Recruit
Summary: RPO providers are accustomed to working with companies in all types of industries, offering flexible and fully scalable services that can support business growth and innovation.
Recruitment process outsourcing (RPO) has become a preferred way for organizations to maximize their talent management strategy. When used effectively, an RPO model can be an extension of your organization’s capabilities. RPO providers are accustomed to working with companies in all types of industries, offering flexible and fully scalable services that can support business growth and innovation.
Here we explain how RPO works and how your company can benefit from it.
The Rise of Recruitment Process Outsourcing
Several factors have contributed to the rise in recruitment process outsourcing, including the major changes that the global pandemic created in the way people work and how companies manage fluctuating staffing needs. As employers shut down or shifted their employees to a remote work model, it became the norm for workers to desire work-from-home jobs instead of returning to the office. As of this publication, experts state that some 32.6 million American workers will have fully remote careers by 2025, with 50% of the working population indicating they wish to do so. This is challenging companies to either become more flexible in recruiting the growing number of candidates who demand full-time remote jobs or lose out on talent because they cannot give up traditional work models.
More companies are turning to RPO providers in their quest to hire great people. With the job market healthy and unemployment holding at 3.9% of the American working population (The US Bureau of Labor Statistics), it’s become difficult to acquire talent in many areas of demand. Add to this the return of jobs to America and the rapid aging out of baby boomers, and it becomes even more difficult to find quality talent to fill job openings. Candidates understand they can easily leave for another opportunity, which is something that decreases the productivity of each organization. Turning to RPO offers companies the chance to place highly skilled candidates into open roles in less time while reducing upfront recruitment costs.
Technology has also had a large role in impacting how companies recruit and retain their workforce. As new technology demands new skill sets, others are phased out. The global IT services outsourcing market is expected to reach a value of $1.06 trillion by 2030, according to recent figures from Precedence Research. RPO providers have wide networks that enable them to recruit candidates in high-demand markets more efficiently. Their personalized recruitment processes also keep candidates engaged, reducing the chance of them taking other jobs because they may pay a little better or offer a few more perks.
What is recruitment process outsourcing?
Recruitment process outsourcing is an arrangement made by an organization to transfer some or all of its recruitment processes to an approved third-party provider. This can often include hosting job fairs, sourcing and screening candidates, conducting interviews and assessments, negotiating compensation, processing new hire paperwork requirements, overseeing onboarding and work performance, and managing payroll processing. Not to be confused with a staffing agency, an RPO provider acts as an extension of the company and assigns dedicated recruitment personnel to the organization to perform these duties seamlessly.
RPO also shouldn’t be confused with TA consultants who provide a strategic perspective on your recruitment systems.
Why would an organization choose to work with an RPO?
In many companies, having a dedicated in-house team of human resource (HR) professionals is not feasible. A company may be in a constant state of growth or experiencing the ups and downs of client projects. Maintaining this pace requires a large number of skilled recruiters and payroll professionals. Many companies just don’t have the budgets to keep a full HR team onboard year-round. Then, there are the operational costs that can add up for things like advertising open positions, conducting rounds of interviews, assessments, background checks, drug tests, and onboarding requirements.
According to Indeed, when they choose the DIY route, “companies can expect to pay between $4,000 and $20,000 to hire a new employee, not including salary and benefits.” Imagine that this number is multiplied by many new hires in high-growth companies. Even worse, in industries with a lot of employee churn, the losses are astronomical. RPO can help an organization control these costs and stay ahead of head counts.
How does RPO work?
With an RPO model, an organization pairs up with a qualified RPO provider who agrees to take on these costs and responsibilities. A contract details the scope of the work to be performed, the timeline, costs, services, and other elements that are critical to your organization.
Once approved, the RPO provider then goes to work to embed themselves into your company culture and the requirements for candidates. This often includes an analysis of your job descriptions, your candidate value statement, and your current recruitment processes being evaluated for efficiency and maximized to produce results. One of the advantages of an RPO provider is its access to costly recruitment and candidate screening tools at a reduced cost, with these savings being passed on to clients.
The RPO provider will assign a small team of agents to focus solely on your recruitment needs. This team will conduct the candidate sourcing, technical screening (e.g., Boolean techniques), assessments, interviews, and background checks. You will still have the opportunity to review and interview a short list of potential candidates, which saves a great deal of time.
The candidates receiving offers can then negotiate for their desired compensation, which is still dependent on your approval. Once hired, each candidate will be handled by the RPO provider to set up their payroll and taxes. The last step is to onboard and train them to integrate them into your organization, with ongoing monitoring and coaching as needed.
How to choose an RPO provider
Selecting the right RPO provider comes down to understanding your recruitment and budget needs as a growing company. RPO is very flexible, offering a few options that may be a good fit. These options include:
- On-demand RPO service: Based on projects or contracts, the RPO provider comes in to fill a specific number of strategic roles in a specified time. This can also be useful for hiring executive-level employees or filling key roles for large one-time projects. With a large network of talent to choose from, the RPO provider has access to these “unicorns” in the candidate pool.
- Functional-based RPO service: The RPO provider assumes responsibility for just one section of the company’s recruitment needs. The organization can take advantage of the candidate pipeline and networks it has to find the right employees, such as when filling positions at a new location or hiring for the information technology (IT) department only.
- Full-service RPO: The RPO provider takes on all the company’s recruitment and talent responsibilities. This is a long term agreement in which RPO agents may sit within the company, acting as a branded talent acquisition team. This can be beneficial for organizations that do not have the internal resources to handle all HR processes.
When choosing an RPO provider, it’s important to work with an agency that shares the same values as your business. Ask for testimonials from its customers. Evaluate its responsiveness to your questions and concerns. Find out how much it knows about your industry and the types of candidates who are successful. Learn more about the steps it takes to find quality workers and how it handles them during the full recruitment process. Look for contractual agreements that explain things in clear terms, including any fees.
To wrap things up, an RPO provider can be your best ally in the battle for talent. It has the resources and expertise to get the job done while saving your business a lot of time, money, and frustration.
FAQ
The main difference between RPO and staffing companies is priority. An RPO recruiter is dedicated to hiring for one company, while a staffing agency hires for multiple companies. The RPO provider must fill the company’s order, while the staffing agent is always under pressure to secure new job requisitions.
There are multiple flexible models by which RPO providers earn fees. These can range from small payments assessed for each task performed to a flat rate per month for all services rendered. RPO providers are paid by the organizations they are in contract with, not candidates.
Andrew (Drew) joined the Remote People team in 2020 and is currently Director, Regulatory Affairs. For the past 13 years, he has been a trusted advisor to C-Suite executives and government ministers on international compliance and regulatory issues. Drew holds a law degree from the University of Otago, a PhD from the University of Sydney, and is an enrolled Barrister and Solicitor of the High Court of New Zealand.
