A lesson in disruptive innovation

When you hear of the Agile methodology and 'as a service' products, you might often think of technology companies adopting these. But for virtualRPO’s Jon Rice and Sean Walters, these concepts are just as applicable to the recruitment industry.

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When you hear of the Agile methodology and 'as a service' products, you might often think of technology companies adopting these. But for virtualRPO’s Jon Rice and Sean Walters, who work in recruitment, these concepts are just as applicable to their industry.

“While the technology industry by its very nature is constantly evolving and expanding, the same can’t be said for the recruitment industry,” says Walters. “We saw that the recruitment industry was stale, staid, not delivering value for clients – and perhaps most importantly, we saw that it was ripe for innovation.”

So they founded virtualRPO, which provides companies with their own dedicated recruitment professional, whose services they only pay for when they use, like a company would tap cloud services.

“You could say we’re more closely aligned to an outsourcing company than a recruitment agency,” says Rice. “The work or projects that our recruiters take on is charged on an hourly rate and we don’t charge referral placement fees like the traditional agencies do.

“There’s no smoke and mirrors: ours clients pay for what they use, and no more. Our clients can plug in when they need to which is a major benefit.”

We saw that the recruitment industry was stale, staid and ripe for innovation.

Sean Walters

Built on the cloud

Walters says the business is built on virtual platforms. “Ours is a virtual service that can be used on site or off. All of our systems are cloud-based, and all of our recruiters have access to remote workspaces and technology that enables them to get the job done, wherever they or their client might be physically located.”

What set virtualRPO apart from other recruitment is that they can deliver “a better hire for half the cost”, he says.

“The world is moving to a contingent workforce economy and to keep up the pace, Kiwi businesses need to be agile and change size rapidly if the market demands. Despite generally positive economic sentiment, businesses still have a frugal mind set, and are looking to save money in new ways," Rice says.

“We are also seeing an increase in skilled talent looking for flexible work or portfolio careers which is a significant shift from past patterns. Interestingly, the technology industry has led the way in hiring contractors to complete projects. For us, having built up a large pool of experienced recruitment consultants over the years that are now looking for flexible work, we realised that we can offer the same thing from a recruitment perspective," Walters adds.

Walters points out that the businesses using their services are from a wide spectrum – from startups to enterprises.

“We operate in sectors that span technology, IT and software, travel, banking and financial services, construction, telecommunications, FMCG and manufacturing – and our client list is growing constantly as business leaders click on to how attractive recruitment cost savings of up to 50 per cent can be.”

When working with large organisations such as Orion Health, Localist and ASB, Walters says recruiters are brought in to augment existing teams.

“For other projects, high growth companies such as My Food Bag will outsource all of their recruitment to virtualRPO, because they are operating with that contingent, flexible approach and don’t need the ‘baggage’ of a permanent – and salaried – recruitment function at this point of their growth.”

Rice says virtualRPO is currently talking to a number of high growth tech businesses with big headcount growth plans over the next 12 months, some which will double in size this year.

“These businesses are too savvy to throw their hard earned profit or raised capital away on massive agency fees when they could engage virtualRPO’s services and in some cases spend only a third of what it would usually cost them to recruit new staff into the business. The costs savings can be put to better use in R&D, marketing and market research, professional development and building their own customer base.”

As for the most in demand skills, he says, recruiters are seeing a rise in demand for those who have experience with cloud software, mobile, enterprise and bespoke applications and big data analytics.

Walters notes there is something of a talent war breaking out in the tech and design sectors. “We’re seeing that most Kiwi software and SaaS firms are competing for similar talent, and so in turn they are snaffling each other’s staff.” This, he says, was similar to the shortage experienced by major global companies a few decades ago that laid the foundations for their big graduate programs.

“Additionally, we’re meeting with design agencies that are experiencing huge growth currently, which is a positive sign of the market. However, they are struggling as the traditional technology firms snap up all the same kind of developers the design agencies are looking for.”

Flexible contracts

In Silicon Valley, some IT professionals are on a two-year contract (their choice) and have an option to move to another hi-tech company after this period or stay to grow the business further. This way, they can work across different companies, acquire new skills, and keep up to date. So is this happening in New Zealand too?

Read more: CIOs and the rapid pace of change

Rice says virtualRPO’s specialist IT recruiters haven’t seen any evidence of options with short-term, easily transferred contracts like the ones offered by Silicon Valley firms.

However, Rice says that at the rate the tech sector is going, he doesn’t doubt that the New Zealand market will see that level of flexibility and agility emerge in the next few years.

Job-seekers or those looking to boost their existing title and climb the ladder should attend more practical courses, find a business or tech mentor, attend networking groups, exchange ideas and share knowledge, follow the trend-setters.

Jon Rice

“The IT, software and tech contracts our recruiters are seeing more commonly are usually for less than two years, often with the possibility of extensions," Walters says.

“A noteworthy trend our recruiters are seeing is that some companies are getting new staff to sign a ‘money back’ agreement for visa support, in which the employee is bound to stay with that company for a set (usually one to two years) period of time, or they have to pay back all visa fees and expenses the employer incurred. Initiatives like this illustrate just how tough it is for businesses to secure and then retain the best people in a hot and growing market.”

So what advice would Walters and Rice give to IT professionals regarding skills updates and training programs they should attend, based on what employers are looking for?

Rice says, “To be frank, certifications and training programs are nice-to-have in a CV, but in this competitive market and particularly in this sector, they won't qualify someone as a better candidate.

“Instead, we’d recommend job-seekers or those looking to boost their existing title and climb the ladder should attend more practical courses, find a business or tech mentor, attend networking groups, exchange ideas and share knowledge, follow the trend-setters or even better – be one.”

Send news tips and comments to divina_paredes@idg.co.nz

Follow Divina Paredes on Twitter: @divinap

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