Many businesses– especially rapidly growing startups– have busy and strained HR focused on the growing needs of employees. Few companies have large enough HR teams to support full-time recruitment. HR staff members usually have other tasks.
Recruitment can be delegated to specialist firms, and it’s not just for those positions usually the subject of headhunting in films. This is recruitment process outsourcing. RPO handles all the steps involved in filling positions needed by the client company.
Here’s our guide on recruitment process outsourcing.
What is Recruitment Process Outsourcing (RPO)?
Recruitment process outsourcing (RPO) gives a third-party service provider the job of finding suitable job candidates.
The method grew out of Business Process Outsourcing (BPO). If we can outsource business tasks, we can also outsource recruitment. The goal is to get qualified candidates to a potential employer with as little disruption and workload for the company’s HR.
Utilizing the services of an RPO can provide you with a variety of benefits. You save time, money, and resources while also enabling your skilled HR staff to make better use of their strengths and expertise for your existing employees.
How Does Recruitment Process Outsourcing Work?
A recruitment process outsourcing agreement outlines the project’s scope, timing, cost, and more. HRM and RPO meet to create or discuss job descriptions.
The RPO team advertises the job opening using its own techniques and technology or the client’s.
The RPO team screens applicants and, if necessary, administers pre-employment tests. If the RPO process is successful, the employer only needs to interview a few highly vetted candidates.
RPO VS. TRADITIONAL RECRUITING
One of the most frequently asked questions in the Human Resources industry is the distinction between RPO and traditional recruitment. The short answer is traditional recruitment fills positions quickly and works with you externally in the capacity you need, and RPO integrates with your operations and takes full ownership of recruitment.
A recruitment company’s traditional purpose is to connect employers with candidates.
Recruitment agencies usually recruit for employers, and they get paid by how many people they get hired.
Employers can hire recruitment agencies to help them find the candidates they want.
The agency is compensated once it has identified the ideal candidate and the candidate has joined the company. This policy encourages recruiters to hire efficiently and quickly transition to new hiring opportunities.
Thus, job positions are quickly filled, as numerous recruiters compete to fill them. This can initially be an effective hiring option for a business.
The RPO partner, unlike any other contingent search provider or recruitment agency, takes full responsibility for the entire process.
The RPO team manages and executes the entire recruitment process.
In addition, they are responsible for the outcomes of the processes themselves.
When your enterprise has fast-moving and scaling needs beyond one-time hires, RPO is better-suited to handling it, but with the complexity of their role, they truly integrate with your company.
KEY STAGES OF RPO
RPO becomes a company’s partner in talent acquisition and isn’t a get-it-and-forget-it solution. A good provider takes time to get it done right by truly getting to know your company and your processes to better understand your needs.
The steps to recruitment outsourcing include stages of discovery and change implementation for sustainable integration and efficiency.
1. Data Collection
The RPO implementation manager first conducts a stakeholder analysis and gathers data on the company’s current recruitment processes: trackers used, internal vs. external hire, and interview formats.
The implementation of this RPO service milestone can take as long as three weeks.
2. Process Mapping
An RPO provider uses the answers to the preceding questions to design a detailed process map outlining the roles and responsibilities of the internal recruitment team, HR, hiring managers, and the RPO team.
The completion of this document can take up to a week, but it serves as the hiring teams’ “Bible.”
3. Change Management and Training
An RPO partner takes extra steps to make sure that their talent acquisition process is sustainable after an implementation.
RPO partners resolve any issues or roadblocks that arise during the launch phase, preceding regular meetings with the team to go over the new procedures and tools.
They take feedback from Internal teams and new technology end-users and give guidance to make sure no one reverts to old methods.
As your company grows your TA provider monitors key metrics, such as user adoption, to identify successes and opportunities for improvement. The access for the processes and policies should reflect the organization’s.
There should be a cultural fit that produces synergy in co-defining goals, tasks, and deliverables.
Examples of Recruitment Process Outsourcing
In recent years, recruitment process outsourcing has gained popularity. RPO’s flexibility, scalability, and speed appeal to companies as they grow their workforces.
There are five distinct varieties of RPO.
An on-demand RPO program can strategically support your recruiting needs when they spike during peak hiring times like the holidays or summer.
When you have an influx of applicants and need help screening them, this model can provide you with a dedicated recruiting resource.
Does your company have a full-fledged TA department, but you still need to bring in some extra help filling out certain positions? Project-based RPO is the way to go.
Having more employees available is beneficial whenever a business makes a strategic shift, introduces a new product or service, or grows substantially.
Project-based RPO gives you access to a group of recruiters who can advise you on how to properly expand or contract your workforce in response to these changes in the business environment.
If you adopt this organizational setup, you’ll be able to take advantage of the services of RPO recruiting teams that are designed to complement your in-house TA or HR group rather than replace it.
Outsource specific markets and/or departments and the resulting output can be guaranteed to meet the same KPIs as your current staff.
The hybrid RPO model’s adaptable framework allows for the introduction of cutting-edge enhancements to your recruiting strategy.
Enterprise RPO, also referred to as full talent lifecycle RPO, takes on every facet of a business’s recruitment process.
Your enterprise RPO provider handles every step, from sourcing and screening candidates to conducting interviews and managing the hiring process.
This end-to-end RPO service has the potential to raise productivity, cut costs, and increase compliance while simultaneously boosting the quality of applicants.
Total Talent (RPO + MSP)
A total talent program combines RPO and MSP (Managed Service Programme) to provide a novel approach to workforce management. This all-encompassing talent acquisition facilitates efficient hiring to fill roles as needed.
Working with an MSP provider makes managing temporary workers easy, and an outsourced RPO handles all aspects of your permanent recruiting.
Combined, you gain the benefits of a diverse yet cohesive workforce.
Top Recruitment Process Outsourcing Companies
These are the top RPO companies to date. Looking at them gives you a benchmark on how it’s done. With the shift to a global and flexible workforce, RPO is more in-demand than ever, and you can choose from a plethora of providers.
Like with other third-party partners, do your research, and base your final decision on personal preference, culture match with your teams, and the specific needs of your business.
Active in more than one hundred countries and offers customer support in 39 different languages.
Experienced in diversity, equity, and inclusion (DEI) recruitment practices. A results-driven, tech-enabled Recruitment Process Outsourcing (RPO) company.
Specializes in helping veterans and finding full-time civilian employment for former members of the United States Armed Forces through different programs.
Focuses on delivering recruitment outsourcing and optimization services and helps businesses to acquire skilled professionals, optimize recruitment processes and employ motivated, well-matched, military candidates.
Provides workforce consulting, contingent staffing, permanent recruitment, professional resourcing, project-based solutions in IT, engineering, and finance, and organizational efficiency, individual development, and career mobility solutions.
Recruitment Process Outsourcing Pricing Models
Newcomers can find recruitment pricing models confusing.
There are four recruitment pricing models: percentage of salary, retained search, flat fee, and hourly fee-for-service.
Each has pros and cons and is best for different situations, so knowing the details of each model will help you choose wisely.
1. Percentage of Salary – the traditional way
This pricing model has been the most common billing method since the professional recruitment industry burst onto the global scene in the late 1980s.
How this model works:
As a placement fee, the recruiter takes 10 to 30% of the successful candidate’s annual salary.
This “salary” usually includes superannuation, but some firms include allowances or non-cash benefits (like cars), so you can check your agreement.
It is very useful to check if the fee includes advertising and skills testing and meet the payment terms to protect the placement guarantee.
Advantages and disadvantages
- If there’s no placement, there’s no fee – all the risk is on the recruiter, so it’s in their interest to find a successful candidate.
- You aren’t locked into a single recruiter and you can brief multiple ones.
- However, if you need multiple candidates with the same skill set (e.g. customer service centers), you’ll be charged the same salary percentage for each, even though they came from the same recruitment process.
2. Retained Search
This is similar to the above, except that the agreed fee is paid in three installments, the first two (non-refundable) payments being one-third of the estimated total fee.
How this model works:
The first payment is due and billed before work is even started on the project.
Once the shortlisting process is over, the second installment is due.
Third, the remaining fee is due upon successful placement of the candidate.
Advantages and disadvantages
- The client and recruiter share the risk in this pricing model.
- The client pays the first two installments to secure a shortlist of available, fully qualified, professionally interviewed, and reference-checked candidates.
- The recruiter doesn’t get the final payment until the placement is made.
- It’s an exclusive deal between you and your recruiter. Most recruiters using the percentage salary model won’t agree, but a retained recruiter will work more effectively for you.
- They know they’ve got the money to support the time and resources needed to find the best candidate, and they’re not working on 15 open briefs, hoping on the law of averages.
- Retained recruiters have fewer open briefs, so they can focus on their clients.
3. Flat Fee or Fixed Fee Recruitment
This pricing model is not linked to the successful candidate’s salary – rather, you and your recruiter agree on a flat (sometimes also referred to as “fixed”) fee for the work.
How this model works
Under this pricing model, recruiters require an exclusive agreement.
The fee is less than under the percentage of the salary model but still respects the recruiter’s work.
Placement guarantee periods are usually offered, but you should still check the terms; there may be a trade-off for the capped fee.
Advantages and disadvantages
- This pricing model is great for companies that need a professional recruiter but don’t know what the salary will be for the skill set they need.
4. Hourly Billed Recruitment
This pricing model is relatively new to the recruitment industry in Australia but is also gaining popularity in the global scene.
Essentially, it’s just like the pricing approach taken by other professionals such as accountants, lawyers, business consultants and so on.
How this model works
There is no correlation between the position held and the salary offered.
All of the recruiter’s time, from taking the initial brief to facilitating the offer and acceptance, is billed on an hourly basis.
An itemized consulting timesheet is included with the bill (or, in your case, you have access to a shared online workspace where you can monitor your recruiter’s progress at any time!).
Typically, the fee is between 50 and 75 percent lower than the percentage of the salary model.
Advantages and disadvantages
- When you have a trusted recruiter, this model works well. Some clients report saving over $1 million per year by using this pricing model. When someone doesn’t work out, it’s cheaper to go back to the market than wait for the recruiter to find a free replacement.
- The client’s recruitment costs are 50% less, they can secure multiple candidates at no extra cost, and their recruiter ensures the best service to ensure repeat business. Fee-for-service pricing means the bill is due whether a placement is made or not.
- Recruiters are paid for their worth and can work on fewer projects because they have guaranteed income. Less competition means a better result.
Which model is best for you?
If you’re risk-averse, you’ll gravitate toward the “no placement, no fee” model. But prepare to pay the most for its safety net.
If you need specialized skills and experience, consider Retained Search. Paying your recruiter in advance ensures your project gets their full attention.
Flat Fee (Fixed Fee) pricing model agreements work well if you have a strict budget and can accurately project costs. Your recruiter can agree to a flat project fee or a flat fee per placement if you want to fill multiple positions with the same job description.
The Hourly Billed pricing model works for anyone wanting to save money on recruitment, recruiting multiple people for the same job, or having an internal HR department that needs help. It works best when you have a “trusted business advisor” recruiter and are confident they will deliver what you need.
Just like any business matter, always read the recruiter’s terms and conditions before applying.
How Big is the Recruitment Process Outsourcing Market?
Markets for services related to the recruitment process, known as recruitment process outsourcing (RPO), are studied from a number of perspectives.
According to Absolute Report in 2021, the global recruitment process outsourcing market size is estimated to be USD 8456.30 million in the same year and is expected to reach USD 25379.40 million by 2028, at a CAGR of 17.0% during the forecast period.
In North America, RPO services are pretty popular, and both small and large businesses use them a lot. It is expected to be the biggest market in the world for the next few years because there are so many big RPO companies in the area.
Europe has the second biggest share of the RPO market worldwide.
The UK, Germany, France, and the Netherlands are mainly responsible for the market’s growth.
The Netherlands has one of the world’s most open economies and is a leader in technology and innovation, making it the top economic opportunity in Europe and Central Asia.
It has a large port, competitive business climate, and a well-educated workforce. As an internationally oriented country, the Netherlands has many highly educated foreign workers.
In the coming years, Asia-Pacific is likely to be the market for RPO services with the most growth. The regional economy and job market have a big impact on the RPO market.
Countries like China, India, and some in Southeast Asia have large labor markets and promising economies.
Therefore, a lot of the RPO market growth in the coming years is likely to come from these countries.
RPO MARKET DYNAMICS
RPO-enabled programs help businesses stay ahead of trends. These recruiting solutions provide measurable results and flexibility for every step of the hiring process to solve all recruiting challenges.
In terms of positioning the employer brand and the candidate experience as a whole, RPO programs can be extremely useful.
It can also help you with strategic talent consulting and long-term workforce planning, two areas that are essential for any business that aspires to expand.
Insight from data
With the help of an RPO, a company can access online program analytics and workforce planning to boost its profile and adapt to changing market conditions.
RPO can simplify the process of hiring efficiently for any business by lowering associated expenses and increasing insight into total workforce expenditures.
The global RPO market helps companies access top talent from different regions.
With RPO’s scalable model, an organization can meet fluctuating hiring needs, improve candidate quality, and boost employee retention.
Recruitment Process Outsourcing Trends
The hiring process requires careful consideration of the job’s requirements, the skillset of the ideal candidate, and the candidate pool as a whole.
The recruitment outsourcing industry is booming. Here are the eight latest trends:
1. Diversity, equality, and inclusion (DEI)
RPO recruiters know DEI is key to a healthy workplace. It creates a healthy, fair, and inclusive system at work. Some say this goes beyond RPO—they’re right.
Along with an equal employment opportunities (EEO) policy, these protect all parties within the organization.
The market is becoming increasingly competitive, so it’s important to find talented people.
RPO specialists also identify and resolve skill gaps in a company’s existing and incoming workforce.
3. Next-generation technology
Next-gen technology is another RPO trend.
With SaaS companies everywhere, the outsourced recruitment industry uses applicant tracking systems (ATS), job boards, and websites.
Recruiters from around the world are familiar with these technologies and are best for hiring talent.
4. Candidate care
Care for candidates is another rising RPO trend. It involves the interaction between recruiters and those they’ve already hired.
The vast majority of recruiters, whether in-house or outsourced, spend a lot of time getting to know each candidate.
Outsourced recruitment firms’ headhunters receive the highest level of professionalism training.
Matching people with jobs that fit for their abilities and personality is a big part of that training.
5. Remote hiring and onboarding
In remote-first businesses, it is the norm to conduct the hiring and onboarding processes online.
The middle of the year 2020 saw the beginning of this RPO trend as businesses everywhere began to expand and bring on more workers.
Typical business recruiters jump on the bandwagon rapidly to meet the rising demand for workers.
With more and more businesses adopting a mix of on-site and remote workers, online hiring isn’t going away any time soon.
6. Remote-only employees
The introduction of remote-work regulations in 2020 sparked a steady increase in this RPO trend.
More and more people are seeking remote work opportunities due to the many benefits of doing so.
Finding the right person for remote teams and communicating with remote-only candidates is simplified with the assistance of outsourced recruitment companies.
7. Global recruitment
As the demand for global talents rises, RPOs that have demonstrated success in international recruitment are likely to see a boost in business.
Professionals who specialize in international recruitment are just as good as, if not better than, their domestic counterparts.
To top it all off, they contribute to the development of a more diverse and inclusive workforce and the maintenance of high-quality skills, particularly among geographically dispersed groups.
8. Future-proof recruitment
RPO matches the smart technology and border-less practices of the future’s digital processes. It’s here now and it’s here to stay. The efficiency and the benefits are too good to skip. It’s another avenue of specialty that businesses can place in the hands of specialists rather than doing it and spending on it in-house.
In the same way that outsourcing is the future of work, RPO can well be the future of hiring.
Recruitment Process Outsourcing Outlook
From Absolute Reports in 2021, the global recruitment process outsourcing market is expected to grow at a CAGR of 17.0% by 2028.
With this statistics, effective recruiting and lower overhead costs are driving market growth. RPO service providers source, select, and maintain recruit quality.
AI and machine learning
Companies are starting to use AI and ML to schedule interviews and screen CVs.
Chatbots and other assessment tools help service providers engage candidates.
AI could revolutionize the way we recruit people because it automates sourcing, rediscovery, reference checking, and diversity hiring to improve workforce planning.
As attrition rates rise across industries, the RPO market is growing.
To stay competitive, many companies quickly replace people who leave their jobs.
Graduates and postgraduates have a lot of opportunities to gain industry experience and skills.
Employers focus on core competencies and reducing recruitment costs also helps the market.
Due to shifting business models and digital disruptions, the financial sector is in a constant state of flux.
So, many businesses in the financial sector are turning to recruitment outsourcing agencies to find qualified candidates while cutting down on expenses.
As these industries grow, they create a wide range of direct and indirect jobs.
When hiring for positions in these fields, it is essential to find people with the right set of skills, which is where RPO agencies come in.
RPOs improve a company’s competitive advantage in the labor market, help attract the best employees, and help businesses maintain their flexibility, relevance, and efficiency throughout the entire recruitment process.
There are dozens of RPO configurations that can be streamlined to fit your needs, whether you want seasonal help with an on-demand solution or full-service expertise with an enterprise program.
If your company is thinking about outsourcing some or all of its recruitment tasks, putting in place a dedicated RPO program is a good step to take.
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