What is recruitment process outsourcing (RPO)?

What is recruitment process outsourcing (RPO)?

RPO is a cost-effective approach to a business’s recruitment strategy. It involves transferring all or part of a company’s recruitment and by outsourcing hiring functions to an external recruitment agency.

Full RPO models entail a third-party agency taking complete control of the talent acquisition function. The RPO firm handles sourcing candidates, screening, interviewing, and onboarding. Small businesses can benefit from the agency’s expertise and offload the costs associated with recruitment technology and services. They also lose control over the process and risk possible cultural misalignment.

Partial RPO from a professional employer organization (PEO) allows companies to control some elements of the recruitment process while outsourcing specific aspects, such as sourcing, screening, and administrative tasks. This allows for more flexibility and customization of the recruitment function. It allows more reluctant business owners to feel more comfortable and confident about the process.

That said, does outsourcing realistically assist in the recruitment process and relieve pressure, financial or otherwise, on the business and owner? Understanding how an RPO firm operates will answer those questions.

How does RPO work?

The primary goal of using an RPO service is to acquire qualified talent for a business’s specific roles. That singular goal can relieve stress on employers, especially when their company lacks the capital or assets to invest in in-house hiring strategies.

An experienced RPO provider has the tools, people, and experience to execute a thorough recruitment strategy. Most providers use some variation of the following four-step process:

1. Needs assessment and strategy development: An RPO firm begins by analyzing the client’s current hiring needs. It assesses the company’s culture, industry, and goals. Based on the research findings,, it develops a tailored recruitment strategy, outlining processes, technologies, and resources to be used.
2. Implementation: To implement the strategy, the RPO provider may use an applicant tracking system (ATS) and deploy a dedicated team of recruiters (on-site or off-site) to manage the process.
3. Recruitment execution: The recruiting partner sources candidates from various platforms, including job boards, social media, and networking events. It screens and assesses each applicant based on qualifications, skills, and experience before inviting the most qualified to interview. The RPO provider and hiring managers jointly decide on the most suitable prospect. Finally, the provider can manage the onboarding process.
4. Performance monitoring and reporting: Throughout the recruitment process, the RPO firm tracks key metrics, including time-to-hire, cost-per-hire, and quality-of-hire. It reports its findings to the client’s business for review.

RPO companies are experts in the recruiting and hiring process. They have the tools and expertise to simplify it for business owners. In most situations — especially those involving small businesses — outsourcing is cheaper than handling the process in-house. Next, let’s get familiar with the potential advantages of putting these tasks into the hands of an RPO.

Benefits of outsourcing the recruitment and selection process

Small businesses can benefit from RPO in several ways, even beyond the reduced overhead costs resulting from the absence of an in-house team. For example, one of the chief advantages of using RPO providers is capitalizing on their economies of scale. This includes resource optimization, process efficiency, technology, established networks, candidate pools, and infrastructure investment.

Partnering with an established RPO agency usually means working with talent acquisition specialists. These are professionals with expertise in sourcing, screening, and assessing candidates. These specialists are familiar with proven recruitment methodologies and strategies, ensuring a more effective talent acquisition and efficient hiring process.

An established RPO agency may also have access to more qualified candidates, especially in niche roles. Agencies usually have a broader reach than a small business or operation. Their thorough screening and assessment processes eliminate unfit candidates early on, helping companies avoid the expense and penalties of wasted time.

Hiring needs ebb and flow, depending on industry changes and business demands. Retaining a permanent in-house team for recruitment and hiring functions isn’t practical for smaller operations. It’s better to outsource tasks to an RPO firm that allows the flexibility to scale recruitment efforts up or down depending on need. That freedom helps a small business maintain minimal HR staff, such as a benefits administrator or a single HR representative.

Does this mean that all RPOs are one-size-fits all? Let’s see how RPOs compare.

Types of RPO models

Recruitment process outsourcing is adaptive and customizable. The four standard RPO models include:

1. End-to-end solutions: This model integrates all phases of the recruitment process. It’s the most involved, handling everything from initial job requisition to new employee onboarding. The model is best for companies seeking complete recruitment management and those in rapid-growth industries facing high-volume hiring needs.
2. Project-based solutions: The project-based model is ideal for a company which must fill numerous roles for a new product launch or a seasonal hiring surge. It is a short-term model designed to address specific hiring challenges without requiring a long-term RPO contract. The model best suits companies with project-based needs or organizations expanding into new markets.
3. On-demand solutions: The on-demand model is the most flexible option for businesses. This solution provides recruitment services on an as-needed basis. Clients can cherry-pick and access specific functions, such as sourcing or screening. On-demand solutions are ideal for small to medium-sized businesses with fluctuating hiring needs.
4. Hybrid models: Companies can use a hybrid model for a more customized approach. This model combines elements of the flexibility of the on-demand model with the inclusivity of the end-to-end model. It provides the ultimate level of control over the outsourced process.

The right RPO model depends on a company’s specific needs. Organizations can streamline and enhance their recruitment process by combining the right model with an experienced RPO agency.

How RPO enhances recruitment

RPO offers a strategic approach to talent acquisition that differs from staffing agencies, offering more transactional placements through employee leasing. These partnerships focus on finding qualified and committed employees.

Pricing also offers savings benefits over maintaining an in-house staff. RPO services offer several models, including monthly service fees for ongoing support, success-based pricing for each successful hire, and hybrid structures that combine monthly and success-based models. This flexibility makes RPO more cost-efficient than traditional staffing solutions.

Key considerations for choosing an RPO vendor

It’s essential to choose an RPO vendor wisely. Businesses should search for vendors with expertise in their industry. They’ll also want to consider:

• Communication style and expectations
• Collaborative processes
• Leveraged technology (AI, automation, recruitment platform, etc.)
• Focus on candidate experience
• Performance metrics and refining strategies

An RPO agency and the hiring business essentially enter a partnership. The company is the client, so it must be selective to maximize the relationship’s benefits.