Recruitment process outsourcing (RPO) sounds daunting at first, but once you fully understand it you will realize it is a fool-proof way of revamping an organization’s workforce through external service providers.
These RPO providers take over recruitment activities and equip businesses with hard-to-find, qualified talent that aligns with their needs and goals.
However, before we dig deep into how recruitment process outsourcing (RPO) can be profitable for your business, we must answer a few basic questions that may already be racking your brain.
What exactly is recruitment process outsourcing (RPO)? How does RPO work? Why do companies opt for recruitment process outsourcing (RPO)? How do you choose the right RPO provider for your business?
Understanding recruitment process outsourcing (RPO) gives organizations a competitive edge in today's dynamic labor market. From start-ups to large enterprises, RPO is a multifaceted service that meets the specific recruitment needs of all organizations.
This article provides a complete guide to recruitment process outsourcing, telling you everything you need to know to make the right decision for your business.
What Is Recruitment Process Outsourcing (RPO)?
Recruitment process outsourcing (RPO) is the outsourcing of a business’s recruitment process to an external RPO provider; an RPO provider can take over all recruitment functions or parts of the process, depending on the business’s needs.
Recruitment process outsourcing (RPO) is a form of business process outsourcing (BPO) - an arrangement where organizations outsource certain business processes to another company whose primary competencies lie in those specific areas.
In this case, RPO providers are experts in all aspects of talent acquisition.
For example, recruitment process outsourcing is often the go-to option for employers who require talent in specialized or technical areas. In a tight labor market where it is difficult to attract potential talent, RPO providers who specialize in key areas can bring a wider pool of potential candidates, unique perspectives and skills, and undivided attention to workforce planning - freeing businesses to focus their energy on more pressing matters.
Lastly, RPO providers are sometimes confused with staffing companies.
A staffing company only deals with recruitment and can be a good option when you have roles you need to fill immediately, especially during seasonal upticks in workload.
But, if you’re looking for strategic solutions to enhance your overall talent acquisition process, an RPO provider is the better option.
Types of Recruitment Process Outsourcing (RPO)
Now that we know what recruitment process outsourcing (RPO) is, let’s explore the different types of RPO that would suit your business.
Full RPO
In a full recruitment process outsourcing (RPO) arrangement, a business hands over its end-to-end recruitment process to a selected RPO provider.
In other words, the RPO provider replaces internal recruitment resources and does everything from start to finish, including sourcing, assessments, and onboarding all the while aiming to provide a seamless experience to both candidates and hiring managers.
The staff at the RPO provider can either work onsite, virtually, at a recruitment center, or a combination of these options depending on the employer’s needs. Similarly, employers can transfer their staff to the RPO provider if needed.
This model usually requires RPO providers to employ fully configured and state-of-the-art recruitment technology and ensure strategic development and implementation, which generally takes around 8 to 12 weeks.
Hybrid RPO
As the name suggests, this type of recruitment process outsourcing (RPO) arrangement outsources certain functions or divisions to an RPO provider but manages the rest in-house.
In this case, the RPO provider staff is either virtual and/or at the recruitment center. The RPO provider uses and optimizes the employer’s recruitment technology (ATS/CRM), measurements, and reporting; the implementation and launch process generally takes around 4 to 8 weeks.
On-Demand or Project RPO
Even though recruitment process outsourcing (RPO) is typically a long-term arrangement, on-demand RPO or project RPO allows you to access their services short-term to gain strategic recruitment support during emergency hiring situations, seasonal hiring spikes, or for certain projects.
This model gives businesses an option to either have their internal hiring team collaborate with dedicated and expert hiring resources at an RPO provider or hand over their entire talent acquisition process to the RPO provider for a defined period.
Similar to the hybrid RPO, the RPO provider staff can work virtually or at their recruitment center; the on-demand and project RPO also configures the employer's technology and reporting system and can turn solutions on and off.
This type of recruitment process outsourcing (RPO) engagement is mostly used as a pilot by employers who will eventually sign longer-term RPO engagements if it appeals to them.
How Does Recruitment Process Outsourcing (RPO) Work?
RPO providers - whether full, hybrid, or project - all have key functions that offer daily administrative tasks and big-picture, strategic guidance across recruitment processes ranging from talent consulting to onboarding.
These key functions paired with the right technological solutions guarantee efficient and cost-effective hiring through RPO providers.
Key Functions
Assess Needs
An RPO provider can work as an independent, external recruitment team or in collaboration with the in-house HR team to determine a business’s unique hiring needs.
This requires in-depth knowledge of an organization’s workplace, ethics, and current hiring operations and challenges. This often involves conducting interviews, workshops, and assessments. It also means making use of the employer’s talent analytics to make well-informed recruitment decisions and improve their HR functions.
The needs assessment is undeniably a critical function for an RPO provider. Therefore, clear communication, transparency, and a shared understanding of a business’s goals and objectives are necessary for RPO providers to be able to tailor their services accordingly.
Design an RPO Solution
After assessing a business’s needs, RPO providers create a customized strategy to meet their goals; the strategy elaborates on the scope and deliverables, and highlights which parts of the recruitment process are given to the RPO provider.
It also includes different sourcing techniques, candidate engagement methods, employer branding initiatives, and selection and onboarding processes.
Source and Screen Candidates
RPO providers create well-structured and calculated processes of sourcing, screening, and evaluating candidates according to the job requirements and their business clients.
This is done to ensure they attract the right type of candidates - both in competency and character - for the job and the business; this in turn expedites the talent acquisition process and increases retention rates.
RPO providers are well-versed in sourcing candidates through social media, job boards, and their extensive networks and databases.
Once the resumes start to come in, RPO providers begin to screen and evaluate potential candidates through initial interviews and skills assessments; the good news is RPO providers are beginning to use advancing techniques such as AI-driven candidate matching or passive candidate sourcing to leave little to chance when it comes to selecting the right candidate for the job.
This is all done by keeping key business stakeholders (such as hiring managers) in the loop to make sure everyone is on the same page.
Coordinate Interviews
While initial interviews are conducted by the RPO provider, candidates are required to meet with key business stakeholders as they come close to being hired.
This is when interview coordination enters the chat; it is the process of scheduling (and rescheduling, if needed) interviews between promising candidates and hiring managers.
This is also the time when RPO providers share key information about the employer to the candidate and vice versa so everyone is on the same page during the interview.
An RPO provider’s communication and people skills are critical as they represent an employer’s brand and reputation while conversing with both candidates and employers.
Turn Job Offers into Exciting Opportunities
Recruitment process outsourcing (RPO) providers often have to take on offer management - a prestigious task best described as “the captain of a smooth hiring ship.” Offer management quite literally makes or breaks the talent acquisition process.
RPO providers are skilled in crafting attractive job offers and ensuring candidates happily accept them, increasing offer acceptance rates.
On the other hand, RPO providers also know how to navigate discussions skillfully to reach a mutually beneficial agreement that satisfies both the business employer and the candidate.
They work tirelessly to gain insight into a candidate's expectations and ensure that the offer is in line with the compensation standards of the business they are working for.
Once the offer is reviewed by key business stakeholders and accepted by the candidate, RPO providers efficiently manage the necessary paperwork, ensuring a smooth and organized process.
Support Onboarding
Recruitment process outsourcing (RPO) providers are often given the responsibility to onboard newly hired employees to their client’s organization.
The process includes coordinating paperwork, planning and executing orientation events, and giving new employees the tools and guidance they would need for an easy and warm welcome into the organization.
Offer Reporting and Talent Analytics Services
If businesses aren’t already using talent analytics to make well-informed recruitment decisions, they often give this task to RPO providers as well.
Throughout the recruitment process, RPO providers regularly track and evaluate figures to provide reports and analytics to their clients, showing metrics like time-to-fill, candidate quality, effectiveness of sourcing methods, and cost-per-hire.
These details help RPO providers optimize their performance, make data-based decisions, and explore areas of improvement. It also provides transparent and comprehensive reporting to key stakeholders.
Ensure Strategic Alignment
Perhaps the greatest function a recruitment process outsourcing (RPO) provider can do for a business is strategically align their recruitment strategies to achieve their business goals.
These external recruitment providers possess extensive knowledge of businesses and their markets.
Similarly, their expertise allows them to make informed decisions and use specialized tools, technology, and best practices to find, evaluate, and select the best employees for your business.
This alignment helps businesses attract and find the right employees faster, improves workforce planning, and drives businesses to surpass their goals.
Benefits of Recruitment Process Outsourcing (RPO)
Now that you know what recruitment process outsourcing (RPO) is and how it works, why should your company opt for it?
RPO providers are considered to be one of the most successful recruitment solutions in today’s time.
Recruitment process outsourcing (RPO) has huge potential and the growth in the RPO market in recent years is a testament to this.
There are several benefits for businesses that use RPO providers in their workforce planning strategies.
RPO Providers Reduce Recruitment Costs
RPO providers are a more cost-effective solution in comparison to traditional recruitment because they often charge on a time-to-hire, cost-of-hire, and quality-of-hire basis.
This way RPO arrangements are scalable according to a business’s needs. Businesses can change the number of people they need to hire every month and avoid the costs of running an internal HR team.
For instance, if your business is opening a new department, it will probably need permanent staff immediately. Similarly, months can pass by without needing to hire anyone. RPO providers are adaptable to all situations, scaling teams up or down accordingly.
Outsourcing recruitment to a third-party service also saves funds that would have otherwise been spent on advertising and recruitment agencies.
Similarly, RPO providers have technology-driven solutions and simplified processes that decrease the costs of screening, interviewing, and overall guiding candidates along the recruitment processes.
An RPO provider’s main role is to ensure vacancies are filled immediately to minimize costs and optimize productivity.
Therefore, by using the skills and resources of RPO providers, businesses can save money, have a better return on their investment, and make the best use of their recruitment budget.
RPO Providers Offer Diversified, High-Quality Talent and Fill Positions Faster
Attracting high-quality talent that is also right for the job and business is notoriously difficult these days.
However, with an RPO and its diversified talent pools, expertise in sourcing, and technological efficiency in screening and onboarding new staff, your business can get the best talent at a faster pace.
RPO providers usually have partnerships with different types of organizations, networks, and colleges across the globe that can help businesses attract undervalued talent. Research from the Harvard Business Review indicates that companies who focused on diversity performed better - a booming 45% market share growth from the previous year.
They also have databases of talent and create talent pools for a position before it becomes vacant to make sure there’s a line of talent ready to join a client’s business without delay.
Similarly, under a complete, end-to-end RPO solution, hiring processes are more efficient because all permanent hiring is centralized.
As every business knows, time is money, and for every position that remains vacant within an organization, a business loses a lot of it.
RPO providers, however, are luckily able to quickly fill even the most difficult positions thanks to their expertise, ready-made talent pools, and ability to identify and fix barriers within the recruitment process.
RPO Providers Offer Expert Employer Branding
If you want to know how important employer branding is for a business, 72% of recruitment leaders globally agree that employer branding has a monumental impact on hiring.
If this wasn’t sufficient proof, according to Glassdoor, 69% of employees say it’s extremely important for their employer to have a brand they can support.
Employer branding is pivotal in attracting the best talent in the market.
However, not all businesses have the in-house expertise or budget to create engaging employer value propositions (EVPs), let alone build strong employer brand strategies.
The best RPO providers in the game assist businesses in conveying their true value to potential candidates. With experts solely devoted to EVP creation and employer brand strategies, RPO providers can market a business to candidates – even in challenging industries.
RPO Providers Enhance the Candidate Experience
Another factor in building and maintaining an employer’s brand is enhancing a candidate's experience.
HR professionals all around the world understand the importance of candidate experience. Getting it right is not an easy task; it is time-intensive and often takes HR teams away from their primary objectives.
This is why it’s a good idea to hand it over to RPO providers who take care of each step, from initial contacts and interviews to offer management and onboarding. This in turn frees in-house HR teams to tend to other pressing matters.
By working with an RPO provider, your business will not only optimize candidate experience but increase its chances of attracting top-quality talent and its ability to boost its market share within its industry.
RPO Providers Use Cutting-Edge Recruitment Technology
The best RPO providers in the game use state-of-the-art recruitment technology to ensure an efficient and cost-effective hiring process.
From applicant tracking systems (ATS) to talent analytics, machine learning, candidate screening, and candidate sourcing and onboarding software, most RPO providers use it all to streamline and automate the recruitment process.
Talent acquisition tech does not come cheap, and instead of investing hundreds of thousands of dollars, it is often more cost-effective to invest in a good RPO provider.
Recently, RPO providers have also begun to explore the power of artificial intelligence in a way we’ve never seen before. Therefore, to gain a competitive edge, RPO providers continuously stay on top of the evolving recruitment technological landscape.
An RPO provider would likely incorporate:
- A flexible Applicant Tracking System (ATS)
- A wholistic Candidate Relationship Management (CRM) tool
- A well-marketed careers site
- A resourceful internal talent community platform
RPO Providers Are Updated on Compliance Requirements
A good RPO company stays on top of constantly changing employment laws and regulations, ensuring the hiring process remains compliant.
This is especially difficult now as businesses are becoming global. Hiring permanent staff in a foreign country and sticking to their compliance rules is very different from hiring in the US.
A global RPO provider’s expertise makes sure businesses don’t break any laws when hiring new talent.
RPO Providers offer Strategic Insights
As discussed in the “key functions” of an RPO provider section, strategic insight and solutions set RPO arrangements apart from other recruitment services.
Data analytics is the foundation for any strategic decision, but most businesses do not have the budget or technical expertise to correctly analyze and make use of data.
On the other hand, RPO providers invest in the latest technology, analytical tools, and experience to assess market intelligence and business findings - the perfect recipe for the strategic guidance your business needs to forecast future talent needs.
These insights provide highly valuable recruitment intelligence, ensuring quicker and more successful hiring.
How Much Does a Recruitment Process Outsourcing (RPO) Provider Cost?
Convinced recruitment process outsourcing (RPO) is right for your business? Let’s discuss pricing.
The cost of an RPO engagement depends on various factors, including a business’s needs, the scale of the project, which RPO model is used, resource requirements, and the pricing structure used by the RPO provider you’ve selected to work with.
However, some common RPO pricing models are:
- Cost-per-hire: This is a fixed fee for each hired candidate.
- Fixed monthly fee: Clients pay a fixed monthly fee for an RPO provider’s services.
- Fixed monthly fee and cost for hire: Clients pay both a monthly fee covering recruitment activities and a fixed fee per hire.
- Cost per transaction: Clients pay a fixed fee per process, for example, reference checks, sourcing, screening, or interviews.
How Do You Choose the Right RPO Provider for Your Business?
There are a few factors you should consider while choosing a recruitment process outsourcing (RPO) provider for your business.
You should make sure the RPO provider can scale their services according to any ups and downs in your hiring needs.
The RPO company should have expert recruiters and a competent support team to assist you in the recruitment process.
While assessing an RPO provider, you need to also make sure they can tailor their approach to your business needs and unique requirements.
A proficient RPO provider uses their expertise and experience to provide strategic recruitment solutions while simultaneously collaborating with you.
Last but not least, an effective RPO provider fits well with your business workplace culture and ethics as RPO provider staff will need to work intimately with you and your employees.
Conclusion
The recruitment industry has transformed in the last decade, and with the growth of technology and globalization, so have our hiring strategies.
RPO is the right approach for your business if you need scalable recruitment support or if your internal HR team is overworked and you need to outsource some processes.
It can also be a good option if you’re facing difficulty attracting the right talent or if you need to save money and abolish your in-house HR team altogether.
As organizations continue to adapt to new trends and reckon with an ever-changing landscape, recruitment process outsourcing (RPO) is a game changer and has emerged as a leading approach for tackling talent acquisition challenges.