By Chris Betros

Executive Impact Sep. 14, 2009 - 02:00AM JST ( 3 )

TOKYO —

While many recruiting companies have taken a hit amid the recession, some companies have seized the opportunity to continue to evolve their business model and reposition themselves. One of those is Futurestep, a wholly-owned subsidiary of Korn/Ferry. An industry leader in strategic talent acquisition, Futurestep -– which was established in 1998—offers customized, flexible solutions to meet specific workforce needs of its clients around the world.

Overseeing the company’s operations in this part of the world is Tim Nelson, president of Futurestep, Asia-Pacific. Based in Singapore, Nelson is responsible for the strategy, growth and profitability of Futurestep in nine countries – Japan, China, Hong Kong, Taiwan, Singapore, Malaysia, India, Australia and New Zealand. Born in Australia, Nelson became the start-up managing director of Futurestep Australia in 1999. Prior to that, he spent nine years with an Australian human resource consultancy. He has completed an Executive Leadership Program at Harvard Business School.

Japan Today editor Chris Betros catches up with Nelson during one of his trips to Tokyo.

How has your business model changed over the years?

When Futurestep started in 1998, seeded through a Korn/Ferry IPO, we were basically the only full-service online recruiting company. We were in partnership with the Wall Street Journal and our model was to advertise to build a candidate pool into our own database. From being a company with 100% of revenue coming from traditional mid-level recruitment, we brought a retained fee structure to the market, and we were pretty successful in markets that were quite mature such as London, Australia, France and the U.S.

While the fundamentals of recruiting are the same, the industry sector is ripe for a transformation and Futurestep has been able to keep moving forward. Now, less than 50% of our revenue comes from traditional single placement recruitment. What we did was to look at where gaps were in the market and where the opportunities were.

And where were the opportunities?

We have partnered ourselves more closely with clients rather than candidates. Much of our work today is helping support our clients manage their own recruiting more effectively, through helping them with their recruitment processes, whether it is through a whole new field of technology such as applicant tracking systems, or through outsourcing large scale recruitment projects. That model has been particularly successful in China and India, and I see potential in Japan, too.

Can you give us a successful example?

For example, we had a project before the Beijing Olympics, where the client—a big North American consumer brand company—needed 120 people. Rather than put lots of job postings up on job sites and because they had no Chinese expertise, they outsourced it to us. That was a 9-month project and went very well. We have other clients with whom we sign much longer contracts, sometimes up to three years. The idea is to take a long-term view to managing the entire recruiting for the organization as well as supporting them.

What is the advantage of such a strategy?

It gets away from the idea of having a client paying for a resume or transaction, which, in the mass market, ultimately favors the recruiting company, not the client. Where consultants are paid a commission on a placement basis, they aren’t necessarily representing the best interests of the client. We’ve taken a totally different view and are not in that business because we are not a mass-market firm. If you are using a totally vendor-based model on a retainer or contingency basis, our managed service model can save you up to 30%.

What is happening to the labor market?

There is a large talent pool but there is a lot of competition for the best. Companies have to really make the right decision to hire the right person. That plays to our strength. I think we will see a lot more M&A activity. That, also, is a good opportunity for us because it means companies are thinking strategically about their business and planning for the future.

How much of your revenue comes from outsourcing?

Over 50% of our revenue now comes from companies that have decided to outsource their recruitment to us. In total, I’d say about 70% of our revenue comes from 18 clients in the Asia-Pacific region – these are very deep partnership-based relationships with companies that are really serious about recruiting.

How do you market yourselves?

It differs in each country depending on the market maturity. All our growth in Asia has been organic and we have tended to focus on the big markets of India and China. We do have a 12-month managed services contract here in Japan. Overall, the marketing tends to be through global events, functions, networking and some print-based advertising in Singapore and Hong Kong. Our strategy to sell our business is to let our clients sell us.

How has the recession affected business?

The downturn has affected different companies in different ways. Because we were not a large traditional recruiting company where individuals were managing a desk and generating recruitment placements, we hadn’t overinvested in staff. Our model is to hire around our clients’ needs, so we only had a small proportion of our business at risk. However, that 30-40% has really fallen off. Our managed service business has declined because the volume has dropped but the business has not gone away. We have had to restructure slightly. We felt the downturn more last November through to January. Since then, we have had double-digit revenue growth.

How come?

Due to a boost in our consulting and outsourcing business. The downturn has given us a chance to sit down with global heads of staffing. They tell me they are not recruiting many people, but want to fix the process so they can do so efficiently. That’s where our consulting business can help.

Are you optimistic about the Asia-Pacific region?

I am encouraged. If you ask any CEO what his/her most important resource is, they say talent. If you ask them what their most dysfunctional process is, they’ll probably say recruiting. At some point, that’s going to become a priority. In some markets like Australia, the U.S. and the UK, this is a very big priority right now.

But not every company wants to outsource their recruiting.

That’s true, but even those companies still need advice on how to do it better themselves. It is all about developing process and tools, how to use different sourcing channels, social networking sites and transfer the knowledge to the internal recruiters. We don’t just hire recruiters to sit at a desk. That is not our business model. We want to grow in partnership with the client and we think of recruiting as helping you be more competitive and more successful.

Since you are responsible for nine countries, how do you deal with cultural differences?

I rely heavily on my local experts for regional strategies. For example, we rarely use the word outsourcing in Asia because it sounds like a low-value process of palming off responsibility. Recruiting is not a low-value process. Where you’ll hear a common expression in North America such as RPO –- recruitment process outsourcing—in Asia, we tend to talk about managed service or staffing solutions. Language and terminology make a difference.

How often do you travel?

I travel about 20 days a month, mainly in Asia-Pacific and back to our headquarters in LA two or three times a year. I also manage a couple of our key client relationships.

How do you relax?

I go to the gym whenever I can, and play a bit of golf or go cycling.

For more information, visit www.futurestep.com