What is Recruitment Process Outsourcing (RPO)

What we will cover

  1. The 12 benefits of RPO

  2. How is RPO different from traditional recruitment?

  3. What are the typical RPO services?

  4. Securing a genuine RPO

  5. What technology is used in RPO solutions?

  6. What is the cost of an RPO solution?

  7. Is RPO a good fit for your company?

  8. Need a workforce solutions partner?

  9. What is the difference between RPO and MSP? 

  10. How is RPO different from recruiting? 

  11. Why do companies use an RPO? 

What is Recruitment Process Outsourcing (RPO)

Recruitment process outsourcing (RPO) is a workforce solution in which a business transfers all or part of its permanent recruitment to an external provider. 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 function of the business. An effective RPO program installs a talent acquisition team, the latest recruitment technology, and flexible recruitment processes within an organisation.

The benefits of RPO

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.

1. Higher quality talent
An RPO provider’s main purpose is to ensure that your business gets the best permanent hires, even in markets which are notoriously difficult. With an RPO, the time, energy and expertise in sourcing, screening and onboarding new permanent staff ensure that a business gets the best talent. They can also create talent pools to ensure that if a new position becomes vacant, there’s a ready-made line of talent ready to join a client’s business.

With the race for talent becoming more competitive than ever before, businesses also need to look to passive and underutilised talent pools to attract the best people. RPO providers have databases of talent throughout the globe, as well as schemes to attract previously ignored talent.

Another important consideration is the value of diverse teams. Research from the Harvard Business Review indicates that companies who focus on diversity perform better: 45% reported market share growth from the previous year. RPO providers who engage diverse talent pools offer big boosts to businesses.

2. Cost efficiency
Not only does an RPO provider ensure that you hire and retain the best talent, but it’s also more cost-effective than traditional recruitment. As RPO providers are most often measured on time-to-hire, cost-of-hire and quality-of-hire, their role is to ensure that permanent vacancies do not remain open for months at a time. Every day that a vacancy remains open leads to increased costs and decreased productivity. A fully optimised RPO ensures that these negative factors remain at a minimum.

3. Agile, scalable permanent recruitment
In any business, hiring is rarely consistent. If your business is opening up a new department, it may need hundreds of permanent staff as quickly as possible. Likewise, there can also be months that pass without a single hire. RPO providers build structures within a business that’s adaptable to any situation, scaling teams up or down whenever necessary.

This gives businesses the certainty they need when a sudden burst of hiring activity comes to the fore.

4. Global compliance
Though compliance is not the most interesting benefit of RPO, it’s critical. Employment laws change all of the time, staying on top of what is and isn’t compliant can be a tough order and an RPO ensures that all hires are compliant with local laws. As business becomes global, this is particularly important. Hiring permanent staff in a compliant way in India requires a very different approach to hiring in the US. A global RPO provider’s expertise ensures that businesses don’t get their fingers burnt when hiring new talent.

By choosing an RPO solution, businesses can utilise the provider’s global expertise to ensure that every single permanent employee is compliant with local laws

5. Reduction in advertising expenditure
Job ads are expensive, especially when trying to attract the most competent permanent staff. Buying an RPO solution hands the pressure of finding this talent to the service provider, and spending money on advertising is eliminated.

6. Reduction in talent acquisition spend
Outsourcing recruitment through an RPO solution is one of the most effective ways for businesses to reduce their talent acquisition spend. Finding talent is a time-consuming process, even for the best talent acquisition and HR professionals. This is especially the case when recruiting for hard-to-fill roles.

As every business knows, time is money. According to Glassdoor, unfilled jobs in the US tech market add up to a total value of $20.1 billion, and that’s just the tech market. For every position that remains vacant within an organisation, a business is losing money. RPO providers, however, are able to quickly fill even the most difficult roles thanks to their dedicated expertise and their ready-made talent pools.

7. Benefit from the latest technology
Keeping up with industry innovation is difficult for HR professionals. With budgets tightening, investing hundreds of thousands or even millions of pounds or dollars in talent acquisition tech can make even the most ambitious companies wince.

RPO providers regularly invest in the latest technology to ensure that clients acquire the talent they need to succeed – from high-tech VMS platforms to data analysis tools.

8. Enhanced candidate engagement
HR professionals understand the significance of candidate engagement (CX). Getting the candidate experience right, however, is no easy feat. Though significant, it’s time-consuming and often takes HR departments away from their primary objectives. An RPO provider offers the experience and in-house expertise to fully optimise the candidate experience for a business. Not only does this increase the chances of attracting top talent, but it also impacts a business’s ability to grow its market share within its industry.

9. Expert employer branding
Employer branding is key to attracting the best talent in the market. 72% of recruitment leaders worldwide agree that employer branding has a significant impact on hiring.

Though hugely important, not all businesses have the in-house expertise to create an engaging employer value proposition (EVP), never mind build a truly impactful employer brand strategy.

The best RPO providers help businesses really define their value to potential candidates. With experts solely devoted to EVP creation and employer brand strategists within their ranks, they are able to market a business to candidates – even in difficult, traditionally challenging industries.

10. Better strategic insight
Data science is the foundation of any strategic decision. While HR and internal recruitment teams are often aware of this, a number of things continue to hold businesses back.

For one, technology is expensive, and HR tech often finds itself low down the priority list. Secondly, HR professionals don’t always have the technical expertise necessary to adequately analyse data. Finally, the data a company holds is only related to the company itself and doesn’t take the wider outlook into account.

A recruitment process outsourcing solution helps in all these respects. With the latest technology and data analysis expertise, an RPO provider can assess historical industry and company data to strategically predict future talent needs. With talent being the most important aspect of any business, these insights provide highly valuable business intelligence.

11. Efficient recruitment processes
Within large organisations, recruitment is often approached independently in different parts of the business. While an IT division may rely on expensive, ad hoc recruitment agencies, another may choose to use their internal HR function. Both of these approaches are inefficient, with one producing excessive spend and the other laying burden on HR departments that are increasingly under pressure to deliver results.

Under a full, end-to-end RPO solution, hiring processes are more efficient – with all permanent hiring centralised. Because RPO providers work with businesses across the globe, they also have the knowledge, experience and best practices required to deliver the best results for a client. Rather than relying on disparate internal approaches, an RPO ensures exceptional delivery of talent throughout a business.

12. HR is freed up to focus on strategic goals
The role of an HR professional is tough. There are more expectations and responsibilities than ever, and yet still, few people get a seat at important board meetings. Add an overcooked talent market into the mix, and it’s clear that the job of attracting permanent staff is becoming the most difficult and time-consuming task within HR teams. With this in mind, choosing an RPO solution has clear and obvious advantages.

As RPO providers take care of all permanent recruitment and provide an end-to-end service, they take a big chunk of responsibility outside of the HR sphere. This gives HR professionals the added time and space necessary not only to keep on top of other parts of their job, but also to develop their skills, adapt to technological change, and perhaps even get a seat at the top table.

How is RPO different from traditional recruitment?

An RPO service provider doesn’t just fill permanent roles on an ad hoc basis, it embeds itself within an organisation, fundamentally changing the way a business hires permanent talent.

Though no two solutions are the same, a good RPO solution is strategic. 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.

What are the typical RPO services?

End-to-end RPO
An end-to-end RPO can be used in a single business division, a single market, or a global enterprise. It encompasses all permanent hiring services, as well as technology investments. An end-to-end RPO typically offers the biggest cost savings and efficiencies for businesses and typically leads to greater client satisfaction. As an end-to-end RPO service evolves, value-added services such as employer branding increase the quality of permanent hires.

Project RPO
A Project RPO also utilises an end-to-end process but is deployed to quickly bring in experts to fulfil an unexpected staffing need, on a single project basis. For example, launching a new sales or digital transformation team.

On-demand RPO
Similar to a Project RPO but more short-term, an on-demand RPO involves recruiters joining your team for a short period of time to rapidly attract and hire the talent you need. Often, an on-demand RPO is sought out during spikes in hiring. Though it allows businesses to move quickly, the benefits aren’t as extensive as an end-to-end RPO solution as it lacks technology implementation and added benefits like employer branding.

Take a look at Guidant Global's RPO solution page for more information on our leading talent solution.

Securing a genuine RPO

RPO is one of the fastest-growing solutions for businesses looking to make permanent hires, but there are things to watch out for. Some recruitment businesses may claim to offer genuine RPO solutions but are only riding the crest of the wave, without actually having the expertise or technology embedded within their offerings. Simply recruiting permanent staff is not an RPO solution, it’s recruitment.

If the RPO solution you’re offered is not strategic in its outlook, doesn’t embed itself within your organisation, and doesn’t incorporate data analysis and reporting, it’s not an RPO solution. Though the industry is more mature than it was ten years ago, there are still some temporary and permanent staffing agencies seeking to expand their business simply by following trends.

What technology is 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

Increasingly, businesses within the RPO sector are also seeking to harness the power of artificial intelligence (AI), optimising solutions for big, global businesses in a way previously seen before. Though it’s implementation is in its infancy, AI is likely to play a big part in the development of RPO in the next five years.

What is the cost of an RPO solution?

The cost of an RPO solution depends on the scale of the project, and which model is used. It is impossible to put an authoritative figure on this, so 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.

Is RPO a good fit for your company?
For most organisations, an RPO can be a boon to business. Historically, only large organisations used an RPO. But over recent years — especially with the rise of technology — medium-sized businesses are using RPO solutions to their advantage. For any business that hires permanent staff on a regular basis, an RPO makes a great deal of financial, structural and strategic sense.

Looking for a non-permanent, contingent workforce solution? Click here to determine if an MSP solution is right for your business.

Need a workforce solutions partner?
If you’re looking for a workforce solution that exactly meets the selection criteria for your organisation but not sure where to start, look no further! Based on our experience of responding to 1000s of RFPs from organisations across the globe, we’ve put together the first instalment of our ‘Creating an RFP for outsourced workforce solutions’ guide. The aim of this guide is simple: to help you understand and structure an RFP in a way that gives you the highest likelihood of finding an outsourced partner who delivers the right outsourced solution for your organisation.

Download our guide to get started 

People also ask:

The key difference between an MSP and an RPO is the duration of the worker that they supply. An MSP will find you short-term talent (a non-employee) with the skills that you need to fulfil a temporary requirement, such as for a project with a set end date or to cover a seasonal demand. The purpose of RPO is to find employees to meet staffing needs at a company on a permanent basis. 

Recruiting is when a company or agency looks for candidates for a specific role on an ad hoc basis. RPO is generally a long-term relationship, where an organisation outsources its end-to-end recruitment needs to an RPO partner. The RPO looks to make improvements to the organisation’s recruitment processes as a whole, by understanding pain points, long-term goals and developing a strategy. 

An RPO provider's main purpose is to ensure that an organisation gets the best possible permanent employees - at the best overall cost - even in the midst of challenging skills shortages or when competition is high. Companies that use an RPO know that they will reach a wider pool of talent and higher quality candidates. 

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