Recruitment is an essential activity for every business, but it’s also a complex one. More than simply filling a vacancy, a successful hire sees the best possible talent matched to their ideal role with their ideal employer. It’s a time-consuming and challenging process that many companies struggle with.
One solution to the problem is Recruitment Process Outsourcing (RPO). In this article, we discuss RPO in detail to help you decide if it’s right for your hiring needs.
What is recruitment process outsourcing?
Recruitment Process Outsourcing is a business strategy whereby an organization hands over its recruitment operations to a specialist third party. These third parties, or RPO providers, have the necessary resources to both streamline and improve recruitment - dedicated staff, knowledge, expertise, contacts and technology.
Working as an extension of a company’s HR function, the appointed RPO provider may be responsible for a single hiring-related activity or they may assist with the entire process, from talent sourcing through to employee onboarding.
There are various reasons a company may turn to RPO. Some common scenarios include:
The company in question experiences rapid growth or sees seasonal spikes that require high-volume recruitment.
It’s looking to fill a highly specialized or executive-level position.
It has a lack of recruitment resources and expertise in-house.
Its own recruitment strategy has proved ineffective, with low retention of new hires.
As the challenges of sourcing new talent and retaining existing employees become more complex, the uptake of RPO increases. Globally, the RPO market is expected to grow by 18.2% between the forecast period of 2022 to 2028.
Types of recruitment process outsourcing
As every company has unique recruitment needs and objectives, RPO is flexible with different solutions for different requirements.
Three of the most popular models are full lifecycle, functional and on-demand RPO.
Full lifecycle RPO is a long-term investment in the outsourcing of all recruitment activity. With this model, the RPO provider is responsible for implementing a recruitment strategy tailored to the organization and oversees:
Employer value proposition (EVP) and employer branding
Proactive talent sourcing
Candidate screening, including skills assessments and aptitude tests
Interviewing (or scheduling interviews)
Contract negotiations and onboarding
Employee offboarding and exit interviews
It will also provide detailed analytics on successful candidate profiles, recruitment performance and new hire retention rates.
The full lifecycle model is popular with SMEs and start-ups that lack in-house resources, or larger organizations that recruit on an ongoing basis.
Functional RPO is relevant when there is a specific hiring objective that needs to be met, and can be delivered as different solutions in itself.
Some employers rely on functional RPO for talent sourcing, raising their company profile with highly qualified candidates to add to their talent pipeline. Others use functional RPO for a specific application, including:
Hiring for skill set - this is common in the tech industry where highly specialized and advanced skills are often required.
Hiring for talent diversity - though it’s high on many agendas, employers often find it hard to devise hiring strategies for talent diversity.
Hiring for geography - this type of functional RPO is popular with global corporations that often need to recruit internationally or source talent in a specific location.
On-demand RPO is the outsourcing of recruitment on an as-needed basis. It provides nearly all the benefits of full lifecycle RPO, but without the long-term commitment.
Situations where a business might choose to outsource recruitment on-demand include rapid growth or expansion, mergers, acquisitions, capital investment or business relocation. Essentially, any period of transformation.
By looking to an RPO provider, the business acquires the resources to grow its workforce quickly and cost-effectively.
The benefits of outsourcing your recruitment process
Successful RPO can prove beneficial on many levels, with both short and long-term advantages. Some of the top reasons to outsource recruitment include:
Time and cost efficiencies - the average cost per hire in the UK is £1,500, rising to £3,000 for senior staff. This average covers in-house resources, advertising and search fees. However, it does not account for costs associated with things like lost productivity and training, which can see the actual cost of recruitment soar.
Working with an RPO provider helps you attract fully qualified talent, reduces the time-to-hire, and allows in-house resources to focus on core business activity. It’s also scalable, so you can ramp up recruitment efforts with ease.
Better quality hires - RPO providers are up to date with the employment landscape, have access to a wide talent pool, understand how to deliver a good candidate experience, and know best practices for screening.
All of this results in better quality hires that add value to your business and are more likely to become long-serving employees.
Advanced recruitment technology - from AI-powered applicant tracking systems to candidate support chatbots, there’s a wealth of technology that can improve the recruitment process.
For many employers, this tech can seem inaccessible. An RPO provider will know what’s available and which tools are right for your hiring needs. It will also use technology to provide insightful performance metrics.
Compliance - employment laws and regulations are constantly updated. It’s an RPO provider's job to stay up to date and ensure your recruitment efforts are fully compliant.
This is particularly important for international recruitment, with employment law unique in every country.
The risks of outsourcing your recruitment process
Whilst it has many benefits, there are also risks associated with recruitment outsourcing. These should be considered carefully before you choose to work with an RPO provider, and include:
Loss of ownership - outsourcing recruitment, particularly in the case of full lifecycle RPO, means placing critical business decisions in the hands of a third party.
This can be a challenge, especially in smaller companies where the business owners are actively involved in day-to-day operations.
Implementation time - whilst RPO providers are experts in recruitment, it will take some time for your chosen provider to understand your needs.
To offer the best possible service, it will need to be up to speed with your organizational culture, your employment preferences, and the specific challenges you face. You’ll need to factor this implementation time into your plan.
Communication breakdown - when you outsource such an important process to a third party, there’s bound to be a few bumps in the road, particularly in the early days. Most of these can be attributed to different communication styles.
Your RPO provider may not update you as regularly as you’d like or messages may get lost in translation.
Data protection - as with any form of outsourcing, RPO means sharing data with a third party and trusting them to follow the same standards of data protection as your organization applies.
Tips for successful recruitment outsourcing
Define your recruitment needs
Outsourcing the recruitment process will prove fruitless if as an employer you have not first addressed what your actual needs are, and what you require from an RPO provider.
Take time to define these. Consider your hiring successes and failures, current challenges, company culture and both your immediate and long-term hiring objectives.
Choose your RPO provider wisely
When it comes to choosing your RPO provider, do your research. Consider the experience it has in your sector and the stability of the team you’ll be working with. The last thing you want is for your point of contact to change every few months.
Look at it for what it is - an investment in a strategic partner - and carry out due diligence.
Set clear expectations
The best way to avoid things like communication breakdown is to set clear expectations from the start.
Discuss key deliverables and timelines with your RPO provider and make sure these are accessible in shared documentation. You should also make it clear how and when you expect process updates to be delivered.
Maintain a level of involvement
It’s unrealistic to view RPO as a complete replacement for in-house decision making. Part of a good hire is ensuring a candidate ‘fits’, and that’s a judgment call that can only truly be made by someone embedded in the hiring organization.
For that reason, it’s wise to maintain a level of involvement throughout.
Track and measure performance
Just as with any business decision, how you move your hiring process forward should be based on past performance data.
Knowing what works, and what doesn’t, is key to shaping a better recruitment strategy and a more productive relationship with your RPO provider.
How do you know if outsourcing is right for your company?
Recruitment Process Outsourcing is not the right solution for every business. Large organizations with sufficient in-house resources and established recruitment practices are unlikely to benefit from outsourcing - unless of course, those practices are proving unsuccessful.
Similarly, small businesses that hire non-specialist talent, and do so infrequently, may find little value in RPO.
However, it does have its place in many business scenarios. Company growth, specialized or executive talent sourcing, seasonal and high volume recruitment, relocation, restructuring, and creating a diverse talent pipeline - these are all examples of where working with an RPO provider can be highly beneficial.