Recruitment Process Outsourcing: What, How, and Why

Recruitment process outsourcing (RPO) is a powerful approach to hiring executive and upper-level talent at organizations around the world. However, the complexities of recruiting for such high-level positions require a specialized approach—which is where RPO excels.

In a nutshell, recruitment process outsourcing is a business model in which a third party takes on the search and recruitment tasks of another company. When framed specifically for executive search, this allows in-house recruitment teams to avoid complex, time-consuming, and often confidential tasks.

Instead, they’re handled by talent acquisition specialists who are up-to-date on talent acquistion trends, who have perfected their executive recruitment processes, and who bring expertise, discretion, and a wide network that makes the process more efficient and effective.

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What is an RPO Provider?

An RPO provider is an outsourced service provider that takes on several tasks associated with the hiring process for one or more roles in another company. RPO is an ideal option for when bringing in top-level talent, such as C-Suite, director-, and upper-management-level roles. In general, outsourced recruitment includes:

• Interviewing C-Suite and top management to identify the qualities of an ideal candidate
• Creating and posting job listings to attract qualified candidates
• Searching through large candidate databases and reaching out to connections
• Sorting through resumes and applications, and conducting initial interviews to identify top candidates
• Assisting organizations in selecting and negotiating contract/employment terms for best-fit executive candidates
• Providing human resources and onboarding services for new employees

There are several types of RPO providers whose basic approach differs based on how they perform their recruiting function. These include:

• Staffing companies most often match entry- and mid-level candidates with open positions that they’ve been contracted to fill. They may fill several roles at once with more of a focus on quantity than quality.
• Executive staffing companies focus only on targeted director-level and above roles. They rely on their own huge networks and the personal relationships they’ve built with top candidates to identify top candidates for open roles. These types of companies often work on a contracted basis, making it even easier to understand organizational needs and quickly source top talent when needed.
• Headhunters identify candidates for targeted upper-level roles. Headhunters are often confused with executive staffing companies, however, headhunter services usually do not include hiring assistance.

While executive recruitment outsourcing works in different ways, it’s most often seen as a way of removing the burden of hiring from your company’s shoulders, instead trusting that process to known experts.

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How Does Recruitment Outsourcing Work?

An RPO provider partnership works by offering placements that meet your business needs in exchange for payment. This can take place in multiple ways, including:

• Full-time RPO: Full-time recruitment firms are responsible for finding people who want to stay with a company and work a standard workweek (or more, depending on position requirements). Headhunters, staffing agencies, or general recruitment services may be called in to fill the open position, depending on the level of specialization.
• Project RPO: A project RPO finds personnel for contract positions rather than full-time or part-time ones. They scour the job market to secure independent contractors or freelancers who can take on often large workloads for a certain amount of time – either definite or indefinite – as the project requires.
• Blended RPO: A blended outsource recruitment firm or staffing agency combines the above two formats and fulfills positions as needed at a company, the better to streamline their workflow, keep talent pipelines full, and reduce the need to source people from multiple recruiting firms.

In any of the above scenarios, recruiters are likely to post jobs, check job boards, use an applicant tracking system and other recruiting technology to keep tabs on open positions, conduct interviews and background checks, and provide hiring services.

Whatever the exact form the recruitment solution takes, it will accrue several benefits to the company using it.

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Benefits of Recruitment Process Outsourcing

There are many known benefits aside from the fast timelines and talent pools an RPO provider offers. These include:

Cost Savings and Efficiency

A good recruitment firm will be able to offer you hard metrics about how recruitment costs stack up internally vs using an agency. If a prospective agency can’t offer numbers, or if the numbers aren’t convincing, look elsewhere.

Best Candidate Talent Pool

To bring in the best talent, you need to be swimming in top talent pools. With an RPO firm on your side, you have on-demand access to the systems and relationships they’ve forged over years or decades.

Turnover Rate Decrease

Long-term retention is an absolute must in executive leadership roles, as high turnover rates can disrupt organizational stability both inside and outside the company. RPO relies on in-depth expertise and a robust network to identify the right candidates with the skills, experience, cultural alignment, and visionary leadership needed for long-term candidate success.

Ideal Candidate Experience

The high-quality candidates you’re seeking for top-level roles aren’t actively looking for a new position. For this reason, they’re less tolerant of cumbersome or mismanaged interview processes. Using an RPO provider, whose talent acquisition process is streamlined through years of experience, is crucial in engaging, attracting, and retaining top talent.

Employer Brand Protection

Your brand is your biggest asset, and it must always be protected. High-quality RPO providers double down on this promise by respecting your brand name and reflecting positively your organization's image; and also by conducting thorough research to present only those candidates whose personal and professional backgrounds align seamlessly with your organization’s mission and vision, safeguarding the brand's integrity.

Compliance Support

As experts in hiring and onboarding, recruitment agencies and RPO providers are able to offer crucial regulatory compliance support, ensuring all legal and industry standards are met. This not only streamlines your own hiring and onboarding processes, including executive salary negotiation, but also protects against potential legal or compliance risks.

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RPO Pricing Model Overview

There exist a number of different pricing models for outsourced recruitment firms. It is important to assess the best type of pricing model depending on what your business requires from the service provider.

• Cost per hire: In the cost per hire model, you pay only when the outsource recruitment firm fills the position you need. Sometimes this takes the form of a flat fee negotiated ahead, while other times you might calculate it as a percentage – as low as 15% and as high as 40%, though most fees land somewhere in the 20-25% range. If you’re filling a single important position and won’t need additional help, this is a good way to go, because you pay a one-time fee and you’re done.
• Fixed monthly fee: If your core business model is not one that accommodates a one-and-done hiring approach, then you might consider hiring managers that charge a fixed monthly fee. Essentially, you have them on hand so that you can get their help finding people whenever you need it. This is appropriate at any level of position you need, though know that a headhunter will likely charge more per month than a staffing agency. Sometimes this fee is flat, sometimes it works like a retainer as a down payment on hiring costs.
• Cost per transaction: Some recruiting firms charge per transaction – e.g. a fee for posting jobs, a fee for interviewing, a fee for background checks, and another for drug screening. If you want an à la carte approach, then this model will likely work well.

Considered in a vacuum, recruitment costs may seem steep. For example, paying 20% of a $100,000 salary is $20,000. However, there are several benefits that you receive in return, including access to high-quality talent; filling the position significantly faster; and statistically longer-retained hires. Plus, your internal recruiting team keeps their workload free to handle standard day-to-day operations.

Economies of scale also play a role. If your company provides legal services, manufactures equipment, or sells imports to boutique stores, then chances are good you don’t have a ton of recruiting expertise. Working with a company that does – and that has all the staff on hand to carry out its duties – can be much less expensive than hiring an HR team of your own or struggling through the hiring process with the people you already have on hand.

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Working with a recruitment firm is flexible, beneficial, and cost-effective, but that doesn’t mean any firm can meet your recruiting needs. Take your time to review the metrics of potential firms, including time-to-hire, candidate satisfaction, and length of time in the industry, which is a major indicator of recruitment expertise.

Finding the right company will help ensure that you hire top talent and gain a competitive advantage over others in your industry. Look for an RPO company that offers a range of hiring solutions, is flexible, meets the client’s needs, has a global reach, provides data-driven results and metrics, and helps companies like yours grow.

TDS Global Solutions is exactly such a company. We offer unique and premium services, helping you fill positions in various industries, at a range of levels, with efficiency and expertise. Feel free to schedule a call or get in touch to learn more today.

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