In 2023, the recruitment industry is changing, and RPO models are seen by many as the answer to sourcing top talent.
Compared to the monolithic and lengthy task of traditional recruiting, outsourcing breaks down hiring processes into a modular system. It gives in-house talent acquisition teams the freedom to delegate manual workloads to external recruitment providers and affords them extra time to scale their operations.
It’s also opened up a brave new world of recruitment software that delivers faster and better results at each stage of the journey. With access to top industry expertise, it’s thus easier for businesses to create talent pipelines and avoid the scourge of unfilled job vacancies.
Don’t just take our word for it either—according to a 2023 study, the RPO market is expected to grow at a CAGR of 15.2% until 2027.
Looking to get started? This page covers everything you should know about this new and increasingly popular recruiting model.
What is RPO?
So, what is recruitment process outsourcing (RPO)? In short, it’s when companies use third parties to help with finding and hiring talent.
The idea has its origins in agency recruitment—a model that uses an intermediary organization to link jobseekers and employers. Believe it or not, the first recruitment agency set up operations way back in 1653.
It wasn’t until the early 2000s, however, that the modern understanding of RPO model recruitment emerged. This recognized the need for a more bespoke approach, where businesses required flexibility and agility to find the best candidates in the labor market. It was also spurred by the growth of the Internet and the globalization of the workforce that ensued.
RPO recruiting models can come in different shapes and sizes depending on what an organization is looking for. For instance, some companies may be inexperienced with hiring and choose to outsource their entire recruitment cycle (akin to agency recruitment). Others may pick and choose the modules they need help with—e.g. posting job adverts or screening candidates—and handle the rest in-house.
The beauty of RPO is there’s no one-size-fits-all approach. You can outsource the areas your HR team is struggling with and retain the parts you want to manage yourself. Each part of the puzzle is then tied together with collaborative recruitment workflow software.
What Are the Key Components of RPO Models?
Let’s now consider the key components of RPO models in recruitment. These can be tailored to meet the specific needs of a business, which makes RPO an adaptable solution for optimizing the recruitment process.
A centralized recruitment platform
The RPO recruitment model is defined by a strategic partnership, where both the provider and the hiring business can view, track, and manage job applications. Cloud recruitment software makes even remote collaboration a seamless experience for both parties.
If you’re getting started with RPO, you may want to keep an eye out for these types of software.
- Applicant tracking systems (ATSs). These allow you to create and post job ads, collect applications, and manage candidate data from one central location. This means you no longer have to switch between countless job boards and career websites.
- Candidate relationship management software (CRM). This is a relationship-building platform for engaging with the most promising prospects in your industry. The aim is to engage with candidates over time, even before there are specific job openings, to create a talent pipeline.
Candidate sourcing, screening, and evaluation
Depending on the working arrangement, RPO providers will handle some (or even all) of the hiring business’s needs. These are the most common areas for them to manage:
- Candidate sourcing. Since the RPO provider already has knowledge of relevant job boards and industry events, they’re usually best placed to source candidates.
- Screening. It can take a long time for inexperienced businesses to perform criminal background checks or confirm references from employers/educational institutions, which is why they might hand these tasks over to an external party.
- Evaluation. Likewise, an RPO provider can take some of the burden off the hiring business’s shoulders by conducting interviews and evaluations on their behalf.
Client involvement
The main difference between RPO models and agency recruiting is the level of client participation.
With the former, the hiring business is still very much involved with recruitment. Through the medium of cloud software, they have visibility over their hiring campaigns and can switch things up in an instant.
Contrast this to the arms-length approach of agency recruiting that often keeps the client business in the dark.
Cost management and feedback
RPO software, whether it’s an ATS or CRM, also comes with data analytics tools for tracking trends and mapping the outcomes of your recruiting campaigns.
Beyond making sure a recruitment cycle stays within budget, this offers a chance to see which job adverts/sources are delivering the best candidates (and therefore, the best value for money). This allows the RPO provider to hone their recruitment approach and the hiring business to work on feedback given to them.
What Are the Benefits of Recruitment Process Outsourcing?
There are many benefits of RPO, and that is exactly why it is an attractive option for organizations looking to optimize their recruitment processes.
Rapid recruitment at scale
Perhaps the biggest advantage of RPO-style recruitment is it removes the bottlenecks associated with hiring top talent. Since a company is only as successful as its employees, this factor often holds small businesses back from parity with their competitors (at least in the short-term).
An RPO model, however, flattens the recruitment learning curve and means businesses can scale their workforces faster.
Access to top-quality talent
Recruiters are experts in their field—they know all the tips and tricks for attracting the best employees. Under their guidance, you can hire quickly without compromising on the quality of candidates.
This will also set you up for the long run, with CRM software providing the basis for a positive employer-employee relationship from the off, and by extension, a higher staff retention rate.
Cost savings
According to a report by the Society for Human Resource Management, the average cost-per-hire for a worker in America is $4,700. However, this only includes hard costs, which are things like advertising/marketing expenses and background checks.
Businesses must also consider the soft costs of hiring, such as the time managers spend supporting HR leaders. The attractiveness of RPO recruiting is that it significantly cuts these, taking time-consuming tasks out of managers’ hands and leaving them free to focus on improving your business’s bottom line instead.
What Are the Challenges of an RPO Recruitment Model?
Hiring new staff is not a simple task, but RPO recruitment models come with their own set of challenges. That said, the best RPO providers will acknowledge these drawbacks and provide you with mitigation strategies.
Here are some points you should bear in mind:
- Less control over recruitment. A feature of the RPO model is that HR leaders must relinquish some control over recruitment decisions (e.g. sourcing strategies, assessment methods, selection criteria, etc). This means you really have to trust that your provider is capable of finding the best candidates on your behalf.
- Communication gaps. Another big challenge is communicating to your RPO provider what type of candidate you’re looking for. This can lead to wasted time in recruitment cycles if job descriptions aren’t written in the correct way.
- Being tied into contractual obligations. Depending on the provider, you may be charged according to either a cost-per-hire or subscription-based model. If it’s the latter, you might face being stuck with the same recruiter until the end of your billing period—even if you’re not happy with their services.
- A higher risk of data breaches. Sharing sensitive candidate and employee information with external providers obviously requires an element of trust— your data is now only as secure as they make it. So, only consider providers that promise strict regulatory compliance.
- Harder to build a company culture. Your internal staff will always have the best understanding of which candidates align most closely with your organization’s culture and values. This is not something RPO providers can always replicate.
What Types of RPOs Are There—and What’s the Difference?
Recruitment Process Outsourcing is a dynamic field with various models designed to cater to the diverse needs of organizations, so let’s now look at the different types of RPOs that are out there.
Recruitment technology RPO
A popular approach to RPO is to use software created by recruitment experts. Whether you decide to use an applicant tracking system (ATS), a candidate relationship manager (CRM), or both, this should streamline your workload and help your business to scale.
When selecting recruitment technology, be sure to look for tools that offer extensive analytical options. Features like automatic report generation or a recruiting metrics dashboard will make it easier to monitor the success of your campaigns, allowing you to better hone your recruitment strategy moving forward.
Full-service RPO
Other businesses may prefer an end-to-end recruitment solution—one that covers all aspects of the hiring process, from candidate sourcing to onboarding. This is similar to agency hiring, in that you’ll have less control over talent acquisition but more time to focus on other endeavors. It will, however, come at a higher cost.
Hybrid RPO
For a middle-of-the-line approach, a hybrid RPO model means picking and choosing which processes you want your provider to handle. For instance, if you can’t stand the manual workload of writing job ads and doing background checks, you can delegate these tasks. But if you want to make an informed final decision on candidates, you might choose to conduct interviews yourself.
How Do I Decide Which RPO Model is Right for My Business?
Deciding which RPO model is right for your company is an important decision—and rightly so, as employees are the bedrock of any business.
For those looking to improve their current recruitment strategy (i.e. find more candidates and increase retention rates), selecting a solid ATS and CRM software can be a good first step. On the other hand, startup companies with little hiring experience may prefer to delegate more of these tasks through a full-service or hybrid RPO.
What’s right for you ultimately depends on your needs, and you can always switch strategies if things aren’t working out.
Oleeo’s Powerful Suite of Recruitment Software Can Help You Hire Faster and More Effectively
At Oleeo, we appreciate just how crucial technology is for HR and recruitment processes. It’s why we’ve developed some of the best AI & automation-powered talent acquisition software on the market.
Our ethos is not just to sell cookie-cutter tools but to build comprehensive and fully configurable software to match every organizations’ needs. Working with some of the biggest businesses worldwide, we know the ins and outs of recruitment, and we want to help you next.
Why not get in touch today?
