Big data for HR or is Big data for HRO?

Big data maybe for HR, but it’s certainly for HRO. Well I certainly think so. Aspen isn’t playing in that space for giggles.

But why? Why is HRO different than corporate HR? What makes it special from a data perspective?

Let’s go to the 4 Vs of big data:
Volume – 12 systems vs 240 systems (or more). HR services for a 100,000 person company vs 20 100,000 person companies

Variety – 1 or 2 systems vs 40. 1 vocabulary vs 40. 1 or 2 processes vs 40.

Velocity – arguably the same actually, it’s still outsourcing :)

Veracity – bad data in corp HR would be across a handful of systems and means “fix it” vs bad data is your fault, you are fired, or we are losing profit

But the 4 Vs only set the stage. Three things stick out more to me that are much more powerful:

1) HRO will have less margin of error when using predictive analytics and

2) their data economy of scale will dwarf anything else when it comes to human capital and

3) each transaction can be leveraged for all accounts, and their clients are paying them for storage of information – it’s the perfect big data business

Lets look at RPO. Bakers dozen list was just released, so let’s start there. If we stick with this list, most clients either let one of these firms use their ATS or the RPO provides. In most cases, the RPO is managing a different ATS from one account to another (but not always).

Doesn’t sound much different than a large multinational corp HR. Until you multiply the problem by 50. RPOs could be managing data from not just 50 ATSs, but data from different CRMs, client side HRIS and finance systems. A company with 25 RPO accounts, bakers dozen size, could be managing data from easily 100 source systems.

RPO is the only place in recruiting with enough volume of data to actually make predictive analytics in recruiting work. By combining data from all those systems, they greatly reduce margin of error in analyzing all kinds of demographics. Their data is just so much bigger and diverse. They can use data to buy SEO better. Know when to kill projects or campaigns within hours or minutes. Know which processes are the most efficient in different environments and not be guessing. The margin of errorr is so small when you combine all these systems and data sets together (assuming the analytics are clean), that whatever the data says, basically goes.

They just have a “data economy of scale” that can’t be beat. Google may have all kinds of applicants, as does Wal-Mart, but what’s wild is that both companies operate in a single environment, not 50. Or 50 cultures, or 200000 hiring managers, or every country, or postal code.

Which brings me to redundancy. You know what RPOs never create? Candidates. They don’t grow them in a secret lab – they inventory them. And candidates don’t change jobs that often. So as a RPO holds onto and combines data from across its accounts, don’t you think they cut down on sourcing? Of course they do. Do you know how much data there is in searchable and categorized documents across 50 accounts for 5 years? Pedabtyes of data. That’s 1000 terabytes (or 1 million GB).

I think really large RPOs need to start selling their data to companies as a revenue stream. Why buy resumes from monster or linkedin when you can buy them already vetted from a RPO? Why not? What a great use of money…buy 1,000,000 people that were already assessed so you don’t have too. The technology is available right now (wink wink).

I will admit – I’m a kind of amped up about what’s about to happen to recruiting. RPOs are going to have a significant advantage over an individual company that is undeniable. The cost savings will be immense, and the profitability for RPO is going to rise dramatically.

It’s a great opportunity for corporate recruiting to change. Take on more responsibility.

Lets see what 2014 brings…RPO is probably first in HRO. Then maybe contingent workforces. But both are heading towards big data.

Keep watching your HRO vendors. Ask the questions about what they are doing to leverage data for you. Ask them what their plans are. Ask about their technology roadmap. Have them prepare the 3 year outlook of technology and analytics at their business if you are negotiating a 3 year deal. Ask about their data infrastructure and how it protects and enables you.

Headed to HR tech next week. This will be a topic for sure (big data) and I am curious to see what the vendors say when I approach them directly.