Thinking of setting up a recruitment process outsourcing firm? Look no further!
This extensive blog covers all you need to know about RPO before kickstarting your very own business!
What is recruitment process outsourcing (RPO)?
Recruitment processing outsourcing occurs when an organization delegates part or all of its recruiting functions to a third-party recruitment provider.
Vendors that offer RPO provide the necessary staff, technology, and processes needed to set up and fulfill a client’s recruitment needs.
RPO services are provided either by sending a team of recruiters to the client organization, through a team of off-site experts, or a combination of both.
What are the major types of recruitment process outsourcing?
1. Fully outsourced RPO
Fully outsourced RPO involves the client outsourcing their entire recruitment function. The RPO provider manages the firm’s end-to-end hiring process, from sourcing candidates to hiring them. In some cases, an Employer of Record (EOR) can be utilized to handle legal and administrative responsibilities, ensuring compliance and managing payroll and benefits for the new hires.
2. Project-based RPO
As the name suggests, in project-based outsourcing, a client appoints an RPO service provider for a specific period of time for particular open roles. During this phase, the vendor is responsible for the entire talent acquisition process.
3. Half outsourced – half in-house RPO
This type is also known as hybrid outsourcing, wherein the client engages the RPO vendor only to fill certain open positions while other positions are filled by their in-house recruitment team.
Also read: 10 sourcing email templates to reach out to candidates
4. On-demand RPO
This is opted for by businesses that experience seasonal hiring spikes, such as around the holidays, to get strategic support for these recruiting needs. This recruitment process outsourcing model offers firms a dedicated hiring resource when they need an extra set of hands to combine with their internal hiring team.
4 reasons why agencies engage in recruitment process outsourcing
RPO is generally done in order to recruit for the roles that companies are unable to fill themselves, allowing them to leverage the benefits of outsourcing. This may happen because of peaks in recruitment demand, the technical complexity of roles, lack of geographical coverage, or performance issues within the internal recruitment team.
Companies also engage in RPO for:
1. Cost management
Time is money. Every business wants to be as profitable as it can be. Each day a position is left vacant, it costs the client, and productivity is hampered. Recruitment process outsourcing helps fill these positions quickly with top talent, helping the client with cost savings. Similarly, employing outsourced IT services can further enhance efficiency and reduce overheads by allowing external experts to manage technical operations seamlessly.
2. Scalability
RPO providers can scale up and scale down their services as per the fluctuating hiring needs of clients. When a client opens a new department, they will have more vacancies versus when they are downsizing.
RPO vendors have the ability to cope with these changes in setup as the math is simple; they get paid for the positions they close.
3. Recruitment process design
Unlike traditional recruitment, RPO vendors not only fill positions but also help clients set up their recruitment processes and technology, including AI and automation in BPO, and train people through a consultative approach.
This helps the client carry on with their recruitment practices seamlessly once the RPO is over.
4. Analytics & reporting
RPO providers have methods for tracking and tracing their recruitment strategies by generating real-time reports and tracking metrics. This helps them make better data-driven decisions for future audits as well.
In a nutshell, companies use RPO solutions as they give them access to readymade resources and an opportunity to streamline their staffing processes.
On the other hand, recruitment agencies provide RPO services because it helps them reach a wide range of clients and gain a predictable cash flow.
Also read: 7 ways recruiters can use recruitment analytics for better hiring
What are the services covered under RPO?
Services under RPO vary for different providers depending on their field of expertise. Here is a list of services that are generally covered under RPO:
- Recruitment services
- Counseling services
- Recruitment forecasting
- Candidate sourcing
- Application handling
- Scheduling & conducting interviews
- Assessments: Psychometric and behavioral assessments
- Technology selection & implementation
- Setting recruitment processes
- Management reporting
How can you set up your own recruitment process outsourcing firm?
Here’s a lucky checklist that will guide you through the process of planning and setting up an RPO company of your own:
1. Invest in proper recruiting tools
The primary difference between traditional recruitment and RPO services is that RPO services do not end after the position is filled.
It is a long-term association.
It will look at turnover rates, technology, scalability, analytics, reporting, and performance management.
RPO providers are expected to introduce and set up a company’s recruitment process along with the recruitment technology required to power these processes.
The technology includes recruitment software, such as an applicant tracking system, an interview scheduling system, provision for timesheets, and data management, for smoother functioning.
You might also like: How to choose the right recruitment automation software for your agency?
2. Think about the manpower you’ll need
The best part about starting an RPO service is that there is no minimum number of employees you need to get started.
A recruiter with experience can start providing solo RPO services. You can hire employees and build a talent acquisition team as you scale up based on the types of services you provide.
3. Pick a pricing model to follow
There isn’t a flat industry standard on fees for RPO services. These rates depend on the recruitment process outsourcing provider as he employs various resources. RPO prices depend on the services provided and the length of the contract. But there are a couple of pricing models you can consider adopting:
- Management fee model: This payment method is generally preferred for monthly projects. A lump sum amount is paid as a management fee on pre-defined agreement terms. The number of positions to be filled by the RPO is fixed in advance. The fee may escalate if the number of positions to be filled increases.
- Cost per hire model: Payment is made every time a position is filled. This model is generally used for short-term projects where the number of hires is quantifiable and definitely known.
- Management fee + cost per hire: This is a combination of the first and second models. A management fee is paid for all the efforts required to fill positions. On the other hand, a specific amount is also paid every time a position is filled.
- Cost per transaction: In this case, a specific fee is charged after a process is completed. This process may include candidate screening, background checks, etc. These charges can either be levied on an hourly basis or on successful placement.
This pretty much sums up recruitment process outsourcing for you. If you’re considering starting your own recruitment process outsourcing firm, we hope this article works as a complete guide to help you kickstart your business!
Frequently asked questions (FAQs)
1. How do RPO recruiters get paid?
RPO providers choose various pricing models based on the set of services they provide, the size of their company as well as client base, etc. Some of these models include cost-per-hire, cost-per-slate, and cost-per-transaction. Many get paid when the right talent gets successfully placed.
Now how much the RPO firm gets paid is often subjective to the client, their business, and their needs, and thus requires a careful assessment before a cost can be decided.
2. How can I become a good RPO recruiter?
To become a qualified RPO recruiter, you must learn a certain set of skills. These include the ability to establish connections over time, develop and manage strong relationships, strict work prioritization, critical thinking, human judgment, and also the desire to constantly learn more.
You must also gain hands-on experience in the recruitment industry to get the hang of its various elements, like crafting hiring strategies, getting a grasp on the latest tech, sourcing tactics, and much more.
3. How does RPO work?
Recruitment process outsourcing providers work with companies to understand their hiring needs and troubles and architect a solution for them.
They either take ownership of part of or the entire recruitment process of the businesses (based on the requirement) and work towards sourcing and hiring top-quality talent for open positions, building a talent pool for them, and even managing any future hiring needs that may come up.
