What Is Recruitment Process Outsourcing (RPO)? A Complete Guide
Recruitment can be a slog. You can find yourself expending a lot of energy and resources with very little to show for it.
Wouldn’t a way to easily optimize and streamline recruitment be handy for organizations?
This is where recruitment process outsourcing, or RPO, comes in.
What Is Recruitment Process Outsourcing?
Recruitment process outsourcing (RPO) is a form of business process outsourcing where an employer transfers all or part of its recruitment processes to an RPO recruiting provider.
Depending on the client's needs, an RPO provider can help manage the entire hiring process or handle specific components. Many organizations improve hiring efficiency through outsourcing HR services, including recruitment functions.
5 Recruitment Process Outsourcing Benefits
RPO companies have niche expertise in talent acquisition, and their recruitment process strategies can help you make better hires for your business.
Potential benefits of using an RPO company include:
1. Access to expertise
- Specialized knowledge: RPO providers bring specialized recruitment knowledge and experience, including industry and area-specific insights and best practices.
- Advanced tools and technology: RPOs have access to a large array of recruitment tools and technologies such as numerous jobs boards, LinkedIn Recruiter, and advanced applicant tracking systems (ATS).
- Talent networks: Providers have extensive networks and databases of potential candidates, enabling quicker access to a larger pool of qualified talent
2. Time efficiency
- Faster Time-to-Hire: With all their knowledge and resources, RPOs can significantly reduce the time it takes to fill open positions.
- Focus on core activities: By outsourcing recruitment, internal HR teams can focus on strategic initiatives, employee development, and other core functions.
3. Improved quality of hires
- Enhanced screening: RPOs employ rigorous candidate screening and assessment techniques to ensure candidates meet the required qualifications and fit the organizational culture.
- Access to passive candidates: RPO providers have the expertise to source and attract passive candidates who are not actively seeking new opportunities but may be a perfect fit for the organization.
- Data-driven decisions: Using recruiting analytics and data, RPOs can make more informed hiring decisions, leading to better quality hires.
4. Cost reduction
- Economies of scale: RPO providers can leverage their purchasing power and recruitment expertise to negotiate better rates for job postings, background checks, and other hiring-related services.
- Predictable costs: RPO agreements often include fixed fees or variable pricing structures based on hiring volumes, making budgeting easier and more predictable.
- Reduction in overheads: Outsourcing reduces the need for maintaining an in-house recruitment team, cutting costs related to salaries, benefits, training, and technology investments.
5. Scalability
- Flexible resources: RPO providers can quickly scale their resources up or down in response to hiring needs, such as seasonal hiring spikes or business expansions.
- Rapid deployment: With established processes and advanced recruiting technology, RPOs can deploy recruitment initiatives swiftly, ensuring timely responses to urgent hiring demands.
Types of RPO
RPO services are varied and can be tailored to meet specific organizational needs. Here are the main types of RPO services and their characteristics:
1. End-to-end RPO
- Comprehensive management: Helps manage the entire recruitment process from start to finish, including writing job descriptions, candidate sourcing, screening, interviewing, and making a job offer.
- Full integration: Fully integrates with the client’s HR department, acting as an extension of the internal team.
2. Project-based RPO
- Short-term engagements: Ideal for handling specific recruitment projects, such as scaling a new department, seasonal hiring, or filling multiple roles in a short period.
- Focused approach: Provides specialized resources and expertise for the duration of the project.
3. On-demand RPO
- Flexible support: Offers recruitment support on an as-needed basis, perfect for companies with fluctuating hiring needs.
- Scalable solutions: Scales up or down quickly to meet changing demands without long-term commitments.
4. Function-based RPO
- Targeted services: Focuses on specific functions within the recruitment process, such as sourcing, screening, recruitment marketing, or employer branding.
- Supplemental assistance: Provides support where the organization needs it most, supplementing internal recruitment teams.
5. Recruiter on-demand
- Short-term recruiter augmentation: Provides experienced recruiters on a short-term basis to handle immediate hiring needs.
- Quick integration: Quickly integrates into the existing recruitment team to fill gaps or manage peak hiring periods.
6. Hybrid RPO
- Combination of services: Blends various RPO services to create a customized solution that meets the unique needs of the organization.
- Flexible delivery: Combines in-house and outsourced recruitment functions for optimal efficiency and effectiveness.
Specialized RPO Services
1. Sourcing and screening
- Talent sourcing: Uses various channels to source potential candidates, including job boards, social media, and industry networks.
- Screening and assessment: Conducts initial screenings, assessments, and background checks to create a shortlist of qualified candidates.
2. Recruitment technology services
- Technology Implementation: Provides access to, or helps with the procurement of, recruitment software such as ATSs, AI-driven sourcing tools, and recruitment marketing platforms.
- Tech Support: Offers technical support and training to ensure the effective use of recruitment technologies.
3. Employer branding
- Brand Strategy: Develops and implements strategies to enhance the employer’s brand and attract top talent. An example could be helping to develop an employer value proposition.
- Candidate Experience: Focuses on improving the overall candidate experience, from initial contact to onboarding.
4. Talent pool development
- Talent pipeline management: Builds and maintains a pipeline of potential candidates for future hiring needs.
- Community engagement: Engages with talent communities to keep them informed about opportunities and developments within the company.
5. Diversity, equity and inclusion (DE&I)
- D&I Recruitment Strategies: Develops and implements recruitment strategies that promote diversity, equity, and inclusion within the organization.
- Compliance and reporting: Ensures recruitment practices comply with DE&I regulations and provides detailed reporting on diversity metrics.
Industry-Specific RPO
- Tailored solutions: Provides industry-specific expertise and customized solutions for sectors such as healthcare, IT, engineering, finance, and retail.
- Regulatory compliance: Ensures recruitment processes adhere to industry-specific regulations and standards.
Depending on the company’s needs, the RPO can either work within existing recruitment processes and optimize them or create an entirely new recruitment process.
The RPO provider might carry out the recruiting process themselves, or help the company implement it.
As well as specialist RPO firms, recruitment can also be undertaken by professional employer organizations (PEOs) who can handle the hiring process, even for hiring international workers or if your company uses collaborative hiring processes.
Another option is exploring an employer of record (EOR) relationship.
For help here, check out our shortlists of the best PEO providers and best EOR service providers.
How Much Does An RPO Cost?
The cost of RPO services varies widely based on several factors, including the scope of services, the organizational size, the complexity of the recruitment process, and the geographic location.
Here are some general pricing models and factors that influence the cost of RPO services:
RPO service pricing models
1. Cost-per-hire model
- How it works: The RPO provider charges a fixed fee for each candidate successfully hired.
- Typical Range: 15-25% of the candidate’s salary.
2. Management fee model
- How it works: The client pays a monthly management fee for the duration of the RPO engagement, covering the operational costs of the recruitment team.
- Typical range: $5,000 to $50,000 per month, depending on the size of the recruitment team and the scope of services.
3. Hybrid model
- How it works: Combines elements of the cost-per-hire and management fee models, where the client pays a lower monthly fee along with additional fees based on the number of hires.
- Typical range: Varies widely based on the combination of fees.
4. Project-based pricing
- How it works: The organization pays a fixed fee for a specific recruitment project, such as filling a certain number of positions within a set timeframe.
- Typical range: $10,000 to $100,000 per project, depending on the project’s scope and complexity.
5. Recruiter on-demand pricing
- How it works: The client pays an hourly or daily rate for the services of a dedicated recruiter.
- Typical Range: $50 to $200 per hour or $400 to $1,500 per day.
Factors influencing RPO cost
- Scope of services: Full end-to-end RPO services will generally cost more than specific services such as sourcing or screening.
- High volume discounts: Organizations with higher hiring volumes may receive discounts, resulting in lower cost per hire.
- Specialized positions: Recruiting for specialized or executive roles typically incurs higher costs due to the increased effort and expertise required.
- Regional variations: Costs can vary significantly based on geographic location, with urban areas or regions with high demand for talent generally incurring higher costs.
- Long-term agreements: Longer-term contracts may offer more favorable pricing terms compared to short-term or project-based engagements.
- Advanced technologies: The use of advanced recruitment technologies, such as AI-driven sourcing tools, can influence the overall cost.
- Employer Branding, Diversity Initiatives: Additional services such as employer branding, diversity and inclusion programs, and extensive reporting can add to the overall cost.
Example RPO cost breakdown
- Small Business (20-50 hires per year)
- Monthly Management Fee: $5,000 to $10,000
- Cost-Per-Hire: $1,500 to $2,500
- Mid-sized company (100-200 hires per year)
- Monthly Management Fee: $10,000 to $20,000
- Cost-Per-Hire: $1,200 to $2,000
- Large corporation (500+ hires per year)
- Monthly Management Fee: $20,000 to $50,000
- Cost-Per-Hire: $1,000 to $1,500
Note that the figures above provide a general overview, but actual costs will vary based on the specific needs and circumstances of the organization.
When choosing an RPO, it’s advisable to request detailed proposals from multiple RPO providers to understand the exact costs and services included.
How To Choose An RPO Service
A couple of quick tips to help you select an RPO service:
Where to find RPO services
The most common ways to find RPO services are:
- Search engines
- Personal networks, online communities, and referrals
- Industry lists like our pick of the best RPO recruitment providers.
- Search engines.
What to look out for
In her excellent article on hiring a recruiter, Mariya Hristova outlines some key elements to look out for when choosing an external recruitment firm:
- They have a track record of placing top talent at the level you need in similar businesses and locations to yours.
- They are not trying to secure your business by racing to the bottom on price. There is such a thing as suspiciously low fees in recruitment!
- You get to know the recruiter you’re going to be working with and what they will do to support you.
- If an agency offers multiple pricing models, they’re not pressuring you into one or the other.
- Always ask to speak to their former clients to get feedback on their services.
Recruitment Process Outsourcing Companies
There are lots of recruitment outsourcing companies offering a variety of options depending on your recruiting needs.
Here’s a curated list of RPO companies to help you get started with your research.
10 Top Recruitment Process Outsourcing Companies
Here's my pick of the 10 best software from the 10 tools reviewed.
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