Big RPO deals like Talent2's contract with Telstra will inevitably take business away from other recruitment companies, admits Talent2 CEO John Rawlinson, but the trend towards RPO and MSP can also provide new opportunities for smaller agencies.

Addressing the RCSA Conference in Port Douglas last week, Rawlinson said Telstra might make anywhere between 3000 and 5000 new hires a year.

"They used to go to multiple agencies. Now we do 80% of those through Telstra Careers. So I'm not going to sit here and say it's not going to diminish [the amount of work available], because there's… three or four thousand less positions now going to agencies."

However, Rawlinson said, there was often room outside big, high volume deals for recruitment firms with highly specialised knowledge, or access to hard-to-find candidates.

Meanwhile, generalist recruiters might find that they were doing less work with the major employers like Telstra, but getting more work from "'smaller but growing organisations, that haven't necessarily got the scale to go with one of these outsourcing models", he said.

"These sorts of models do, to a certain extent, level the playing field and enable those that… fill specialty niches, or have a great value proposition, or are more efficient, or are just plain better… to actually get more of the work out of those organisations," he said.

"[Outsourcing] can be both friend and foe - it just depends on how you work with that opportunity," said Rawlinson.

Most Australian companies still too small to warrant MSP deals

Rawlinson said that although in many ways Australia had a "more sophisticated, more coordinated" recruitment industry than the US, it had lagged behind in adopting recruitment outsourcing models because employers were generally smaller here.

"MSP programs typically run with at least one thousand contractors, and I think they run better when you've got three, four or five thousand contractors - and there are not that many organisations in Australia that have that scale," said Rawlinson.

For medium-sized organizations, he said, going back to the traditional agency recruitment model might sometimes be the best decision.

"Any less than 100 hires a year is very difficult for us to make these programs work, and we'd be suggesting that you'd be better off having really good partnerships and working on the processes you have with your external suppliers - your agency based suppliers."

RPO brought stabilised earnings

Rawlinson said Talent2's original decision to launch into outsourced services had been designed in part to create sustainable, annuity revenue.

"When Morgan & Banks was a listed company, we always used to get the investors saying: 'We love your company, we love the profits, but really, your assets go up and down the elevators every day," he said.