The Recruitment Industry and Globalization: Who Will Win?

 The recruitment industry is undergoing an intense period of globalization driven by the needs of domestic clients. When recruitment firms are highly successful in the U.S., their multinational clients increasingly ask if they can recruit in the South America, Asia-Pacific or the EU regions.

Big recruitment firms no longer have a monopoly on internationalization—powered by technology, boutique firms can now compete in foreign markets that would have been inaccessible 10 years ago. So what trends are shaping this wave of globalization, and what will distinguish the firms that thrive in a globalizing industry?

1. A Firm Understanding of Client Needs

Depending on what type of clients a firm serves, its reasons for needing recruitment services abroad can vary drastically.

For instance, many large multinational firms are struggling to gain a foothold in emerging markets. The Boston Consulting Group’s 2013 Globalization Readiness Survey found that 78 percent of multinational companies expect to gain market share in emerging economies, but only 13 percent say they have an advantage versus local competitors and only 9 percent of companies’ top 20 leaders are based in emerging markets. Multinational executives report that their companies displayed the largest performance gap in attracting and retaining local talent. Clearly this is an area where recruiters can assist.

Now, contrast this with the many U.S. tech firms that are globalizing not to gain local market share, but rather to employ local talent. This is the case in Israel, where Oracle, Microsoft, Intel, Google, Apple, IBM, Facebook, Cisco Systems and others have all opened R&D centers. The country has the world’s highest per capita concentration of high tech startups and engineers, and local employees expect significantly less pay than Silicon Valley engineers. Once again, recruiters can be an asset in this type of expansion, but this is a very different basis for globalizing.

The most successful recruitment firms will both respond to client needs and anticipate demand. A firm with a niche in sales talent might expand to serve a client with operations in London, but also aim to serve other B2B tech firms that want a local sales presence. If one company wants recruitment services in a given market, others probably do too. Smart firms will understand why they need those services and act before their competitors do.

2. Visibility into the Global Talent Marketplace

Local and regional conditions once determined the supply and demand of talent. Today, data science, programming, market research, technical support and even recruitment sourcing can be offshored. When outsourcing is possible, the international talent pool determines supply and demand.

Indian and Chinese graphic designers now affect the temporary staffing market in the U.S. If the foreign artists can complete the same design work at a fraction of the price it would normally cost in a Western city, they affect the value of labor in that city and all others where graphic designers are needed.

International recruitment firms cannot address a local market without understanding that foreign talent may serve clients more effectively than local talent. The recruiter’s job is not simply to fill a desk in London, Paris or Berlin, but rather to identify and present talent that fits the client’s strategic objectives. Companies need global staffing and recruitment firms that understand the marketplace and can help them find the highest quality labor at the lowest possible price.

3. Technology Will Distinguish the Winners

Opening a foreign office is an extremely difficult process. From finding an office and setting up a legal entity to meeting local employment regulations and adapting to local business customs, firms are often surprised at how much work it entails.

Many firms struggle abroad because they have built their entire workflow around one recruitment database, but they cannot use this system in their new office. They must use different software, which fundamentally changes operations and distances the new team members from the practices and workflows that made the firm successful in the first place.

Thus, the most successful global recruitment firms will be those that can utilize the same recruitment solutions anywhere in the world.  They will have the ability to access the same multilingual recruitment database, sourcing tools, documents and internal communication systems to collaborate efficiently, regardless of whether they are in Silicon Valley or Seoul. Firms that can overcome geographical separation with technological unity will outperform their competitors.

In an era where increasing number of goods, services and talent belong to global marketplaces, recruitment firms must be attuned to the forces that drive their clients abroad. Firms must also understand the forces that determine the value of labor in the local and regional markets they serve. While a firm handle on international recruitment trends provides an edge, it is ultimately technology that will enable firms to execute on the knowledge and expertise they possess. In the globalization of recruitment, the winners will have digital edge.