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Recruitment Process Outsourcing

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removed. (October 2006)

Recruitment Process Outsourcing is a form ofbusiness process outsourcing (BPO) where an

employer outsources or transfers all or part of its recruitment activities to an external service

provider.

The Recruitment Process Outsourcing Association defines RPO as follows: "when a provideracts as a company's internal recruitment function for a portion or all of its jobs. RPO providers

manage the entire recruiting/hiring process from job profiling through the onboarding of the new

hire, including staff, technology, method and reporting. A properly managed RPO will improve acompany's time to hire, increase the quality of the candidate pool, provide verifiable metrics,reduce cost and improve governmental compliance."[1]

The RPO Alliance, a group of the Human Resources Outsourcing Association (HROA),approved this definition in February 2009: "Recruitment Process Outsourcing (RPO) is a form of

business process outsourcing (BPO) where an employer transfers all or part of its recruitmentprocesses to an external service provider. An RPO provider can provide its own or may assume

the company's staff, technology, methodologies and reporting. In all cases, RPO differs greatlyfrom providers such as staffing companies and contingent/retained search providers in that it

assumes ownership of the design and management of the recruitment process and the

responsibility of results."

[2]

Occasional recruitment support, for example temporary, contingency and executive search

services is more analogous to out-tasking, co-sourcing or just sourcing. In this example, theservice provider is "a" source for certain types of recruitment activity.

[3]The biggest distinction

between RPO and other types of staffing is Process. In RPO, the service provider assumesownership of the process, while in other types of staffing the service provider is part of a process

controlled by the organization buying their services.

Contents

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y 1 Historyy 2 Benefitsy 3 Risksy 4 See alsoy 5 References


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[edit] History

While temporary, contingency and executive search firms have provided staffing services formany decades, the concept of an employer outsourcing the management and ownership of part or

all of their recruiting process was not first realized on a consistent basis until the 1970s, in

Silicon Valley's highly competitive high-tech labor market. Fast-growing high-tech companieswere hard-pressed to locate and hire the technical specialists they required, and so had littlechoice but to pay large fees to highly specialized external recruiters in order to staff their

projects. Over time, companies began to examine how they might reduce the growing expensesof recruitment fees while still hiring hard-to-find technical specialists. Toward this end,

companies began to examine the various steps in the recruiting process with an eye towardoutsourcing only those portions that they had the greatest difficulty with and that added the

greatest value to them. Initial RPO programs typically consisted of companies purchasing lists ofpotential candidates from RPO vendors. This "search/research" function, as it was called,

generated names of competitors' employees for a company and served to augment the pool ofpotential candidates from which that company could hire.

Over time, as business in general embraced the concept of outsourcing more and more, RPOgained favor among Human Resource management: not only did RPO reduce overhead costs

from their budgets, but it also helped improve the company's competitive advantage in the labormarket. As labor markets became more and more competitive, RPO became more of an

acceptable option. Furthermore, through the advent in the 1980s and 1990s ofhuman resourcesoutsourcing (HRO) companies that began taking on the processes associated with benefits, taxes

and payroll, companies began recognizing that recruitinga significant cost of HRshould alsobe considered for outsourcing. In the early 2000s, more companies began considering the

outsourcing of recruitment for major portions of their recruiting need.

There have been fundamental changes in the US labor market that serve to reinforce the use ofRPO as well. The labor market has become increasingly dynamic: workers today change

employers more often than in previous generations. De-regulated labor markets have also createda shift towards contract and part-time labor and shorter work tenures. These trends increase

recruitment activity and may encourage the use of RPO.[citation needed]

It should also be noted thateven in slower economic times or higher unemployment, RPO is still considered by companies

to assist in an increasing need to screen through a larger candidate pool.

[edit] Benefits

RPO's promoters claim that the solution offers improvement in quality, cost, service and speed.

y Quality and Cost - RPO providers claim that leveraging economies of scale enables themto offer recruitment processes at lower cost while economies of scope allow them to

operate as high-quality specialists. Those economies of scale and scope arise from alarger staff of recruiters, databases of candidate resumes, and investment in recruitment

tools and networks. RPO solutions are also claimed to change fixed investment costs intovariable costs that flex with fluctuation in recruitment activity. Companies may pay by


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transaction rather than by staff member, thus avoiding under-utilization or forcing costlylayoffs of recruitment staff when activity is low.

y Service and Speed - The commercial relationship between an RPO provider and a clientis likely to be based on specific performance targets. With remuneration dependent on the

attainment of such targets, an RPO provider will concentrate their resources in the mosteffective way - at times to the exclusion of non-core activity. Traditional internalrecruitment teams are less likely to have such clearly defined performance targets.

Organizations with efficient hiring process that are viewed as employers of choice by potential

staff may stand to gain benefits from an RPO process.

[edit] Risks

RPO can only succeed in the context of a well-defined corporate and staffing strategy. As with

any program, a company must manage its RPO activities, providing initial direction and

continued monitoring to assure the desired results.

y Loose Definition of RPO - As RPO is a commercial concept rather than a specificdefinition, there is little regulation to RPO providers. As such, a recruitment agency may

brand their services as RPO without actually structuring them in a way that will providethe most benefit to their clients.

y Cost - The cost of engaging an RPO provider may be more than the cost of the internalrecruitment department, as an RPO provider is likely to have higherbusiness overheads.

y Effectiveness - Improperly implemented RPO could reduce the effectiveness ofrecruitment, should an RPO provider not understand or seek to understand therecruitment solution that they will be providing.

y Failure to Deliver - RPO service providers may fail to provide the quality or volume ofstaff required by their clients, especially when finding candidates in industry sectorswhere there are staff shortages.

y Lack of Competition - Placing all recruitment in the hands of a single outside providermay discourage the competition that would arise if multiple recruitment providers wereused.

y Pre-Existing Issues - An RPO solution may not work if the company's existingrecruitment processes are performing poorly, or if the service provider lacks appropriate

recruitment processes or procedures to work with the client. In this situation, it is betterfor the company to undergo a recruitment optimisation programme.

y Employer Branding - RPO providers do not necessarily act as custodians of their clients'employer brand in the way that a strongly aligned retained search firm orinternalrecruiting resource would.


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y Engagement - Many RPO organisations perform their staffing functions and serviceoffsite oroffshore, disconnecting the provider from the client company's growth and

recruiting strategy. While this effect can be mitigated through strong relationshipmanagement, some of the momentum and energy associated with the rapid upscaling of a

workforce through recruitment may dissipate.

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