reduce the fixed costs associated with permanent hires, while others choose this solution to remain compliant to local labor regulations or standardize processes in their organization.

As a result, a number of companies are turning to temporary staffing, independent contractors, freelancers, and gig workers as a way to achieve their goals. Others see flexible talent as resources that can be more easily and quickly procured through staffing agencies, which are different from recruitment agencies. An MSP gives them more workforce agility to rapidly respond to changes in their business. According to Staffing Industry Analysts (SIA), organizations in the Americas report an average of 20 percent of their workforce are contingent.⁵

Under an MSP, a provider will oversee the requests and fulfillment of requisitions for temporary staff, then administer the talent suppliers that recruit the flexible talent. MSPs were developed as a way for an external provider to support companies with this critical component of their workforce, which in recent years have grown more complex. Managers with contingent talent responsibilities—typically procurement and HR leaders—are spending more of their time tending to workforce matters, according to SIA.

Like RPOs, MSPs have also matured since being introduced into the labor market more than two decades ago. Initially, this model was regarded primarily as a way to achieve greater cost savings, but today that is just table stakes for implementing such an initiative and focuses on giving companies wider access to high-quality talent.

Through talent pooling, in which job applicants and other workers are nurtured for contingent roles, managed services providers create a robust pipeline of talent available to the MSP buyer whenever the need arises. Growing complexities in labor laws around the world pose real challenges for companies using flexible talent that MSPs with global and local expertise are better suited to manage.

A Holistic Approach to Talent Acquisition

Although many companies continue to manage their contingent workforce separately from their permanent one, there is rising interest to integrate RPO and MSP programs to create a holistic approach. Referred to as a total talent acquisition model or integrated talent solution, this elevates people resourcing to a whole different level. While it is a complicated program to deploy, in the life sciences industry 86 percent of organizations across all industries say they plan to pursue this model within the next 12 months, our survey found.

The Right Time to Explore

With talent scarcity worsening and little relief in sight, companies in the medtech industry will have to consider every option for acquiring the skills needed to drive innovation. Whether this is done through permanent hiring or deploying more flexible talent, the right solution will depend on need and access to people. The industry has long relied on partners to deliver a plethora of effective manufacturing services. It may be time to consider partnerships to achieve similar successes in talent management. 

References

1. bit.ly/mpo220531
2. bit.ly/mpo220532
3. bit.ly/mpo220533
4. bit.ly/mpo220534
5. bit.ly/mpo220535

---

Tania de Decker is managing director of global strategic accounts for Randstad Enterprise Group. She works with Fortune 500 companies to develop and implement processes that improve and drive recruitment and retention solutions. de Decker has over 28 years of recruitment experience and has worked over 18 years with life sciences companies. The emphasis has always been improving the quality of her clients’ talent acquisition and achieving cost savings without compromising their capacity to pursue growth opportunities or manage risk.