5 min read

Recruitment Process Outsourcing: The case for Outsourcing Hiring

Team Glider

Updated on January 18, 2024

The recruitment process plays a crucial role in building a skilled and diverse workforce that drives the growth and success of an organization. However, many organizations struggle with time and resources as well as the expertise required to execute an effective hiring strategy. This is where Recruitment Process Outsourcing (RPO) steps in. RPO offers a solution for organizations seeking to optimize their recruitment efforts by delegating hiring processes to external experts.

Understanding Recruitment Process Outsourcing (RPO)

What is RPO?

RPO is a type of business process outsourcing where an employer outsources its recruitment functions to a third-party organization (RPO provider).

An RPO service contract can be partial, that is it may only cover sourcing and screening of candidates.

It can also be a full-cycle service, where the provider handles every step of the hiring process, from finding candidates to negotiating job offers.

How RPO Works

Recruitment process outsourcing typically starts with an RPO contract that stipulates the scope of the project and cost. 

Other stipulations that may be included in the contract include the agreement that all applicants processed by the provider are exclusive to the client employer and may not be provided to other employers.

The client organization’s hiring managers then meet with the provider to iron out job requirements.

Afterwards, the provider advertises the job, screens applicants, and then, depending on the type of service, can either interview the applicants themselves or facilitate interviews so that the client’s hiring managers can meet the top candidates.

Where and When to Use RPO

Recruitment process outsourcing (RPO) can be used in various scenarios and organizations, depending on their specific needs and objectives. Here are some situations and contexts where and when RPO can be applied:

Where RPO is Beneficial

High-volume hiring

Companies that have consistent and large-scale hiring needs, such as call centers, retail chains, or seasonal employers, can benefit from RPO. RPO providers can efficiently handle the entire recruitment process, including sourcing, screening, and onboarding, saving time and resources for the organization.

Geographic expansion

When a company is expanding into new regions or countries, RPO can help streamline the hiring process. RPO providers with local expertise and knowledge that can ensure compliance with local labor laws and cultural practices, effectively sourcing and attracting talent in new markets.

Specialized recruitment

Some industries require highly specialized skills and expertise, such as engineering, IT, or healthcare. RPO can be used to source, screen, and assess candidates with these specific qualifications, ensuring that the organization has access to top talent in their field.

Project-based hiring

Organizations that have short-term or project-based staffing needs can leverage RPO to quickly ramp up their workforce. RPO providers can assemble a specialized team of recruiters to swiftly identify and recruit candidates for the duration of the project.

When to Implement RPO

High turnover rates

If an organization ever finds itself unable to retain its top employees, the recruitment process outsourcing can be a solution. RPO can help find better-suited candidates who are likely to stay longer with the company.

Ineffective recruitment strategy

An effective recruitment strategy can seamlessly attract, assess, and hire top talents while optimizing time, cost, and candidate experience. If an organization’s strategy starts to fall short of these goals, it can leverage RPO to inject expertise and efficiency.

Insufficient HR resources

Large-scale hiring is often time-consuming, meaning limited HR resources can be insufficient to complete the process within time. Organizations can leverage RPO to provide additional support.

Benefits and Challenges of RPO

Adopting RPO can yield numerous benefits for organizations. However, it also presents several challenges that organizations need to consider.

Benefits of RPO

Cost savings

Outsourcing the recruitment process can save valuable time and resources for the company. The RPO provider is solely responsible for sourcing, screening, and shortlisting candidates, which allows the internal HR team to focus on other essential tasks such as talent development and employee engagement. 

Access to expertise

RPO providers often possess extensive expertise and knowledge of the recruitment field, allowing them to employ innovative recruitment strategies and techniques to attract the most qualified candidates. This can result in a higher quality talent pool, ensuring that the organization acquires the best candidates for their positions.

Ability to scale

RPO can provide scalability and flexibility to the organization, as the service can be adjusted based on the company’s recruitment needs. Whether the organization requires assistance for a single position or a contingent recruitment drive, RPO can tailor its services accordingly.

Challenges of RPO

Lack of control over recruitment

There can be a lack of control over the recruitment process when outsourcing to an external provider. The organization might not have full visibility or involvement in the selection and hiring decisions, which can potentially result in a misalignment of company values and culture fit.

Lack of common values

Partnering with an RPO provider requires thorough due diligence to ensure that the chosen service provider aligns with the organization’s objectives and values. Failing to select the right provider might lead to inefficiencies or miscommunication, negatively impacting the overall recruitment process.

Cost considerations

RPO can also involve higher initial costs for the organization, as the service providers typically charge a fee for their services. This initial investment needs to be carefully evaluated against the potential long-term benefits to ensure a viable return on investment.

Metrics for Assessing RPO Success

The main metrics that can be used by client organizations to measure the effectiveness of their RPO strategies are time to fill, quality of hire, and cost per hire.

Time to Fill

Time-to-fill assesses the duration between the posting of a job opening and the hiring of a qualified candidate. A shorter time to fill indicates a more efficient recruitment process.

Quality of Hire

Quality of hire refers to the extent to which a newly hired employee meets or exceeds job expectations. Metrics to assess the quality of hire include performance evaluations, employee retention rates, and customer satisfaction surveys.

Cost per Hire

Cost-per-hire calculates the total cost of hiring a new employee, including advertising, screening, interviewing, and onboarding. A lower cost per hire indicates a more cost-effective recruitment process.

Conclusion

RPO offers organizations a valuable solution for optimizing their recruitment efforts. However, it is essential for companies to carefully consider the challenges associated with RPO, including the potential loss of control over the recruitment process.

By evaluating metrics such as time-to-fill, organizations can effectively assess the success of their RPO strategies and make informed decisions to improve their recruitment processes.

As the recruitment landscape continues to evolve, RPO will remain a strategic tool for organizations seeking to enhance the efficiency and effectiveness of their hiring practices.

Frequently Asked Questions (FAQ)

When should an organization consider implementing RPO?

When it starts experiencing challenges such as high turnover among top talents, inefficiencies in recruitment processes, and strained HR capacity

How does RPO benefit organizations?

RPO gives organizations access to a wealth of experience and knowledge in the field of recruitment, as well as the capacity to scale their hiring processes, all while saving them significant time and money.

Can RPO be implemented for short-term or project-based recruitment needs?

Absolutely! RPO can be adapted for short-term or project-based recruitment needs. An organization gets targeted expertise, faster time-to-fill, and cost-effectiveness for specific projects, without long-term commitments.

How is the success of RPO measured?

By using metrics such as time to fill, quality of hire, and cost per hire. Time-to-fill measures the duration between the posting of a job opening and the hiring of a qualified candidate. A shorter time to fill indicates a more efficient RPO process.

What is the typical duration of an RPO engagement?

3 to 6 months. However, the duration can vary depending on the specific needs of the client organization, the complexity of the RPO solution being implemented, and the industry in which the client operates.

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