What is Recruitment Process Outsourcing (RPO) and why is it important?
RPO is a model where a company outsources the management of the recruitment function (in whole or part) to a specialised external partner. Broadly speaking, organisations seek RPO solutions to engage with a partner that will build and run a leading-edge Talent Acquisition function that adds real value to the business. An RPO solution provides access to an expanded talent pool, mitigates risk, improves compliance, drives efficiency, cuts costs, reduces time-to-hire, reduces attrition, and ultimately improves the talent acquisition results.
An RPO provider is responsible for the management of the permanent recruitment within a business, and typically has outsourced recruiters based onsite — embedded within the HR or People teams of the business. An effective RPO program installs a talent acquisition team, the latest recruitment technology, and flexible recruitment processes within an organisation.
Recruitment process outsourcing is a solution that has enormous potential. The growth in the RPO market in recent years is a testament to this. As with many new ideas, there is some buzz that cloaks RPO, but there are also a number of clear benefits for businesses who embed RPO within their workforce planning strategies.
- Carry out 1 off hiring projects without compromising the size of your talent acq. team
- Enhance workforce planning and gain agility using market insights and talent analytics
- Find and engage the right talent faster with innovative sourcing and screening strategies, community-powered recruitment levers, and proven talent marketing and employer branding strategies
- Minimise hiring costs by reducing reliance on third-party agencies
- Build a more diverse workforce, a more equitable hiring strategy and an inclusive culture
- Create talent pools for niche and in-demand skills to source qualified talent faster
- Gain specialised sourcing, talent marketing, candidate management and onboarding expertise instantly without having to invest in internal resources
- Mitigate risks with compliant hiring practices
- Build the process and technological infrastructure necessary to move toward a total talent management model
- Improve candidate experience
How is RPO different from traditional outsourcing?
Traditionally, organizations hire through one of three recruiting options: internal recruiters, staffing agencies, and contract recruiters. Solutions that work externally to fulfil the purpose.
A good RPO solution is strategic.
An RPO provider takes ownership of the design and execution of the recruitment process. Though no two solutions are the same. It should take ownership of the design and management of the recruitment process. It should embed the latest technology to ensure maximum efficiency, it should provide regular data analysis, and it should provide regular reports on the effectiveness of the solution.
How to choose between RPOs (and why is the Circular RPO is different)
Selecting the right RPO model depends on your company’s immediate challenges and future goals. Answering these questions can set you on the right path:
- Do we need resources on a temporary or permanent basis?
- Do we want to transform our company’s current recruitment processes?
- Are our agency use and costs consistently high due to ineffective internal recruitment strategies?
- Do we want our recruitment capabilities to reflect the most updated methods and practices?
- Are our talent needs urgent due to a new initiative or problems with the internal team?
- Do we know how and when technologies, such as AI, recruitment marketing tools, candidate engagement solutions or talent analytics, can best complement human intelligence to improve our recruitment results?
The Circular RPO solutions offers great flexibility and agility looking for a solution that is right for you today can evolve with your business to adapt as markets change.
Technologies used in RPO solutions
Technology is changing our world. It’s also changing RPO. From talent analytics to machine learning, candidate screening to automated sourcing, the best RPO providers harness advanced staffing technology to provide a highly-efficient, cost-effective hiring process. And as technology advances, genuine RPO service providers will too.
Typically an RPO would incorporate technology such as:
- An ATS (Applicant Tracking System)
- A CRM (Candidate Relationship Management) tool
- A dedicated careers site
- An internal talent community platform
The Circular RPO services also leverages our talent pool and community of prevetted candidates, allowing for faster and better hiring. You can get all the Circular benefits from the inside!
Cost of RPO
The cost of an RPO solution depends on the scale of the project, and which model is used. It’s best to contact an RPO service provider to get a real understanding of the cost-effectiveness of an RPO solution for your business.
Overall there are 5 typical payment models:
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.
What companies benefit from RPOs
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.
Companies looking to open tech hubs in other countries where they have no infrastructure or field presence are a great fit for RPO services as they will get up to speed in the new location at a much more reasonable cost.
Also companies facing 1 off hiring projects are a great example. If your recruitment teams are understaffed for a 1 off project, probably it makes no sense to compromise the size of the team hiring more TA Managers. It could be more reasonable to outsource it with an RPO, also allowing your team to learn and adapt to being exposed to new hiring practices.