Recruitment Process Outsourcing (RPO)
Recruitment Process Outsourcing (RPO) is a form of business process outsourcing (BPO) when an employer outsources or transfers all or part of the staffing process to an external service provider.
A true or total RPO solution involves the outsourcing of the entire recruiting function or process to an external service provider. This provider serves to provide the necessary skills, tools, technologies, and activities to serve as their client's virtual "recruiting department". This definition differs from occasional recruiting support often provided by many temporary, contingency, and executive search firms. While these organizations do provide an invaluable service, they do not qualify as RPO as it does not involve the outsourcing of the recruiting process.
While many temporary, contingency, and executive search firms have provided a form of RPO for many decades, the concept of an employer outsourcing the entire recruiting process wasn't truly realized until the mid-to-late 1990s when the dot-com boom resulted in significant talent shortages. Many companies lacked the internal expertise and resources to acquire the talent needed to remain competitive.
In addition, the generation arriving to the labor force in the 1990s began bringing a shift in career pathing. Rapidly changing markets and industries now forced people to consider shifting employers when beneficial to them as opposed to staying with the same company over the course of their career. This combined with the arrival of Internet technologies and job boards, such as Monster.com, CareerBuilder, and HotJobs resulted in greater attrition and heightened competition for talent.
While RPO was first coined as a term in the late 1990s, several companies now claim to provide RPO services. HRO Today, a trade magazine specializing in human resources outsourcing, credited Recruitment Enhancement Services (RES) as the inventor of recruitment process outsourcing. RES began offering candidate sourcing, screening, and coordination services as early as 1983. More recently, in 2004, HRO Today credited RPO provider Hyrian with "Bringing a new acronym (RPO) to the HRO dictionary" and "Reinforcing that RPO is a rising trend".
Purpose / Benefits
Often the goal of starting an RPO solution is to achieve improvement in four areas: quality, cost, service, and speed.
RPO providers utilize their inherent economies of scale along with heightened levels of recruiting expertise that is expected within a company that does nothing but recruiting. For example, some multi-national companies may have over 1,000 positions requiring different skill-sets and expertise. Staffing an in-house recruiting population that possesses the sourcing skills needed to recruit for all those different skill-sets is extremely challenging. However, an RPO provider will typically have a large staff of recruiters, an extensive database of candidate resumes, and the established tools and networks needed to source for all types of positions.
Costs can be reduced because an RPO provider typically provides greater recruiting efficiencies with best practice processes and improved sourcing techniques. In addition, RPO solutions typically allow for greater fluctuation in volumes and do not require dedicated staff to support a department when volumes are low. For example, if a company hires 10 recruiters to handle their peak requisition volumes, then the company will have to either lay-off recruiters during the slower periods or will be forced to compensate under-utilized recruiters. With RPO, the external provider can often shift underutilized resources to other clients where volumes are higher, thus saving the original client the cost of those resources.
Outsourcing of any company process can be a challenging change management experience. Failing to properly ascertain the impact of RPO will result in reduced hire success, decreased quality of hire, and higher costs.
Furthermore, not all employers are well-suited to RPO. An RPO solution will not work under a broken or failing process. The employer must be willing to recognize that the RPO provider has success because of a proven business model and process. Hiring managers within an employer must be required to observe new procedural controls and process in order to achieve optimal delivery of RPO services.
If an organization has difficulty hiring quality hires due to an extremely negative perception of the employer, an RPO program will not correct this. This will instead require improved branding and an adjustment of that image before RPO will begin to be successful.
On the other hand, a company with a well observed hiring process and that is widely considered to be an employer-of-choice, may only receive negligible benefits from an RPO solution. Such a company may not be well-suited for an RPO solution either as it would not bring a positive return on investment.
Finally, the proper control or governance of a well run solution may be difficult for some employers to adjust to. While the responsibility for results and success will often still reside with the employer's HR Vice President or Director of Staffing, the responsibility for execution will reside with the RPO provider. This often amounts to a switch for the employer's executive from the role of player to coach. This adjustment, while critical, may not fit with the personality or skill set of the executive and/or the culture of the employer implementing the RPO solution.