Understanding Recruitment Process Outsourcing (RPO)

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Ajay Mallapurkar Published on Aug 26, 2020

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1. What is RPO?

Recruitment Processing Outsourcing is when an organisation delegates a part of or the entire recruitment function to a third party recruitment provider. The RPO vendor provides necessary staff, technology, and processes needed to set up & fulfil the client’s recruitment needs. RPO services are provided either by sending a team of recruiters to the client organisation, through a team of off-site experts or a combination of both.

2. What Are The Types Of RPO?

a. Fully Outsourced: In this type of RPO the client outsources full recruitment. The RPO provider is responsible for end-to-end recruitment process. right from Sourcing candidates to hiring them for the clients.

b. 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.

c. 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.

3. Why Do Companies Engage In RPO?

RPO is generally done in order to recruit for the roles that companies are unable fill themselves. This may happen because of “peaks” in recruitment demand, 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. Each day a position is left vacant, it costs the client & 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 up with these changes in set up 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, technology and trains 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 the future audits as well.

In a nutshell, companies use RPO services as they give them access to ready made 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.

4. 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 Interview

7. Assessments: Psychometric and behavioural assessments

8. Technology selection and Implementation

9. Setting Recruitment Processes

10. Management Reporting

5. How To Go About RPO?

Here’s a checklist which will guide you if you’re planning to start your own RPO business.

a. Recruiting Tool: The primary difference in 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 companies recruitment process along with the technology required to power these processes. The technology includes, software for recruitment, provision for time sheet and data management for further smooth functioning.

b. Manpower: 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.

c. 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.

Management Fee Model

This payment method is generally preferred for monthly projects. A lump sum amount is paid as 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.

Cost Per Hire Model

A 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 Plus Cost Per Hire

This is a combination of the first and second model. 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 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 chat bot on the bottom right, and we’ll help you out!