Recruitment Processing Outsourcing is when an organization delegates a part of or the entire recruitment function to a third-party recruitment provider.
The RPO vendor provides the necessary staff, technology, and processes needed to set up & fulfill the 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 Types of Recruitment Process Outsourcing?
1. Fully Outsourced
In this type of RPO, the client outsources full recruitment. The RPO provider is responsible for the end-to-end recruitment process– right from sourcing candidates to hiring them for the clients.
2. Project Basis
As the name suggests, a client appoints an RPO provider for a specific period of time for specific roles. During this phase, the RPO vendor is responsible for the entire recruitment process.
3. Half Outsourced- Half In-house
This type is also known as hybrid outsourcing, wherein the client engages the RPO vendor only to fill certain positions while other positions are filled by the in-house recruitment team.
Why Do Companies Engage in Recruitment Process Outsourcing?
RPO is generally done in order to recruit for the roles that companies are unable to fill themselves. This may happen because of “peaks” in recruitment demand, the technical complexity of roles, lack of geographical coverage, or performance issues within the internal team.
Companies also engage in RPO for–
a. 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. RPO helps fill these positions quickly.
b. Scalability: RPO providers can scale up and scale down their services as per the fluctuating 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 maths is simple; they get paid for the positions they close.
c. Recruitment Process Design: Unlike traditional recruitment, RPO vendors not only fill positions but also helps clients set up their recruitment processes and technology and train people through a consultative approach. This helps the client carry on with their recruitment practices seamlessly once the RPO is over.
d. Analytics & Reporting: RPO providers have ways and methods to track and trace the recruitment process by generating real-time reports. This helps in making better data-driven decisions for future audits as well.
In a nutshell, companies use RPO services as they give them access to readymade resources and an opportunity to streamline their recruitment processes.
On the other hand, agencies provide RPO services as it helps them to get in touch with a wide range of clients and gain predictable cash flow.
What Are Some of the Services Under An RPO?
Services under RPO vary for different RPO providers depending on their field of expertise. Here is a list of services that are generally covered under RPO–
1. Recruitment services
2. Counselling services
3. Recruitment forecasting
4. Candidate sourcing
5. Application handling
6. Scheduling and conducting interviews
7. Assessments: Psychometric and behavioral assessments
8. Technology selection and implementation
9. Setting recruitment processes
10. Management reporting
How to Go About Recruitment Process Outsourcing?
Here’s a checklist that will guide you if you’re planning to start your own RPO business.
1. Recruiting Tool
The primary difference between traditional recruitment & RPO services is that RPO services do not end after the position is filled.
It is a long-term association.
RPO 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 technology required to power these processes.
The technology includes software for recruitment, provision for timesheet and data management for further smooth functioning.
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 & build a team as you scale based types of services you provide.
3. Pricing Models
There isn’t a flat industry standard on fees for RPO services. These rates depend on the RPO provider as he employs various resources; RPO prices depend on the services provided and the length of the contract.
a. 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 are pre-defined.
The fee may escalate if the number of positions to be filled increases.
b. 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.
c. Management Fee Plus 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.
d. 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 charged on an hourly basis or on successful placement.
Hope this article helped you understand RPO a little better.
If you’re looking to start an RPO of your own and would like to chat with us about it, hit the chatbot on the bottom right, and we’ll help you out!