Time to Hire

Ep 22: Terry Terhark on the Evolution of RPO

• Recruitment Process Outsourcing Association (RPOA) • Episode 22

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In this episode, Lamees Abourahma welcomes Terry Terhark to the podcast. Terhark, a 35-year, highly-accomplished veteran of the RPO industry, shares his perspective on the growth of recruitment process outsourcing.

Terhark chronicles RPO's evolution from project-based hiring to a mature, rapidly growing market, highlighting the impacts of COVID-19 and AI. He emphasizes the importance of quality recruiting, direct sourcing, and strategic consulting as core RPO capabilities. He predicts increasing technology expectations, more blended deals, and the potential for higher RPO valuations. Terhark advises RPO providers to differentiate on quality, build strong relationships, and understand their market position.

Listen to this episode for a comprehensive view of the RPO industry's past, present, and future.

This episode is based on an edited version of Terhark's keynote for the 2024 RPOA Annual Conference. Mark your calendar for the upcoming RPOA conference in Chicago on September 28-30, 2025.
 

View the RPOA Calendar of Events for the RPOA Annual Conference and other events. 

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THello everyone, and welcome to another episode of time to hire from the Recruitment Process Outsourcing Association, whether you're a seasoned Talent Acquisition Professional or just starting in the field. Time to Hire provides an invaluable platform to extend your knowledge, learn from industry leaders and stay up to date with the rapidly changing world of recruitment. 

I'm Lamees Abourahma. In this episode, we hear from Terry TerharK, CEO of The Next Thing RPO, an enterprise member of the RPO Association. Terry is an industry pioneer who spent the past 30 years building RPO and staffing businesses. He shares his personal perspective on the evolution of the RPO industry and its future. Welcome Terry to the podcast.

 

Good morning everyone. My name is Terry Terhark. I've had the privilege and honor of being an RPO for the last 35 years. I've been in recruiting about 40 so definitely been around the block a little bit and just a little bit about myself.

My first RPO firm was a company called Selective Staffing. We built it up to about six, 7 million in revenue. We sold it to AON in 1998 so we had that for eight years, stayed on with AON for about five years, and then started my next venture, a company called Right Thing, which we built to about 1200 recruiters, about 120 million in revenue. And that business was acquired by ADP. Stayed with ADP for a number of years leading global businesses for them, including RPO, and then my latest venture. We started in 2019 company called Next Thing. We're about 303 50 recruiters today.

We had the opportunity to do a couple of meaningful acquisitions: AIRS, which is a recruiter training and recruitment technology - we did that in 2008. Start Date, which is another technology that we acquired in 2019 and then, most recently, company called Talent G, which is an analytics platform.

I've also had the opportunity to sell some of the industry's most meaningful deals, including Goldman Sachs, which was $30 million a year deal, Amgen, 10 to 12 million a year, Follet, about 30 million a year, Chrysler, over 10 million a year, and GE, 5 million.

Perspective on AI and Technology

You'll notice in my speech, I'm going to weave in how technology, I believe, kind of leads us to where we are going. By the way, I really enjoyed Kevin's presentation this morning. I tend to be one who believes that the role of the recruiter will never be replaced by AI. To me, it's that elegant blend of art and science which truly makes the difference in recruiting. It always has been and always will be, in my opinion.

Historical Perspective on RPO

So in order for us to understand kind of what's in front of us, I'm going to give a quick review of what, at least what I've seen over the last 20 plus years. I'm one who believes that companies have outsourced recruiting since the dawn of time - if they're using contingency search or temporary firms, they're outsourcing a portion of their recruiting.

We started to hear about vertical recruitment outsourcing in kind of the late 90s, early 2000s. Prior to that, I think what I would call project-based recruiting. We got really good at my company Selective Staffing. We were an RPO, even though we didn't quite call it that at the time.

Since 2000, RPO has absolutely grown up. I think that it's provided amazing market opportunities. What I saw in the 2000s was an opportunity to capture market share. There was no clear leader in the RPO space in that mid-2000 early 2000, and a lot of companies grew up very quickly who are still there today.

Post 2000s and in the 2010 timeframe, we've seen a lot of Mergers & Acquisitions. We've seen private equity take a very strong interest in this industry. The combined annual growth rate for RPO going forward through 2030 is 17%, and you'll be hard-pressed to find other industries that have that kind of CAGR over the next five years or so.

COVID's Impact on RPO

COVID has had a material impact on the RPO industry, and I think it elevated our status, our ability to be partners, and our visibility. The other thing that's super interesting - my current company today, we don't have an office. We're 100% remote. If I were to look back pre-COVID as an RPO firm, you could never do that - you had to have a footprint, you had to have an office. Today it just does not matter.

The Post-COVID era and the advent of AI/ChatGPT has fundamentally changed what is expected of the RPO on a go-forward basis. Quality of recruiting is how you differentiate in today's market - your ability to find that candidate that doesn't want to be found, your ability to direct source, your ability to direct recruit, is absolutely core to how you want to go to market and how you want to differentiate.

Current Condition of Industry

Baker's Dozen Rankings

You're all familiar with the Baker's Dozen. You'll notice that in the last 15 years, my company's not ever been on that list - had a little bit of a falling out in 2008 with the Baker's Dozen. Nevertheless, I do think that the Baker's Dozen provides visibility to buyers in terms of where to start, where to find your potential partner.

Industry Analysis

This is pretty recent from Everest. In my opinion, there's a number of very reputable, very credible analysts who represent our space. I've always been drawn to those analysts who understand RPO and who are going to really be able to dig into capabilities. Everest, Nelson Hall, and Lighthouse would be the three that I think have really good practices around RPO.

Modern RPO Requirements

Let me talk just a little bit about service offering evolution. The early RPO were, in my opinion, project-based. End-to-end has grown quickly, especially through the early 2000s mid-2000s and it's still kind of a vital component.

Core Capabilities Expected Today:

1. Core recruitment capabilities - direct sourcing and recruiting
2. Job board ownership and management
3. Recruitment marketing and employment branding
4. Analytics, metrics, and statistics
5. Technology solutions and AI integration
6. Strategic consulting

Current Market Trends

These are my personal assessments:

1. Shift from wholesale outsourcing to blended solutions
2. Refined project-based solutions post-COVID
3. Increased demand for market assessments and labor market analysis
4. Growing expectation for strategic advisory services
5. Need for scalability (both up and down)
6. Evolution in pricing - less emphasis on cost

Future Outlook and Recommendations

Key Insights and Expectations:

1. Technology expectations will increase
2. More blended deals
3. Direct recruiting capabilities crucial
4. Continued pricing power
5. Increasing firm valuations
6. Technology integration importance

Strategic Advice:

- Differentiate on quality
- Build relationships - almost every piece of business won through relationships
- Embrace technology while maintaining human element
- Know your market position
- Focus on top-of-market positioning
- Maintain pricing power through value demonstration

Q&A Session

[Question about market dynamics during economic downturn]

I'm probably not the best to answer that, because the vast majority of our business comes from referral - 95% of the deals we run are not competitive. Where we have been competitive, we've certainly heard "you're too expensive," but it's not enough for me to say that providers are buying business. I still believe that there's pricing power, particularly if you can articulate your value and the value of your recruiters.

 

I hope you enjoyed this episode of the Time to Hire podcast from the recruitment classes, outsourcing Association. Give us a review wherever you listen to the podcast, and remember to check out the 2024 RPO buyers guide from the RPO a website at RPO association.org, as always, stay connected, stay engaged and stay informed of what's happening in the talent and recruiting world by tuning into the RPO a the place you go for RPO you.