Cielo Leads the RPO Race but Its Plan Needs Refinement

Fundamental to the evolution of the As-A-Service Economy is the ideal of Collaborative Engagement. This week, HfS attended Cielo’s annual U.S. analyst and client summit in Milwaukee where this ideal is being lived out. The service provider’s promise of “We Become You” was demonstrated by clients to be alive and well in ongoing contracts as these organizations look to adapt recruiting practices to impact business outcomes.

Founder and CEO Sue Marks gave an update on financials with the company’s revenue having grown at 25% CAGR and EBITDA 36% CAGR from 2011 through to 2015. Of course, this includes the acquisition of Ochre House in 2012, but nevertheless, profitability outstripping revenue growth to such an extent is extremely positive when compared to competitors such as Manpower, which has seen large-scale topline contractions over the same period. 

Highlights of the event included:

• Continued Healthcare Focus: Cielo continues its private healthcare predominant focus in 2016, last year the service provider filled 40,000 positions and claimed to achieve a 30% reduction in cost to hire over client’s in-house operations in this industry. Referrals are still the predominant sourcing channel for Cielo in this vertical, although it sees increased traction from its use of Skyrecruit, the company’s proprietary talent acquisition platform. 
• Geographic Expansion: Cielo has entered LATAM with the opening of its Buenos Aires center this month, plus the company will also be opening an additional U.K. operation in Manchester and expanding its existing center in Budapest.
• Talent Nurturing: Cielo has launched an internal recruiter training scheme Recruit U, an intensive 5-month, 124 class hour, training course aimed at developing top performing recruiters. Recruit U is now being rolled out internationally from what was initially a North American initiative. 
• Skyrecruit: The company’s proprietary cloud talent acquisition platform was launched in May 2015 and continues to be developed, now being fully mobile and being leveraged in onsite retail hiring applications. The platform has received wide-scale adoption with 130 clients now using it. Key to this adoption is the platforms plug and play capability.
• Division of Labor: Adam Smith’s “division of labor” has been embraced by Cielo as it aims to refine its hiring and onboarding process. Sourcing, candidate support and onboarding have all been separated as bespoke services, Cielo terms these: Recruiting, Impression Center and Bridge respectively. This creates greater efficiency and expertise and enhances the candidate’s experience. 

Cielo has demonstrated through its continued financial performance, and new logo wins that it is a dominant force in the recruitment process outsourcing (RPO) market. Innovation continues to be at the forefront of the service provider’s strategy and is demonstrated with its launch of Skyrecruit, Recruit U and its separate recruiting and onboarding functions, all of which, are clear differentiators in the RPO market. This innovative mentality has been formalized in Cielo’s “Ever Forward” initiative. 

What is not so clear, however, is the company’s stated strategy and direction for how it plans to win further market share. Messaging at this point is fairly disparate. And, although there is a clear focus on cultural development within the organization—and how this translates to contract success—there is no clear strategy on winning market share in what is now a blossoming, high-growth market (growing at 13% annually). 

Given that the RPO market has moved beyond its incubation phase following the 2008 recession, gaining market share should now be the primary concern of the market providers. Cielo’s messaging indicates that it is largely placing its eggs in the healthcare basket (although it does have a limited number of clients in other verticals, such including telecoms, retail and manufacturing). Nonetheless, it appears to be limiting growth opportunities in other major high-growth RPO verticals such as high-tech, banking, financial services and insurance (BFSI) and manufacturing. 

HfS believes Cielo would be better serviced using its proven healthcare industry prowess as a springboard for infiltrating other industries.

Overall, Cielo is making progress on its journey to the As-A-Service Economy in a relatively immature market. The development of plug-and-play digital services and collaborative engagement have been implemented, to an extent, within Cielo’s current and new contracts. The service provider’s focus on innovation and service excellence should continue to serve it well in this journey.