HR Mavericks

Eddy’s HR Mavericks Encyclopedia

Recruitment Process Outsourcing (RPO)

We all know that recruitment is essential to staffing your company with great employees. But do you know that many companies outsource some of all of their recruiting needs? Here is a guide to better understand recruitment process outsourcing and see if the scalable, customizable solutions that these providers offer are right for your organization.

What Is Recruitment Process Outsourcing (RPO)?

Recruitment process outsourcing is a process in which an organization outsources part of all of its recruitment efforts to a third party. Recruitment process outsourcing is different from other types of third-party agency recruiting because the process is outsourced instead of bringing third party recruiters into the organization.

How to Know If Recruitment Process Outsourcing Is Right for Your Business

Even though there can be some major advantages to outsourcing your recruiting efforts, it is not the right move for every organization. Here are a few tips to better determine if recruitment process outsourcing is right for you.

No Internal Recruiting Team

Some organizations successfully meet their hiring needs without an internal recruiting team. When an organization does not have an internal recruiting team and does not have the bandwidth to meet their internal hiring demands, they may decide to outsource the process.

Hard-to-Fill Roles

Your organization’s recruiting team may not be prepared or qualified to fill all of the roles you need. When there are hard-to-fill roles that your team does not feel confident they can fill or have been struggling to fill for some time, you may want to look at outsourcing those roles.

Growing Pains

Growing pains can be a good problem to have, but without the right tools in place, an organization’s lack of ability to hire enough people into the right roles can be catastrophic. If your organization is growing faster than you can hire or have the budget to hire, RPO can help you fill that gap.

Cost Savings

Recruiting is a costly process and can eat up a large portion of an organization's available budget. There are a few things to keep in mind when calculating the cost of recruiting outside of the standard things like salary and marketing costs. There are also costs associated with having unfilled positions. Recruiting firms have established networks and may also have pipelines of readily available qualified candidates that could save your organization time and money.

Time Constraints

When you are pressed for time and need a role filled urgently, going with an RPO may be more beneficial than traditional recruiting or other types of outsourced recruiting. By outsourcing the process, you put the entire process in the third-party firm’s hands and allow them to do what they specialize in without any competing processes or priorities getting in the way.

Pricing Models For Recruitment Process Outsourcing (RPO)

There are several different types of pricing models for RPO providers, and one is not necessarily better than another. Understanding the different types of fee structures that RPO providers may have will help you determine which is right for your organization.

Model 1: Flat Subscription Fee

In this model, you pay a flat monthly fee based on the number and types of hires you need. One of the advantages of this model is its exclusivity. Since you are paying the firm a monthly flat rate, they are in turn working exclusively with your company or with an agreed-upon number of companies.

Model 2: Pay Per Hire

This type of hiring fee structure is based on success. It is low risk because you only pay the firm when they successfully fill the role or roles you are looking for. In this model, the firm receives a certain percentage of the hire’s first-year salary. The drawback of this model is that since a firm is likely working on multiple roles across multiple organizations, they are incentivized to follow the path of least resistance and fill the roles that are easier to fill.

Model 3: Cost per Project

Another pricing model consists of project-based hiring fees. This type of fee structure can be advantageous when there are specific projects your organization is working on. The fee is usually calculated based on the time it takes to complete the project. A few examples of the types of projects that can be outsourced include hiring for a specific location, hiring for a new location, and building a new department or team.

Tips for Choosing an RPO Provider

Choosing an RPO provider is not as daunting as it may sound. Here are a few tips for choosing the right RPO provider.

Tip 1: Understand Their Recruiting Plan

It's important to ask up front what their recruiting plan is. Do they create a customer plan based on your organizational needs, or do they follow the same process for every client? Does their recruiting plan fit the unique needs of your organization?

Tip 2: Get Multiple Quotes

When meeting with potential recruitment process outsourcing firms, it is important to look at the cost, but also remember that cost isn’t everything. The cheapest option may not be the best option, but the most expensive option may not be the best option either. You should get multiple quotes before making a decision and weigh the pros and cons of each before deciding on the right fit.

Tip 3: Company Culture

Company culture is more than the shared mindsets of your people, and there are financial advantages to having a diverse organizational culture. Make sure you choose an RPO that understands and represents your organization’s culture.

Tip 4: Quality of Hires Based on Data

Each outsourcing firm that you talk to should be able to show you the quality of their hires through data. Take time to look at their placement rates, placement times to fill, annual loss or replacement rate, and areas of specialty. If a firm cannot show you a strong track record for quickly filling the roles that you are looking for, you may want to consider that a red flag.
Tyler Fisher, PHR

Tyler Fisher, PHR

Tyler empowers Talent Acquisition professionals, HR business leaders, and key stake holders to develop and execute talent management strategies. He is igniting the talent acquisition process through: team building, accurate time to fill forecasting, driving creative talent sourcing, and fine-tuning recruiting team effectiveness.
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Frequently asked questions
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Candidate Nurturing
Careers Page
Co-Op Program
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External Recruiting
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Hiring Statistics
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Internal Transfer Policy
Internship Program
Job Ads
Job Fair
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Lateral Hire
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Online Job Application
Outplacement Firm
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