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The European Market Nevertheless, these talent migrations are not necessarily at the expense of Europe in the aggregate. "From an HRO perspective, we've seen a number of organisations actually relocate jobs back onshore to Europe," Constance says. "Buyers of HRO services are looking to respond to political [pressure], and their own customer pressures, to be seen supporting their home markets." In other words, he says, "At a time of high joblessness in Europe, few companies want to be seen as adding to the problem." Sharing this opinion in part is Gary Bragar, HRO research director in the Newton, Mass.-based office of BPO analyst firm, NelsonHall. "I don't see a big migration of talent away from Europe because of the cost factors," he says. "Our research indicates companies putting greater effort into talent retention—integrating learning, for example, into talent management objectives." He adds that companies and RPO providers "cannot afford to lose talent, especially in a recession. They're in a hiring freeze and cannot fail to retain the people they have, which fosters greater engagement with employees." Observers agree that economic uncertainty is a certainty. "The next few years will be hard to call," says Constance. "If China does go off the boil, then these bright spots will quickly disappear, and demand for talent will fall very rapidly in the emerging markets." While fear of a double-dip recession in Western European economies is real, Barenholz says, it has yet to have a major impact. He chalks this up to the high level of inbound migration that followed the expansion of the European Union. "There are still historically large pools of labour available," he explains. "As such, there are no clear trends that the BRIC countries are going to generate any sharp increase in inward migration of knowledge workers and entrepreneurs, compared with historic trends." While another recession in Western Europe would intensify the political pressures for countries and companies to retain jobs onshore, even that eventuality would not totally erase the demand for offshoring, he adds, pointing to the strong growth, at present, in offshoring activity to the Philippines. What does all this mean for HRO providers? Howard H. Nelson, director of global HR and learning solutions in the global process services unit of IBM UK Ltd., says not to worry. "Providers have inevitably widened their appeal to capture both ends of the [HRO] market, offering services like payroll outsourcing and standard learning services at lower cost through variable pricing that flexes with business demand, and higher value HR transformation, with the latter continuing to be the more attractive market," he says. Get a Riggle On If, indeed, another recession were to rear in Europe, what do HRO providers need to do now to prepare for the possibility? And how must their clients prepare? Most observers are cautious, noting that economic stressors affect different countries, industries, and companies differently. They can even spur competitive differentiation and growth. As IBM's Nelson puts it, "Not all companies are affected by recession equally." Organisations feeling the "cold winds of recession," he explains, might seek to reduce cost through procurement-led activities that guide the purchase of lower priced HR services, "typically in the more 'commodity' areas of payroll and standard learning services." While not exactly positioning HRO as providing "complex transformation," such short-term services can still bode well for their providers, he says. On the other hand, he adds, those organisations that ride the recessionary rollercoaster well will likely continue to focus on transformational HR as strategic, taking advantage of the economic squalls to "restructure and focus on efficiency, through technology and process automation." Constance agrees that another recession isn't necessarily bad for the HRO industry or clients. He cites strategic workforce planning as a solution adopted by many clients to endure the recession and possibly come out of it even more profitable. Once this strategy is established, companies then have to take a hard look at their talent in each country of operation. It takes time, he notes, "to grow engineering skills in a developing economy outside those that are well supplied, like India and China." Which, again, can augur well for RPO providers. Barenholz has a similar opinion. Companies with business models that came through the previous recession relatively unscathed will continue to focus on transformational HR, he projects: "Taking advantage of [another recession] to restructure and focus on efficiency through technology and process automation." He adds that successful companies tend to focus on opportunities that a recession might present. "They also tend to take a medium to long-term view of the transformations they can embark on now that will position them well for the future," he says. With regard to talent initiatives, Bragar postulates that a recession in Europe might guide further use of cost-effective initiatives such as e-learning. "I've just finished a study [22] HRO TODAY GLOBAL | WINTER 2012