What Is Recruitment Process Outsourcing (RPO)?

An acronym commonly used throughout the Human Resources (HR) and recruitment industry, Recruitment Process Outsourcing (RPO) is a form of Business Process Outsourcing (BPO) whereby a business subcontracts it’s hiring-related operations to a third party provider on a permanent basis. The provider acts as an extension of the clients’ HR function, either managing particular elements of the recruitment process or the entire operation. The provider supplies the necessary resources – staff, technology and methodology – to fulfil a clients recruitment requirements.

Depending on a clients’ needs, RPO solutions can be delivered on-site, offsite or both. When orchestrated effectively, recruitment process outsourcing serves to optimise recruitment efficiency, reducing cost-per-hire, increasing time-to-fill and improving Hiring Manager satisfaction.

What are the different types of RPO?

There are four types of recruitment process outsourcing engagement models; on demand, function, project and full RPO.

To complement matters further, there are some recruitment process outsourcing providers who will provide ad-hoc support to in-house resources through modular service offerings. For example, they might take ownership of certain aspects of the hiring process like hiring strategy design, talent market mapping, talent sourcing or even the employer brand. In order to offer modular services, it stands to reason that the recruitment process outsourcing provider must also offer full RPO services, so for the ease of explanation, we will not making the distinction in this article.

Likewise, we’ve written a separate FAQ on Project RPO’s; a manditory read for any organisation about to embark on a business transformations or expanding their operations base.

Why use RPO providers

Talent is both an enabler and differentiator. An organisations’ ability to find, onboard and retain top-talent while closing the skills gap can give it a competitive edge. However, a protracted time-to-hire, or worse still, a bad hire, can derail a project, product or even an entire organisation. Nowhere is this pressure more keenly felt than in HR; a function increasingly being asked to do more with less. At a time when organisations face increasing change, disruption, and market competition, HR is expected to reduce time-to-hire, optimise hiring processes and reduce overheads.

Thankfully help is at hand. Recruitment Process Outsourcing (RPO) take the burden off HR teams and helps them deliver their objectives by:

• Owning the recruitment process: End-to-end management of the recruitment process from forecasting to offer management and contracts.
• Decreasing time-to-hire: Lessen the impact of unfilled vacancies by reducing the time it takes to find, qualify, interview and hire candidates.
• Scaling with demand: Match resources with hiring demand across geography, function and levelling and plan for periods of high activity.
• Enhancing the candidate experience: A single point-of-contact to keep candidates informed and engaged throughout the hiring process.
• Improve the employer brand: Promote the identity of your company throughout the recruitment process will enhancing the candidate experience.
• Managing fewer suppliers: No need to partner with multiple recruitment agencies to help you keep pace with your hiring requirements.
• Reducing overheads: Centralised, transparent invoicing reduces the administrative burden and allows you to prioritise spend in other areas.

RPO’s sole purpose is to enhance and strengthen an organisations’ hiring capability. Working as an extension of your organizations’ HR team, it expands their technical capability and reach while freeing up resources to tackle other important aspects of human resource management – employee engagement, retention, well being and compliance with HR law.

How does RPO differ from traditional recruiting?

Recruitment process outsourcing differs from traditional recruitment in the nature of the partnership between recruitment outsourcing provider and client and the scope of the services offered.

Traditional recruitment agencies partner with organisations on an impromptu basic, filling vacant positions when instructed by a client. With repeat placements, relationships between a conventional recruitment agency and client can prosper, but their emphasis is on filling roles before their competitors over understanding the ins and outs of a clients’ business. If they don’t, they won’t get paid.

Recruitment agencies and executive search firms operating a retained model have a closer working relationship with their client, but do not traditionally offer the scope of services provided by an RPO provider. They take the time to understand the client’s business model, its values and challenges so they can emulate the employer brand and ‘sell’ the role and the organisation to prospective candidates. By working closely with hiring authorities, they gleam insight into preferred candidate traits over and above what is described in the job description.

Due to the scope of the services offered, not to mention their incredibly close working relationship with HR, recruitment outsourcing providers go the extra mile. Their mastery of the entire hiring process means they are best placed to input into or even define hiring strategy, as well as introducing consistency across an organisations’ hiring process. Through making the whole process more coherent, they can ensure employer brand is maintained while boosting key hiring metrics including cost-per-hire,  time-to-fill and Hiring Manager satisfaction.

What roles do RPO providers fill?

Recruitment Process Outsourcing providers can provide access to both permanent and contract talent across all levelling:

CXO – Top managerial positions within an organisation.
VP – executive management, typically a head of a business function.
Senior – individual with direct reports and leadership responsibilities.
Manager – individuals with direct reports and some level of influence.
Associate – individuals with two-three years relevant industry experience.
Entry level – individuals with minimal professional work experience.

However, in reality, not all RPO providers will find and places candidates across all seniority levels. Executive search firms and recruiters offering project recruitment solutions tend to do so within their remit, whether that be industry expertise (e.g. life science), functional focus (e.g. manufacturing) or levelling (e.g. senior management and executive-level roles).

How is RPO performance measured?

Recruitment process outsourcing is generally introduced to improve hiring efficiency while driving down associated overheads. To this end, RPO performance should be measured against:

Cost-per-hire: How much it costs an organisation to fill a vacant position. This should be compared to the historical cost when hiring was the sole responsibility of in-house resources.

Time-to-fill: The number of days from when a job requisition (RR) is received until the offer is accepted by a candidate. Compare with in-house resources prior to commencement oF RPO.

Quality-of-hire: The quality of the candidates being processed and subsequently hired. Can also apply to the quality of the overall hiring process. Compare with in-house resources.

Hiring Manager Satisfaction: A measurement of a hiring manager’s satisfaction with the hiring process now that it is partially or wholly managed by the RPO provider.

How do RPO providers get paid?

Recruitment Process Outsourcing providers operate on a retained basis and typically charge a monthly management fee. Depending on the agreement and the cost model employed by the RPO provider, some may also include a cost-per-hire fee (charged for every successful hire made) or, in situations where a specific component of the hiring process is to be completed by the RPO provider, a cost per transaction. Sometimes an RPO provider may introduce a cost-per-hire fee for senior management and executive-level placements only.

For more hiring advice tailored to hiring managers in the life science industry…

• Read What Is Project Recruitment?
• View our executive search solutions to see how we can help you grow your team and your business.

* Fraser Dove International is a specialist executive search firm operating exclusively in the Life Science industry. Passionate about people, we take pride in helping exceptional life science organisations source the talent they need to design, manufacture and distribute life-changing drugs, treatments and devices which transform and save patient lives.