Six key differences between an RPO provider and an MSP

Outsourcing workforce management is a common practice among organisations today. The advantages are many. Outsourcing helps organisations find and acquire top talent with specialised skills quickly and with less effort and cost. This is an especially critical need today.

The objective of partnering with a Recruitment Process Outsourcing (RPO) provider or a Managed Service Provider (MSP) is similar—to boost the efficiency of managing an organisation’s resource needs. Both entities can take over the talent acquisition needs of the organisation, completely or in part, and enable the organisation to focus on managing other issues that require strategic decisions.

An RPO provider can manage the complete talent acquisition process of an organisation or some aspects of it, as per agreement. It could take care of candidate sourcing, screening, onboarding and more. Ideally, an RPO team embeds itself within the talent or HR team of the organisation, onsite or offsite, and understands the culture and brand value of the organisation. An MSP, on the other hand, focusses on non-permanent staff only. It operates a recruitment process that manages consultants, contractors, freelancers and other temporary staff. It functions like a supply chain manager in the recruitment cycle.

Differences between RPO and MSP

It hardly needs stating that organisations manage their recruitment processes differently and more innovatively today. The line differentiating RPOs from MSPs is becoming rather faint, given the changing nature of working models and workforce profiles. 

Here are six fundamental differences between RPO providers and MSPs.

1. Offerings: MSPs assure reduced risks and costs while RPO providers assure quick availability of top talent given their vast experience with talent acquisition under various conditions. Reduced cost is implied since they rarely use external agencies to source talent. MSPs are usually handled by the procurement division of organisations while RPO providers work in association with the HR department.

2. Sourcing methods: MSPs source temporary workers through third parties. They use an appropriate Vendor Management System (VMS) to manage candidates and to connect with a network of staffing agencies experienced in handling client requirements. MSPs then present the most suitable candidates to the client. 

RPO providers source the candidates themselves. They find suitable candidates from their own database or from social media platforms and other industry networks. They have access to candidates looking for new opportunities as well as those who fit the role but are not actively looking for a change. RPO providers use Applicant Tracking Systems (ATS) to manage all their candidates. 

3. Needs fulfilled: RPO providers take over the entire talent acquisition process of an organisation and manage demands for scalability, compliance, cost and other business challenges. They provide the right talent for full-cycle projects, partial projects or any other requirement. 

MSPs are experienced in managing suppliers and staffing requirements. Their programmes are designed to manage scalability, vendors and clients with high volume needs for flexible resources. The MSP’s expertise lies in staffing.

4. Pricing models: The MSP model is governed by market rates, which involve a percentage of the candidate’s rates. RPO providers, on the other hand, quote rates depending on the skill sets of the candidates recruited. 

5. Use of technology: MSPs and RPO providers deploy different technologies to fulfil their business objectives. While ATS is the choice of RPO providers, MSPs deploy VMS. While there is a certain amount of overlap between the two, VMS is a more complex system.

efficient ATS enables RPO providers to track client requests, align suitable candidate profiles to the request, schedule and track interviews and overlook onboarding processes. RPO providers also deploy tools and techniques that allow them to analyse relevant data, gather insights and design future improvements.

MSPs implement VMS tools to manage their workflow. Record keeping, billing and approval of hours worked are all managed through such systems. 

6. Processes used: While RPO providers manage all the recruitment modules—from sourcing and screening to interview management and making offers, and even onboarding when needed—MSP processes include tracking of resources, approvals, time tracking and payroll services. MSP processes are an extension of the organisation’s procurement functions and operate as such. RPO providers do not handle payroll as a regular practice. 

Despite all the differences, the need for both providers is to meet the organisation’s manpower needs. In today’s rapidly changing business landscape, the pressure to find the right candidates is immense. The restrictions during the pandemic and political decisions globally have all contributed to this. Attracting both temporary and permanent employees or workers has become critical for all organisations to remain agile and competitive. A blended approach is slowly gaining popularity in organisations so that the best of both models can be implemented and the final objective—that of finding the right people at the right time—achieved. 

Careernet’s RPO service integrates the entire recruitment process. It helps clients source the appropriate human resources, develop a sturdy hiring strategy and optimise the talent supply chain. Careernet’s RPO services are scalable and integrated across various business verticals. It has been an RPO provider for over 15 years and that proves its expertise and understanding of global recruitment trends. Careernet offers enterprise RPO, project-based RPO and resource-based RPO services.

FlexiStints by Careernet is a professional staffing solution that offers services for specialised talent for short-term engagements. Their professional staffing offerings can be customised as per client needs.

Write to us at sales@careernet.in for a demo.