The Ultimate Guide to Recruitment Process Outsourcing (RPO)

What is RPO, what are the options, and is it better than traditional agencies?

Hiring? You’ve likely considered Recruitment Process Outsourcing (RPO). But what does in actually entail and more importantly, is it worth it? Read on to find out.

Recruitment is constantly changing. Once, it was a simple matter of posting a job and receiving candidates in your inbox. Now, as organisations scale up, job functions change, and hiring the right person becomes more important than ever, the recruitment industry has taken on a life of its own. Recruitment Process Outsourcing (RPO) is a example of this, and can greatly benefit organisations looking to hire. 

What is RPO?

Recruitment process outsourcing (RPO) is a form of business process outsourcing (BPO) where an organisation transfers all or a part of its recruitment processes to an external service provider. An RPO provider can supply its own or may assume the company’s staff, technology, methodologies, and reporting. This may be for organisational wide hiring or a specific component such as annual graduate campaigns.

Initially, RPOs were primarily used by large companies while the smaller end of town shied away from the idea of fully outsourcing their recruitment. With time, the perception of RPOs being an enterprise-only service has cleared, and organisations of all sizes are seeing the value. 
RPO providers are also offering a better, more holistic service than two decades again, as they’ve been building a competitive market, developing innovative new practices, and creating new tools to deliver an improved and flexible service. The role of RPO providers has differentiated from that of traditional recruitment agencies, and many organisations are recognising the unique value RPO can provide.
Today, Recruitment Process Outsourcing is a multi-billion dollar industry, servicing a wide range of organisations across all sectors and sizes. 

Advantages of Using an RPO Provider

Recruitment is a vital process in any organisation, so business leaders should be well-informed before making the decision to outsource. If done so correctly, and with the right provider, Recruitment Process Outsourcing can be a great benefit to your organisation’s hiring. Here’s why: 

  • Leverage the knowledge and experience of specialists

    Partnering with an RPO, the service you receive is only part of the benefit. The other major part is access to teams with the experience across many years and industries to help you recruit effectively.

  • Reduced time and cost to hire

    RPO services streamline the hiring process, saving businesses time that would otherwise be spent on drawn-out hiring procedures. Cost-per-hire can be decreased over time by at least 30%.

  • Access to better talent

    To find the top candidates, RPO providers can make use of cutting-edge technologies like AI and in-depth industry expertise to find quality candidates.

  • Scalable solutions

    RPO can be flexible and adapt to your organisation’s needs whether you're hiring 10 candidates or 100. You can quickly grow or reduce your hiring team based on the market or for certain projects.

  • Analysis and planning

    Consistent analysis, reporting, and planning help to enable effective decision-making. RPO providers work closely to understand your hiring needs and objectives, ensuring they provide the right value.

  • Decreased turnover

    New hires will be more engaged when recruitment and onboarding procedures are consistent and efficient. An RPO provider will be able to give candidates a streamlined hiring experience.

  • Diversified talent pools

    Many RPO providers have established networks through which they can provide underrepresented talent. This can be personal connections, partnerships, university programs, and other channels.

What Are The Types of RPO?

The good thing about RPO is that your solution can be as holistic, or as specialised, as your organisation needs. The three main models of RPO to consider are:

  • On-demand RPO: This option is generally used by organisations that have a sudden or seasonal rise in hiring, are planning to launch a new project or product, or are addressing a backlog of hiring. The RPO providers utilise their understanding of the company and their objectives in order to attract the right candidates for the role.
  • Function-based RPO: The organisation partners with an RPO provider to handle the department or division’s recruitment. For example, the RPO provider handles all hiring for the IT department while the internal Talent Acquisition team manages the rest.
  • Full RPO: The RPO provider manages all of the organisation’s hiring and recruitment. Effectively, the RPO provider is paid to function as the organisation’s internal hiring team.

How Much Does RPO Cost?

The cost of RPO will naturally depend on a variety of factors. The model you are using will alter the price you pay, as will the volume, frequency, seniority, and type of roles you’re hiring. Employers generally pay for RPO in one of the following ways:

  • Cost-per-hire: Businesses pay a cost per hire, which can be a fixed amount or a percentage of the role’s yearly salary.
  • Monthly fee: Each service provided to the organisation is charged as or part of a monthly payment plan.
  • Hybrid: A mixture of a fee-based payment plan and cost-per-hire. 
  • Transaction-based: Employers are charged for each role, interview, background check, candidate received, etc.

The cost-per-hire model is generally the preferred option for the majority of organisations. Its flexibility allows organisations to see better ROI and effectively scale as needed. For employers that process a large number of applicants, the transaction-based model can be pricey, while monthly fee and hybrid options do not guarantee successful placements.

Choosing an RPO provider

The RPO provider that is best for you will have specialised knowledge of your sector and will create a solution specifically for your company based on your requirements, strategic goals, and principals’ preferences.

Choose wisely. Selecting an RPO is not the same as handing your car keys to the first parking valet you see, assuming they can park your car just as well as they can park all the others. You must pick an RPO with experience and knowledge in the specific sector, one who is well-versed in the technologies each position’s candidates must be proficient with, and one who is aware of the unwritten laws of your industry and the qualities that are needed to succeed there.

Perhaps you’re primarily considering a one-time, significant increase in your personnel, or, on the other hand, you’re trying to manage a sizable, ongoing flow of recruits and layoffs. Each of these circumstances calls for a different strategy and perhaps a different partner.

The ideal RPO will be able to pair you with a recruiter who is familiar with your industry, your rivals, and all of the top graduates of the pertinent departments and programmes. They will be able to bring up hiring process aspects that perhaps even you hadn’t considered and handle the inevitable rejection of the majority of applicants in a way that leaves them with a favourable (or at least neutral) impression of your brand.

They should also leave your organisation with a legacy of improved technologies and processes that you can continue to use on your own. 

RPO vs Recruitment Agencies - What’s the difference?

The primary differences between an RPO and a Recruitment Agency come down to how the business partnership is arranged, how the partner is compensated, and ultimately what they are driven to produce. Typically, a recruitment agency has a narrower scope than an RPO provider. The cost for agencies might range from 10% to 25% of the new hire’s starting salary for permanent employees.

In contrast, an RPO may receive a monthly fee for managing the recruitment processes, along with potential performance-based bonuses and KPI incentives. If the agreed SLA (Service Level Agreement) is not upheld, there may even be penalty provisions.

Another major difference is that an RPO will take ownership of and manage any candidates that come through, regardless of the source. Recruiters, on the other hand, will only be responsible for candidates that they themselves have sourced.

Although it does depend on the volume, frequency, and type of employment, using an RPO may be 50% to 75% less expensive overall than using traditional agencies

Overall, the ideal option will depend on the needs, hiring volume, and budget of your organisation.

A recruitment marketplace, like TalentVine, can provide the on-demand and specialist services of a recruitment agency, while offering the flexibility, scalability, and cost-savings of an RPO.

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In Summary...

Understanding the types of RPO, the options, and cost structures will help you assess if it’s the right choice for your organisation. An RPO provider can support your hiring process, or take over completely, with various payment structures to go with this. Properly implemented, RPO can give you better candidates, shorter hiring times, more flexible recruitment, in-depth analysis, a diverse talent pool, and a higher retention rate, among many other benefits. 

Many organisations also opt to work through Recruitment Agencies, and this can be a preferable option if hiring is more intermittent, or support is only needed for specific roles.

When using recruiters, TalentVine can help you find the best! Compare rates, reviews, performance and more to find the best specialist recruiters for your role. Best of all – it’s FREE for employers.

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