Recruitment Process Outsourcing (RPO) is a category of Business Process Outsourcing (BPO) where an employer transfers all or part of its recruitment processes to an external service provider.
With most BPO services, cost is a main driver of adoption. Cost savings are realized in outsourcing repetitive, highly time consuming processes or highly technical processes. The outsourcing of these functions allows for the employees to focus on value add or revenue generating activities.
RPO streamlines and simplifies the administration and reporting of talent sourcing and recruitment by consolidating processes into one system. Uniform policies and practices increase efficiency while reducing compliance risk, time to fill and most importantly the cost of talent acquisition.
RPO providers can offer a highly scalable and consultative recruitment service that holistically incorporates and/or transforms the existing employer’s business process flow to optimize hiring results.
Employers may engage a RPO provider to manage their entire talent sourcing process and recruiting activities or engage limited services for particular businesses verticals, positions, initiatives, projects and/or geographies.
Not a recruitment agency
RPO differs greatly from the services offered by staffing companies and recruitment agencies in that the RPO provider assumes ownership of the design and management of the recruitment process and the responsibility of results in addition to sourcing and recruiting talent.
4 Recruitment Process Outsourcing models
1 Fully Outsourced
The employer outsources all recruitment. The RPO provider manages the entire talent sourcing process and recruitment activity for some or all roles across the business.
The employer retains their own in-house recruitment team, however, they utilize a RPO provider on an ongoing basis to manage the roles they cannot fill themselves. This may be caused by “peaks” of recruitment demand, technical complexity of the roles, lack of geographical coverage or performance issues within the internal team.
3 Project Based
The employer engages a RPO provider for a specific period of time to complete a start-to-finish recruitment project. The nature of the engagement is time bound and relates to a specific need, generally by the type of role and/or geography.
4 Vendor Neutral
This model is the most customizable as it can be used in a Fully Outsourced, Hybrid or Project Based solution. The distinguishing features of Vendor Neutral RPO are:
The use of outsourced (employer owned) talent pool development and management
This talent pool is tapped first to source suitable candidates. If no suitable candidates are identified, then the Job Requisition is passed to the tiered Recruitment Agency panel.
The use of a tiered Recruitment Agency panel
The Vendor Neutral RPO provider manages the recruitment agency relationships. The benefits to the employer are: the transparency of recruitment agency margins, consolidated billing and invoicing and consolidated metrics reporting.
The benefits of RPO
The cost reduction realized will depend on what recruitment model the employer had used in the past and what type of model they are moving to. If the employer utilized recruitment agencies exclusively to fill all roles in the past, the cost savings can be substantial (20%+) on a cost-per-hire basis. Employers moving from a purely in-house model to a fully outsourced model may not save as much, but they will achieve other benefits such as scalability and flexibility, reduced time-to-fill and increased quality of hire.
RPO providers provide not only recruitment resources, but also proven uniform policies and recruitment practices, which can reduce time to fill. A long time-to-fill for a non-critical function may be acceptable. However for critical functions, the risk to business flow can be substantial. Chronically long times-to-fill can leave a company handicapped when competing in the business arena.
Putting the wrong candidate into the wrong opportunity not only creates a business risk, but also might result in upsetting company morale. RPO does not discount the importance of finding the right person at the right time for the right opportunity. Rather, RPO consultancy seeks to create a process where the probability of matching the right candidate with the right opportunity increases.
RPO providers can increase or decrease the number of resources dedicated to an employer based on recruitment demands. This flexibility ensures that the recruitment cost overhead is in line with the recruitment needs, saving the employer both time and money. The ability to scale up helps reduce time-to-fill
especially when recruitment demand surges. Likewise, when recruitment demand is low, the resources dedicated to sourcing and recruitment can be reduced to cut costs.
In a consultative function, a RPO provider can work with the hiring managers to develop and fine-tune a more comprehensive Job Requisition. With this enhanced Job Requisition, the developed short-list of candidates will posses more of the skill sets required for the position. After the short-list is developed the RPO provider can conduct behavioral interviews, psych testing and reference checks to assess candidate quality and fit.
RPO can be designed to incorporate monitoring of the process to not only provide data for improving quality of hires but also to improve the quality of the process.
Weighing the pros and cons
It might be somewhat unsettling to outsource a critical function such as talent sourcing and recruitment. Company efficiency and profitability is directly correlated with quality of the employees and indirectly by company morale/culture. Thus employers are very sensitive about the recruitment process.
As with outsourcing the Recruitment Process, the key to any BPO service is to not focus on cost. It’s the increase in value that matters.
Learn more about outsourcing