Recruitment Processing Outsourcing, or RPO, is a type of business process outsourcing (BPO) where a company outsources all its recruitment activities to an external provider. RPO is getting huge popularity in the business world. It is predicted in the “Global Recruitment Process Outsourcing Market” Research Report, that the RPO market revenue will get a 144% boost by 2025.
This article will take a deeper look into how RPO works and the benefits it can bring to a company. We will also explore the various pricing models used in the recruitment outsourcing process. Whether you are considering using RPO for your own organization or want to learn more about this increasingly popular trend, this article has something for you. So let’s dive in and explore the world of Recruitment Process Outsourcing.
How does Recruitment Outsourcing Process work?
In the RPO outsourcing model, a company outsources the management of its recruitment process to an external provider. The provider takes on responsibility for all or part of the recruitment process, including the job posting, candidate sourcing, screening, and selection.
A contract defining the services is signed by the organization and the provider to start the Recruitment Process Outsourcing (RPO) process. The organization then gives details about the open positions, such as job descriptions and necessary education and experience.
Using a variety of tools and strategies, including job boards, social media, candidate networking, employee recommendation programs, etc., the supplier manages the entire hiring process. Additionally, they manage candidate communications and organize company-hosted interviews.
Once the provider has identified a shortlist of qualified candidates, they present them to the company for final review and selection. The company can then choose to hire one of the candidates, or the provider may continue the recruitment process until a suitable candidate is found.
In this approach, recruitment is outsourced in the most efficient way as the company completely delegates all tasks connected with candidate searching and interviewing to another company.
What are the benefits of Recruitment Processing Outsourcing?
Recruitment process outsourcing services have gained massive popularity due to the fact that they have got numerous benefits. In this chapter, we will describe each of them in detail.
Reduced recruitment costs
One of the primary benefits of outsourcing recruitment services is the potential to reduce recruitment costs. RPO providers typically charge a fee based on the number of hires made, rather than an hourly rate or a percentage of the employee’s salary. This allows businesses to better predict and control their recruitment costs, as they know exactly how much they will be paying for each hire. Additionally, RPO providers often have access to a variety of cost-effective recruitment tools and resources, such as job boards and candidate databases, which can further reduce the cost of finding and attracting top talent.
Reduced recruitment speed
Another benefit of RPO is that it can significantly speed up the time it takes to fill open positions. RPO companies have dedicated teams of recruitment professionals who are solely focused on finding and attracting top talent for their clients. These teams have the knowledge, skills, and resources to efficiently identify and screen candidates, which can result in a much faster time to fill than if a company were to handle recruitment in-house. This is especially important in today’s competitive job market, where top candidates, such as senior developers, are often in high demand and may not be available for long.
Decreased turnover
By ensuring that the appropriate individuals are hired for the appropriate roles, RPO can reduce turnover. RPO providers frequently have a great deal of experience finding and evaluating candidates based on their qualifications, work history, and cultural fit. Businesses can hire applicants who are qualified for their positions and likely to work for the organization in the long run by relying on the experience of these experts. This can lessen the expenses and interruptions brought on by high employee turnover, such as the requirement for ongoing new hire training.
Diversified talent pools
Recruiting Process Outsourcing (RPO) can also help companies to diversify their talent pools by accessing a wider range of candidates than they might be able to on their own. RPO providers often have established networks of recruitment professionals and job seekers, which can give companies access to a diverse pool of candidates from different industries, backgrounds, and locations. This can be particularly beneficial for companies looking to diversify their workforce and tap into new markets or customer segments.
Advanced analytics
Finally, the RPO recruitment process can provide companies with access to advanced analytics and reporting tools that can help them to better understand and optimize their recruitment processes. These tools can offer insightful information regarding the efficacy of various recruitment techniques, the performance of certain recruiters, and the overall cost and effectiveness of the hiring process. This can assist businesses in making data-driven decisions about how to enhance their hiring procedures and more effectively locate and entice top personnel.
Recruitment Processing Outsourcing pricing models
There are four main types of pricing structures in the outsourced recruitment process. All of them have their pros and cons but one is clearly standing out and we will focus on it at the end of this chapter. Meanwhile, let us describe each of them.
Cost-by-resource
Businesses pay a set monthly amount for each resource (such as a recruiter or a sourcer) assigned to their account under the cost-by-resource approach. This model often works best for businesses with large recruitment teams or lots of available positions because it enables them to scale their hiring efforts up or down as necessary. Businesses find it simpler to plan their budgets with the fixed monthly fee because they know exactly how much they will be spending on each resource.
Cost-per-transaction
In the cost-per-transaction model, businesses are charged for each recruitment-related activity, such as interviews, background checks, and offer negotiations. This model is often used for companies with a low volume of open positions or a small recruitment team, as it allows them to pay only for the services they need. However, it can be more difficult for businesses to predict and budget for their recruitment costs under this model, as the cost per transaction can vary depending on the complexity of the role and the number of candidates involved.
Cost-per-hire
The cost-per-hire model is perhaps the most well-known pricing model for RPO. Under this model, businesses pay a fixed cost for each hire made, regardless of the level of the position. This model is often used for positions that are difficult to fill or require specialized skills, as it incentivizes the RPO provider to focus on finding the best candidates for the job. It is important for businesses to carefully consider the cost-per-hire rate, as it can vary significantly depending on the complexity and seniority of the position.
Hybrid model
Hybrid pricing models combine resource-based pricing and cost-per-hire pricing. With this arrangement, companies can pay a set fee for each employee they make while still having access to extra resources (like recruiters or sourcers) as needed. Companies that require a combination of devoted and adaptable resources to satisfy their recruitment goals may find this strategy to be a good fit.
Which model is more efficient?
The cost-per-hire model clearly incentivizes the recruitment process outsourcing services provider to focus on finding the best candidates for the job. Under this model, businesses pay a fixed cost for each hire made, which encourages RPO providers to efficiently fill open positions. This model also allows businesses to better predict and control their recruitment costs, as the fixed cost per hire is easier to budget for than models that have variable costs. Additionally, the cost-per-hire model aligns the interests of the RPO provider and the business, as both parties benefit when top candidates are successfully placed in open roles.
We at Escadra work with the cost-per-hire pricing model, so we focus on finding the best candidates for your open positions. This strategy also ties our interests to yours since we both gain when qualified individuals are hired for open positions.
To wrap it up
In summary, Recruitment Process Outsourcing is an effective strategy for businesses looking to streamline their hiring processes, find top talent more efficiently, and reduce recruitment costs. With these many benefits, RPO can easily be considered the number one choice for businesses of all scales.
As a leading Recruitment Process Outsourcing (RPO) provider, Escadra is dedicated to helping businesses streamline their hiring processes, find top talent more efficiently, and reduce recruitment costs. We have a proven track record of delivering measurable results for our clients, and we are confident in our ability to support your business. Escadra is the best choice for businesses looking to outsource their recruitment needs. Contact us today to learn more about how we can support your business.
