Until recently, companies that were dissatisfied with the traditional agency recruiting model had few options. They could either try to negotiate a better deal, usually in the form of a reduced fee schedule or flat fee in exchange for exclusivity on the vacancy, or hire someone internally to take the job of a corporate recruiter. For most smaller businesses, the agency fees are unaffordable and they don’t have the hiring volume to justify a full-time hire. Now, Recruiting process outsourcing is gaining momentum as businesses of all sizes discover that BPO fits rather well within the overall HR strategic plan.
Recruitment Process Outsourcing Defined
Recruiting Process Outsourcing or RPO is where a company outsources part or all of its recruiting function to an external partner. The rest of the human resources function may stay internal, with specific handoff points built into the hiring process for a smooth transition and seamless candidate experience.
Types of Recruitment Process Outsourcing Engagements
There are several different types of RPO options available and most if not all are very accessible to small and mid-sized businesses.
Function-specific RPO is where job vacancies for one specific function are outsourced, while other functions are retained in-house. This solution makes sense for either very specific roles that are difficult to source or for high-volume hiring needs in a specific area where the business is consistently going back to market for the same roles over and over again. The key here is picking the right partner who has expertise in the function. For example, Red Clover has served clients as the function-based RPO for HR positions, leveraging our expertise and ability to source high-quality talent: candidates that not only have the right knowledge, skills, and experience but who also demonstrate the behaviors and motivators that align to the client’s culture and values.
Full-service RPO is when all recruiting is outsourced to an external partner. In this case, a good RPO provider will set up a dedicated talent team to work with the client, investing time to understand the company’s values and culture as well as provide support on everything from writing a job description to communicating the company’s employer brand. Full RPO partners act like the right hand to the CHRO, communicating directly with hiring managers on vacancy briefs, tailoring the interview process to the business needs, and leveraging applicant tracking systems and other recruiting technology to provide a candidate and user experience that promotes the company as an employer of choice.
On-demand RPO is often provided as part of a larger HR BPO contract, where HR services are fully outsourced to a third-party provider and the external team can flex in and out of recruiting as needed to serve the client. It’s worth noting that careful planning and communication are important here. It’s hard to imagine an on-demand RPO agreement where the client can suddenly drop a dozen vacancies and expect a talent acquisition team to be ready to jump. For example, we offer on-demand RPO as part of our interim and outsourced HR services, however, we meet with the client and set goals quarterly to ensure that we are staffed appropriately and are able to meet demand.
What is the Cost of Recruitment Process Outsourcing?
Like all outsourcing solutions, the number one reason companies look to outsource recruiting is to reduce the cost per hire. RPO costs vary dramatically depending on the size of the organization and the average number of vacancies sourced. For us, we price our RPO services as a fixed price monthly retainer that is calculated based on the scope of the recruiting process, the number of parallel vacancies running in parallel, and the relative complexity of the job role. We translate to an estimated number of hours per week needed to do the work and price it as a fixed fee. Our goal is to provide clients with a number that they can rely on as if they had hired someone internally.
In an evaluation of total cost per hire for our clients over a twelve-month period, we found, on average, they saved 50% over traditional agency recruiting fees.
Is RPO Right for Your Company?
RPO may or may not be right for you, but if you are in a position where you are hiring regularly or have a predictable hiring season, RPO is worth considering, regardless of your total business size. The return on investment for a good outsourced recruiting process outsourcing contract is somewhere between 2 and 3 positions, depending on the annual base salary and complexity of the overall hire. The right partner will save you time and money as well as bring the supporting technology, including access to platforms like LinkedIn Corporate Recruiter and the access to talent and search features not otherwise available.
An Interim HR Manager Could Be Your RPO Solution
We offer RPO as part of our interim and outsourced HR services. Our dedicated, high-performing team works hand in glove with your senior leadership team to source and select talent that not only has the skills and experience to do the job but also fits your values and culture. Contact us.