What is RPO or Recruitment Process Outsourcing? (Types of RPO & How it Works)

Charley Mendoza
August 23, 2023
 min read

Ever wondered why some businesses thrive while others stumble? It all boils down to the people on your team.

Unfortunately, finding the right talent can feel like searching for a needle in a haystack.

A recent study by the Center for American Progress (CAP) reveals that replacing employees is more than just a headache – it's a financial earthquake

According to their findings, replacing employees could chip away at your bottom line.

  • For high-turnover, low-paying roles (earning under $30,000 a year), the cost stands at 16% of their annual salary.
  • Mid-range positions (earning $30,000 to $50,000 a year) can rack up costs equivalent to 20% of their annual pay.
  • CEOs and other executive roles: The price skyrockets to a jaw-dropping 213% of the annual salary.

As you can see from these costs, businesses need to get their hiring right— preferably the first time.

Enter Recruitment Process Outsourcing (RPO).

What is RPO?

Recruitment Process Outsourcing (RPO) is an arrangement where a business gets help from an outside service provider to manage some or all its hiring tasks, such as sourcing, screening, and interviewing candidates. 

RPO recruitment gives business owners hiring flexibility and improved candidate experiences.

One of its main benefits is freeing up  the company from time-consuming parts of hiring, like reading through the average 250 resumes each job post gets, and arranging interviews with qualified candidates.

RPO vs Staffing Agencies vs Recruitment Agencies

Recruitment Process Outsourcing (RPO), staffing, and recruitment are three distinct approaches to managing workforce needs, each with its own focus and scope. 

RPO recruiting works not just on a per-hire basis like a staffing or recruitment agency would. An RPO recruiter will also evaluate and improve your overall recruitment process and retention rates.

They will also look at your time-to-hire metrics, the scalability of your hiring strategies, and cost-per-hire, all in an effort to help you cut costs and build your dream team faster.

Another difference is that candidates sourced and screened by a recruitment process outsourcing company are exclusive to the client, unlike staffing and recruitment companies that recruit for multiple organizations.

Types of Recruitment Process Outsourcing

As mentioned, not all recruitment outsourcing services provide end-to-end solutions. The services they provide depend on the needs and budget of the company. 

Below are the common types of RPO arrangements and when companies use them. 

What is RPO End to End? The most common type of recruitment process outsourcing arrangement is one where the RPO handles everything from developing a job profile, sourcing, pre-screening, interviewing, and extending a job offer.

Some RPOs also offer onboarding and even exit interviews. Companies hire end-to-end RPO recruiters for long term commitments, usually for more than a year.

Project RPO: is almost the same as an end-to-end RPO in terms of deliverables, except that the scope is limited to a role or line of business within the company.

Businesses usually hire a Project RPO when they’re in a hurry to scale a specific department, or when they don’t have experience hiring for a niche role. Typical engagements for project based RPO recruitment last a few months up to a year.

Selective RPO or point-of-service RPO: The company will only outsource one or a few recruitment tasks, like screening candidates and conducting preliminary interviews. This leaves the business the task of conducting the main interview, evaluating candidates, picking the top three candidates, and finally extending a job offer.

Companies that use selective RPOs usually have their own hiring process, so they only outsource the grunt work of the recruitment.

How Does Recruitment Outsourcing Work?

The exact process varies per RPO and according to the arrangement you choose, but these are the general steps.

1. Identifying Needs and Crafting Job Listings

Start by clearly stating the skills, experience and hiring objectives to the RPO recruiter. They’ll collaborate with the hiring manager to create a clearly defined job listing for each role you’ll hire.

2. Holistic Analysis for Improvement

The RPO recruiter dives deep into your existing recruitment ecosystem— if any, to pinpoint areas for improvement. They may find areas where candidates are dropping off in the recruitment process, common candidate questions, or areas where you’re spending significantly more resources compared to the number of quality candidates you get.

Doing this ensures every aspect of the recruitment strategy is aligned with your hiring goals, corporate values, and employer branding.

3. Executing the Strategy

The RPO recruiter puts the strategy into action, using their own tools and technology to source candidates and create job listings.

4. Evaluating Candidates

The recruitment process outsourcing company will build a database of candidates and conduct a series of phone interviews and evaluations to narrow down applicants. A skills-based test can also be done to further screen candidates based on their resume claims. Finally, the RPO recruiter will forward top contenders that match your needs to the Hiring Manager.

5. Interviews Set up and Metrics Monitoring

Selected candidates who pass the phone screening and skills-based test, will be scheduled for an interview with your team or the Hiring Manager. The RPO recruiter will also monitor metrics like the number of candidates sourced from job boards, how many pass the pre-screening, and skills-based exam, plus the costs associated with these steps.

(Optional) Hiring Manager Interview Prep

The RPO recruiter can also help the hiring manager prepare for the interview by giving them questions to ask, responses to look for, and other evaluation methods to help them uncover the best candidates of the bunch.

6. Post-Interview Debrief

The Hiring Manager and the recruitment outsourcing liaison will conduct a debriefing to discuss the candidate’s interview results and select the top 1-3 candidates. Another interview may be conducted in case there’s no clear #1 candidate.

7. Job Offer and Onboarding

The RPO will conduct the reference and background checks, and then negotiate a job offer. Once accepted, they’ll recommend a start date for the candidate to start onboarding. 

Recruitment Process Outsourcing Benefits and More

If you want to hire positions quickly and keep an engaged workforce, without the hassle of hiring in-house teams, collaborating with a reliable recruitment process outsourcing company is the best option for you.

Companies with strict compliance procedures, or those undergoing a rapid period of growth can benefit from outsourcing recruitment, too.

Working with an RPO won’t just save you money, it will free you up to focus on more important aspects of your business too. 

Contact us to learn how outsourcing recruitment can save you money and time in building your team.  

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