The complete guide to Recruitment Process Outsourcing
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When SBZ Ltd’s sleek new electronic kitchen appliance hit the market, the company’s management was delighted but somewhat unprepared for the sales deluge that followed. It became imperative to expand their customer care centre ASAP! The company’s small HR team could not cope with the high-volume screening and interviews that needed to be conducted to staff the call centre. One of the company directors advised the team to consider outsourcing the company’s recruitment needs. After reviewing a couple of RPO service providers, SBZ Ltd. ultimately opted for an end-to-end agreement with a well-known firm to manage all recruitment needs for their rapidly growing business.
Defining RPO
Recruitment Process Outsourcing (RPO) is the term used to define an organisation’s hiring of a third-party service provider to handle its recruitment process. However, RPO does not stop at filling up temporary vacancies or long-term positions; rather, it is a professional service that can help a business overhaul its recruiting systems, thereby facilitating hiring the most appropriate and qualified individuals who will remain with the organisation.
RPO service providers and conventional hiring agencies —what’s the difference?
RPO service providers share similar functions with plain vanilla staffing agencies but differ significantly in terms of their scope of operations. A company’s internal recruitment team or a staffing agency restricts itself to sourcing candidates and selecting the most suitable individual for a job opening. An RPO service provider, on the other hand, offers a comprehensive service in terms of design, management and execution of the recruitment process. This involves multiple operations such as:
- Managing an extensive candidate database
- Developing sourcing strategies
- Tailoring the hiring process to candidates’ skills, qualifications, mindset and cultural ‘fit’ with the organisation
- Supporting clients with recruitment analytics
- Building employer brand
- Campus recruitment
Types of RPO agreements
The type of agreement that a business enters into with an RPO service provider depends on the nature of the operation for which it needs to outsource. Here are some hiring situations that help explain various types of RPO vendor services:
Project based RPO
XYZ Ltd. is a large company belonging to a leading automotive group. The company plans to diversify into electric vehicles. Their existing managers, however, lack the specialised qualifications needed for the new project. XYZ’s management decides to hire a small team of qualified engineers and managers to incubate the project. However, the company’s HR team informs the management that they do not possess the technical knowledge to assess candidates for this project. Also, they are constrained for time due to the extensive training programs they are conducting across group companies.
The company’s management, after considering these issues, decides to try out a project-based agreement with an RPO service provider. Under this agreement, the RPO will provide two technically qualified staff to join XYZ’s HR team, to help them recruit suitable candidates for this project. This project-based RPO is flexible and suited to the company’s immediate hiring requirement for a new business unit. The internal team is also relieved that they can focus better on their core role.
Enterprise RPO
XYZ Ltd’s project-based agreement works smoothly; the internal team informs XYZ’s management that they are impressed with the hiring processes adopted by the RPO provider.
When the project picks up pace, XYZ Ltd. decides to sign an end-to-end or enterprise agreement with the RPO provider. This agreement includes:
- Outsourcing the entire recruitment operation across job levels for the new factory.
- Managing the complete hiring cycle from sourcing to onboarding.
- Stringent focus on quality control and compliance
- Hiring across locations
Resource based RPO
AZX, a multinational electronics company, was in the process of setting up its head office in Mumbai. Its internal hiring team, selected from the Singapore office, felt that the process of recruiting people for the available technical and marketing positions would be more effective if their team included a couple of local Indians.
AZX’s senior management decided to go in for a resource-based RPO agreement with a large, reputed RPO service provider. Under the agreement, the RPO provider would augment the existing team with two recruiters. This collaborative model saved AZX both time and money, with the RPO vendor’s recruiters providing professional services and valuable cultural inputs to the company.
What advantages does RPO offer over traditional staffing practices?
Lowered costs, saved time and access to a larger and better-qualified talent pool are some of the standout advantages of recruitment process outsourcing. Let us look at some of these plus points in detail.
Cost-effective: Reduced cost is the main reason for companies to opt for the services of an RPO. The cost of recruiting employees often goes beyond control in many organisations. Professional recruitment companies provide integrated solutions that lead to cost reduction and, equally important, improve hiring quality.
More scalability: A company’s recruitment needs may undergo unexpected fluctuations. Outsourcing the hiring process makes it easier for a company to scale its recruitment needs up or down, adapting to a swiftly changing business environment. RPO thus makes for an ideal option for companies poised to expand in the short run.
Time-saving and qualitatively superior: Organisations with in-house HR teams typically have the following disadvantages:
- The teams follow outdated recruitment methods that are time-consuming and hence not cost-effective.
- They may lack the manpower needed to focus solely on recruitment as HR divisions need to address related functions like payroll, compliance, employee training etc. This issue gets exacerbated, particularly when a company grows rapidly and requires large-volume hiring.
Employee retention: Employees switching jobs within short time spans is now a universal concern for organisations. An RPO can offer some advantages here. While screening, a recruiter can check a candidate’s duration of service at previous organisations and assess whether the individual is habitually prone to shifting jobs within short time periods. The recruiter can also assess a candidate’s behaviour and work preferences during interviews.
Predictive analytics: The vast databases that RPO services maintain enable them to analyse and foresee recruitment trends that can affect their client organisations. Companies can leverage these insights according to their requirements.
Providing strategic support: Today, a high-skilled candidate has the pick of firms across the world. To consistently attract good candidates, organisations must project their mission and values appropriately at all times. In-house hiring teams that do not add brand value to job openings run the risk of losing talented candidates to competition.
Professional recruiters can help build and enhance a company’s brand value among job-seekers. Among a basket of services offered by RPO service providers is market analysis of a client organisation, based on industry research and performance evaluation with competitors. Based on such analysis, a professional recruiter will be able to develop and market the organisation’s brand value to potential employees.
Recruiting plays a significant role in organisational initiatives such as making workplaces more equitable, diverse and inclusive. Companies working on DEI strategies can gain by using RPO service providers to align their hiring with these objectives.
Measuring RPO performance
Notwithstanding the established value that RPO brings to an organisation, it is essential for a company to evaluate the performance of an RPO vendor after signing up. Organisations can measure the success of their RPO using the following parameters:
- Ratio of recruiting to cost: Calculate the total expense of recruiting divided by the base compensation offered to the new hires.
- Recruitment time frame: Count the days from the publishing of the job vacancy to the day the selected candidate reports to HR. The shorter this period, the more successful the process.
- Acceptance from a candidate: Count the days between the job first being published and the date the chosen candidate accepts the offer. This too should be a reasonably brief period to be considered effective.
- Feedback from HR manager: How satisfied is the hiring manager with the choice of candidate? Assess his feedback on a scale.
When to use RPO and when not to
It is useful for companies exploring outsourcing services to look at worldwide trends on when it helps to adopt RPO and when it doesn’t.
RPO typically delivers stellar results when adopted by medium to large companies in finance, retail, call centres and healthcare, which require large-scale hiring. Some experts opine that RPO is best avoided in certain situations such as recruiting for senior-level positions in niche industries. It is also felt that in-house recruiters are better placed to assess candidates when hiring senior management at vice-president level and above. An RPO with more than one client belonging to the same industry is likely to be entangled in conflict of interest.
How to select an RPO service provider
If you have decided to go with HR outsourcing services, here are some criteria that will help you evaluate various RPO vendors.
Select a vendor who meets your needs. Some RPOs focus on the recruitment process (sourcing, interviewing and evaluating candidates). Others may provide strategic interventions for improving employer branding or technology consulting. Not all vendors cover every aspect of RPO; so pick one that’s best suited to your requirement.
Learn about the RPO vendor’s marketing and advertising strategy. Assess the RPO service provider’s expertise in social media marketing and using SEO to publicise openings on search engines. Do they have in-house marketing resources or will they want to use yours?
Verify reporting and metrics. Enquire about the vendor’s reporting process—what they can provide and what their frequency of reporting is. This is a crucial input as it is well nigh impossible to measure success without it.
Enquire about candidate support. Employer branding is strongly impacted by a candidate’s experience of the recruitment process. Regardless of whether certain candidates are hired for available openings, the company runs the risk of losing these potential hires at a future date if the candidates are not treated well during the hiring process. Discuss the candidate experience that the RPO service provider will provide during the hiring process.
Get information on company background. Get references from the RPO firm’s other clients, preferably organisations in the same geographic location. Learn more about its track record in customer service.
As a leading talent solutions provider in India, Careernet RPO offers comprehensive guidance in the recruitment process, from formulating hiring strategy to mapping internal processes and optimising talent supply chains, to client organisations . Having been in the recruitment outsourcing services business since 2006, we understand the necessity of expertise and process management in a rapidly changing business environment. And that is what enables us to offer this service to employers across India as well as the world. Write to us at sales@careernet.in for a demo.
