What is Recruitment Process Outsourcing?

Recruitment process outsourcing (RPO) is a form of business process outsourcing (BPO) where an employer transfers all or part of its recruitment processes to an external service provider. An RPO provider can provide its own or may assume the company’s staff, technology, methodologies, and reporting. In all cases, RPO differs greatly from providers such as staffing companies and contingent/ retained search providers in that it assumes ownership of the design and management of the recruitment process and the responsibility of results.

Why consider RPO?

Today, the recruiting environment is rather complex. In order to effectively recruit top talent, you need to navigate a tight labor market; become proficient in a set of relevant technologies; and manage and nurture candidates and hiring managers. RPO providers are subject-matter-experts; talent acquisition is their core competency. They know how to navigate the recruiting environment, stay current with the latest recruiting technology and have the resources to scale recruiting capacity to meet hiring demands. RPOs bring people, technology, process, and metrics into a talent acquisition function.

The number one reason companies succeed, struggle, or fail directly correlates with whom they hire.

Depending on what an organization is looking for, an RPO solution can bring an array of many benefits including managing hiring fluctuations throughout the year; reducing total recruiting cost and dependency on staffing agencies; improving hiring manager satisfaction; reducing time-to-fill; elevating employment brand; improving candidate experience; simplifying or streamlining the hiring process, and saving time for other duties among other benefits.

Is RPO right for your organization?

Historically, RPO provided high-volume hiring for large organizations at a lower cost compared to other recruiting options. However, RPO has evolved over the last few years to become a flexible strategic talent acquisition solution with additional benefits that can be adopted by small and medium-size organizations as well.

Over the past few years, RPO has been trickling down into the smaller and middle-market domain as outsourced recruiting becomes applicable to these markets. As a result, smaller, agile RPOs are rising into the higher ranks of strategic recruiting partners and carving their unique niche in the talent acquisition marketplace.

Smaller organizations have the additional challenge of managing hiring capacity and fluctuating needs. It is typical for human resources personnel in smaller organizations to wear multiple hats: managing employee relations, training, payroll, compensation, and benefits, in addition to hiring and recruiting. Smaller firms also have a fluctuating number of hires throughout the year, making it challenging to staff an internal recruiting team based on demand.

Recruitment process outsourcing brings scalability to the process and variability into the cost. RPO engagements can be structured and priced based on hiring needs, providing a flexible solution to recruitment requirements.

How is RPO Different than Other Outsourced Recruiting Options?

Traditionally, organizations hire through one of three recruiting options: internal recruiters, staffing agencies, and contract recruiters. Until recently, few organizations were aware that recruitment process outsourcing could be a viable or available solution to their recruiting.

Unlike other outsourced recruiting models, recruitment process outsourcing is a strategic partnership that brings additional value-added benefits, including:

• Analysis and planning.?When run effectively, RPO providers work with their clients to understand the business side of recruitment or business goals. They help clients forecast staffing needs and plan the necessary resources to respond to these needs, which help achieve those business goals.
• Extensive job marketing.?RPO providers market client jobs through job boards, social media, referrals, and networking to drive candidate exposure to jobs and employer brand (a major differentiator from staffing solutions).
• Sourcing and engaging talent.?In addition to finding talent, RPO providers build up employment brand and recognition; engage future potential talent through talent communities and talent pipelines; and source candidates in advance and with multiple sourcing assessments.
• Candidate assessments.?RPO providers assess candidates, guide them through the beginning of the recruitment process, and make sure they have the core skills, competencies, and motivators to do the job.
• Candidate care.?Managing the candidate experience is very important as it reflects on your employer brand. RPO providers help clients take care of the candidates and manage their experience, whether they are being interviewed, hired, or considered for the job.

Three basic types of RPO engagements

RPO is not a one-size-fits-all. RPO offers different engagement models.?There are three main RPO engagement types:

• On-Demand RPO:?A contract-based engagement with a qualified provider that knows the company, their messaging, their processes, and the results they need. The contract specifies a defined number of roles within a defined period of time.
• Function-Based RPO:?The RPO provider takes a piece of the company’s recruiting needs entirely off the company’s plate (e.g., the IT department or an entire division of the organization).
• Full RPO:?When the RPO vendor provides a company’s entire internal recruiting function including access to the provider’s full breadth of resources.

How Much Does RPO Cost: Models and Comparisons

There isn't a flat industry-based fee for specific RPO services, and there isn't a price range for small businesses or large enterprises. How much an RPO solution costs will depend on an organization's specific needs and goals as well as the RPO provider.

• Management Fee Model (typically monthly)?- A fee is paid to the RPO provider for working on an agreed-upon number of positions. The fee may change depending on the agreement or may have escalation factors if the number of hires increases over a period of time. The cost model is associated with enterprise RPO services and some emerging RPO services, such as white label RPO.
• Cost Per Hire Model?- A fee is paid for each candidate who is successfully brought through the program and hired (or other activities such as offered a position) by the customer. The cost per hire model may be used for short-term project RPO, where the solution is based on accomplishing certain results or the solution is only needed for a few months. This model is also a good fit for point-of-service RPO, where a specific recruiting function (like filling the candidate pipeline) is outsourced to the provider.
• Management Fee Plus Cost Per Hire?- This is a combination of the above two. This combines the consistent recruiting effort under the management fee, with payments for the success (hires) of the program. This is another cost model that's appropriate for enterprise RPO and point-of-service RPO.
• Cost Per Slate?- This is a sourcing model where the RPO provider charges a fee for a set number of sourced, screened, and qualified candidates for each open position. From there, the candidates are provided to the internal recruiters for the continuation of the recruiting and hiring processes. Cost per slate is another cost model that's well-suited for short-term project RPO solutions and point-of-service RPO.
• Cost Per Transaction?- A fee is charged for a specific process to be completed by the RPO provider, such as initial screening or reference checks. Buyers opting for on-demand RPO services or even consulting RPO services may be charged per transaction, whether it's an hourly rate or for each process or successful candidate.

Concluding Remarks

When implemented correctly, RPO enhances recruiting effectiveness and gives an organization a competitive advantage. As Younger said,?by improving recruiting and hiring, an organization places the right people in the right positions, creating an environment where everybody wins: employees are happier, management is more effective, executives hit their numbers and the organization overall is better positioned for success.