Outsourcing recruitment is a growing trend in the US, with researchers currently estimating an approximate annual growth of 16%. This has been attributed to various factors, including the rise of AI and technology, as well as many agencies providing candidates of a consistently high quality. It seems that confidence is growing in companies’ abilities to use technology to manage the recruitment process. While this could be perceived as an impersonal approach, candidate engagement appears to be higher when the right technologies are put to work.
The burning question you’re considering is whether recruitment process outsourcing (RPO) is right for your business. This article explores what RPO is and what it does, with information that you can use to decide whether to outsource or attempt emulating RPO businesses’ methods in-house.
What are the main types of RPO?
Getting down to practicalities, you may find yourself wondering how your relationship with an RPO provider might work. If you choose to outsource the recruitment process, your relationship will likely be based on one of the following engagement models:
In this model, the company enters into a contract with its RPO provider. It specifies a period of time and how many roles are to be filled within that period. For example, you may be expanding your business and will need to recruit several new staff members at once. Even though your HR department can usually handle recruiting, the anticipated volume of work is higher than normal, and you use on-demand RPO to increase your capacity for effective recruiting.
If you need specialist staff within a certain field, you might turn to an RPO to handle all your recruiting in that business function or department. They would then be responsible for all your recruiting within that area. For example, you might hand over recruiting engineers, IT workers, or healthcare workers to an RPO that specializes in hiring people within these fields.
Instead of using RPO on an as-and-when-required basis, companies can opt for full RPO and have their service provider fulfill all their recruiting needs. It’s a long-term relationship that saves businesses from having to divert staff to recruiting tasks and allows them to focus on the employees and work they already have.
What types of recruitment processes are usually outsourced?
Typically, you’d use RPO providers to handle all recruitment processes up to and including onboarding. However, you can choose to outsource some recruitment processes while performing others in-house. Most companies prefer to use their own managers to select who will be hired, for example – but they will want a shortlist of top candidates to focus on. Reaching this point is usually the work of the RPO provider. Here’s what they’d do:
1. Preparing for the recruitment process
During this process, your RPO provider works with you to determine what kind of people you want to hire. This includes what their skills, qualifications, and experience should be, as well as what type of personality will be a good fit for your team. Preparation includes using job descriptions, or developing new ones, to form the source documents from which effective job posts or advertisements can be crafted.
2. Sourcing candidates
The next step is then for the RPO provider to find relevant candidates who are interested in the job. To do this as effectively as possible, they will leverage technology to post ads and monitor responses. For example, Broadbean’s software allows agencies to post on over 7000 job boards, search engines, and social media channels. It also offers data-driven insights to help optimize this process, ensuring a consistently high caliber of candidates.
3. Screening applicants
The advent of AI is having a profound impact on the recruitment process. For instance, it’s been estimated that 65% of recruiters use AI to some extent when identifying and sourcing candidates.
Many RPO providers will utilize AI-based tools to screen resumes and manage candidate expectations, culminating in an interview shortlist comprising the most suitable applicants.
4. Scheduling interviews and onboarding new hires
A high-quality candidate experience often involves a lot of back-and-forth communication, which an RPO provider can handle while companies make their hiring decisions. And, once the selection is made, it’s great if there’s someone to oversee contracting and onboarding so that the successful candidate knows everything they need to get started in their new job.
Why do companies outsource their recruitment processes?
The Recruitment Process Outsourcing Association reports that 43% of top companies are using RPO providers to handle their recruitment processes. The top reasons for doing so include the fierce competition for high-level talent prevailing in today’s job market.
Business conditions can change rapidly too, opening up new opportunities for companies that can respond quickly – and to do so, they’ll need the right people at the right time. But, it’s no surprise that they and their staff are busy and don’t have time to focus on recruiting. For them, the logical solution is to outsource recruiting work to companies that specialize in this field.
As additional motivations for outsourcing recruitment, time to hire and cost per hire can be reduced by partnering with an RPO provider. And, since their business reputations depend on it, RPO providers are laser-focused on finding the right recruits to fill vacancies. After all, a recruiter (or RPO company) is only as good as the candidates they source.
Finally, companies may choose an RPO partner to improve their recruitment process so that they can improve employee retention. Or, they may find themselves overwhelmed by a seasonal requirement for additional staff and require extra resources so that the hiring process runs smoothly.
What types of companies outsource their recruitment process?
Almost any company can use RPO partners for more efficient and cost-effective recruiting. However, certain factors may indicate a stronger need for recruitment process outsourcing. These include:
- Fierce competition for candidates within the industry: For example, healthcare recruiting is very competitive. According to Healthcare Executive, 71% of healthcare decision-makers cite competition for talent as among their greatest challenges.
- Companies seeking people with high-level or specialized skills: Companies may outsource their recruitment to companies who can dedicate the time and effort needed to find candidates with a rare or unique skill set. For example, there’s currently a shortage of qualified engineers in the US job market and people with good financial management skills are also in short supply too.
- Industries that expect high staff turnover: In some industries, high staff turnover goes with the territory. According to LinkedIn Data, the industries with the highest staff turnover in the US are professional services, tech and media, entertainment, accommodation, and retail.
How does RPO compare with using agency recruiters?
Agency recruiters can be very helpful in sourcing candidates, but they tend to focus on speed and volume since their revenue model is based on commissions for successful placements. With a need to source lots of candidates as fast as possible, their focus isn’t necessarily on your business. In addition, they’re reactive rather than proactive, since you would only use an agency once you already have a vacant role.
An RPO provider, on the other hand, handles a much larger chunk of the recruitment process and they are inclined to take a longer-term view. Since they often serve as a natural extension of your HR or in-house talent team, they will usually be more aware of your unique goals and strategy, not to mention any plans to grow or rescale your business.
What are the main benefits of RPO?
Focusing on your core business
The main reason why businesses will outsource any support function is so they can remain focused on their main strategy – be it growth, revenue or innovation. By outsourcing processes such as recruitment, they can rest assured that this area of their business is being handled by skilled and dedicated professionals.
Scaling recruiting at will
Scalability is another strong reason for RPO. At certain times, you may have a high demand for people to fill roles, and at others, you won’t be recruiting at all. Recruiting is labor intensive despite the tech that recruiters use to help them. So, your HR department can be pushed beyond its capacity at peak times – or fail to fulfill what capacity it has because there’s no demand for new employees. When you have an RPO provider, they simply assign more of their recruiters to serve you when you have intensive recruiting needs.
Acquiring better candidates
RPO providers work hard to extend their reach as far as possible. Even when they’re already in contact with candidates that seem to have potential, they’ll market your post intensively. This means more applicants, and with more people to choose from, a good chance of gaining a better-quality hire.
Reducing staff turnover
If you find the right people to fit a role, you’re less likely to see them moving on to pastures new. What you need is people who are highly motivated to take on the challenges of any post you offer. With an RPO provider being focused on just that, you may well find that the people you hire stay longer – or even build entire careers with your company. That’s because a good RPO company will actively search for people who are a good fit for your business.
Competing more effectively for talent
Owners and managers of smaller businesses may feel that they don’t have the resources to attract top talent. If they recruit in-house, that’s probably true – but if they use recruitment process outsourcing, it needn’t be. Think about it: with an RPO provider, you have the services of an entire business that is specialized in finding you suitable staff. It can do far more than a small HR department can.
Aligning recruiting and onboarding
When recruiting and onboarding aren’t under one roof, mixed messages can confuse candidates. Bring them together for continuity and choose recruiters who have an intimate understanding of your business’s culture. By implementing full cycle recruiting methods, your recruitment outsourcing providers can create a seamless experience that helps new employees deliver their best sooner.
Reducing recruitment costs and time to hire
Reducing recruitment costs and time to hire is all about the recruiter’s skill, focus, experience, and access to the right tools. With a professional RPO provider, all of these benefits are at your fingertips – without you having to pay extra salaries or purchase software yourself.
Calculating costs and ROI From RPO
RPO is a growing trend, and different providers each have their own pricing models and rates. Some RPO providers have a flat fee for different service packages. Others work on a set cost per hire, and some charge a percentage of salary per hire. Finally, some companies charge a flat rate as a retainer and then charge a cost-per-hire (CPH) fee.
Of course, it’s still possible to calculate a basic ROI from this. If you’re already using an employment agency, you could look at what you are spending there. For in-house recruiting, you can factor in the cost of the staff you employ to do recruiting, the cost of advertising posts, and the cost of the software you’d use to identify good candidates. Having done this, you might think that your hiring costs are sorted. But a straightforward comparison based on these figures doesn’t fully reflect realities.
For example, what is the cost of an unfilled post? If your agency or in-house recruiters take 90 days to fill a vacancy and RPO results in a 60-day time to hire, you should take that into account too. You should also consider the cost of a rejected offer. It will add days, weeks, or even months to your recruiting process. Worst of all is the cost of a bad hire. That can be very difficult to quantify and could cost your business thousands of dollars.
Remember, a good RPO provider will do their utmost to ensure that any candidate you interview is highly motivated to get the job. That means less chance of a rejected offer. Besides this, a thorough applicant screening process reduces the chances of getting a bad hire – as long as your RPO provider is exercising diligence.
Tips for outsourcing the recruiting process
The success you’ll have with recruitment process outsourcing depends on which provider you appoint. Many RPO professionals are complaining that just about anybody – from solo HR freelancers to traditional agencies – are using “RPO provider” as a tag. So if you’re considering recruitment outsourcing, you should take the time to find the right service provider to form a partnership with. Here are some tips to get you started:
- To begin with, consider the company itself. Who does it serve? Does it have specialist credentials in any particular field, for example, is it a healthcare recruiter? You may also want to consider asking for testimonials from satisfied clients in your sector.
- Ask questions about its capacity and work methods. Since scalability is one of the top benefits of RPO, you will want to confirm that the service being offered fits that criterion. Technology will be the key to unlocking scalability, so it’s also worth enquiring about the tech tools used by your prospective provider to find the best quality candidates.
- A good RPO should be just as interested in your business as you are in theirs – if not more so. Find out to what degree they collaborate with their clients. This can be as easy as settling down for a chat. They should ask you about your business’s strategies and forward planning, the culture you’re striving to foster, and the type of people who are likely to fit in well
- Discuss accountability for results. After all, if they are to be responsible for outcomes, they must be accountable too. Finally, check on timelines. What do they do, when will they do it, and how long does it take?
Optimize your recruitment strategy with Broadbean
Whether you’re an RPO professional, employment agency, or an HR manager looking for ways to improve your organization’s recruitment processes, it’s worth taking a look at Broadbean’s suite of recruitment tools.
From helping you get the word out about posts on offer to effective applicant ranking that brings you closer to that all-important shortlist, you’ll find what you want right here. That’s because we partner with leading recruitment software, talent management and applicant tracking service providers. We bring the world’s best together under one roof. With our tools and tips, that’s what you’ll achieve with the people you recruit and hire when you combine our tools with your expertise. Let’s work together to help you find the people you need.