Recruitment Process Outsourcing and Unbundled Services

Recruitment Systems

What is RPO?

Recruitment Process Outsourcing (“RPO”) is a business process by which an employer outsources or transfers all or part of the recruitment process to an external service provider, typically a professional recruitment company. This recruitment company provides the necessary skills, tools, recruitment software, other technologies and activities to act as their client's virtual "recruiting department".

There are at least two variants of RPO:

  End-to-End RPO - the RPO provider performs most recruitment functions.

  Partial RPO for a subset of the company's recruitment functions, such as sourcing, screening, and interview scheduling.

Depending on the requirements, typically, a provider will deploy a "Core Delivery Team” focused on filling open requisitions. If required, the recruitment company may also set up a “Passive Candidate Team” focused on specialist areas such as:

  Specialist professional skills in frequent demand (eg. engineers).

  Niche positions not in frequent demand (eg. derivatives traders).

  Excessively aged requisitions (eg. 80+ days).

RPO Sounds Dangerously Similar to BPO. Is that a Problem?

RPO is a type of business process outsourcing (BPO). Some organisations that work in this area have tried to distance themselves from the actual outsourcing label in an effort to disassociate themselves from the controversial failings of BPO engagements. Hence other terms are being used, such as unbundled services.

Will the BPO Controversy Result have a Negative Impact for the RPO Industry?

The controversy has created discomfort in corporate procurement. The impact is mainly the emotional aspect of a sale of this type of services and this is important to recognise. The negative growth was not a direct result of the BPO industry, rather more a direct result of the changes in behaviour of corporate recruiters in response to the global financial crisis.

What are the Current Trends in the RPO Industry?

RPO was a rapidly growing industry prior to the GFC, with the IDC estimated in 2007 that RPO was growing at 18% annually. Other estimates showed RPO growth in excess of 30% prior to 2009. Since the recovery, the dip we saw in RPO usage is correcting itself.

Is this Recruitment Engagement Model Unsustainable?

The developments we see happening in RPO are a matter of the transformation of the industry to adapt to client needs. During the financial crisis, corporate recruiters reacted by bringing recruitment processes in-house.

Companies that have already been through the process of identifying value in an RPO relationship are taking longer to make outsourcing decisions. Companies that have not gone through the process and are being targeted by RPO organisations are finding it easy to say no to this type of change in approach to recruiting.

The response from RPO vendors should be to try to limit the risk and perhaps the transaction value and ease their clients into the possible benefits. Partial RPOs will have a better chance of conversion as they have a smaller risk.

Specialised recruitment or post-recruitment functions such as onboarding, outplacement services or even the management of the recruitment software in use can be added to the portfolio of services. These are potentially winning servicing options, given the contemporary challenges for the whole range of businesses. These type of activities work very well in an outsourcing model.

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