In the past, hearing the word outsourcing would conjure up images of some customer service representative sitting in a call center on the other side of the world, with a limited knowledge of my company and/or product (and perhaps of the English language) attempting to help me solve my problem. After a few minutes of friendly banter, I would hang up the phone and be no further ahead in my quest than when I first made my call. Sound familiar?
Today the same word conjures up very different images for me, as I describe in this article. This is due to my recent understanding of the potential benefits and cost savings that outsourcing can bring to an organization over the long term.
These days, virtually any given task within an organization can be (and often is) outsourced, ranging from hiring, to billing, to managing projects, to providing technical support. Such outsourcing often adds a certain level of professionalism to the services offered and, in some cases, outsourcing to companies overseas may facilitate communication with foreign customers and help build business relationships.
Recruitment Process Outsourcing
Recruitment process outsourcing (RPO) falls under the category of business process outsourcing (BPO), and is still a relatively new concept in the business setting. RPO means an employer outsources or transfers all or part of its recruitment activities to an external service provider. When contracting out such services, organizations need to have complete assurance that the entire recruitment process is handled adequately by the service provider. This means managing tasks that traditionally fall both within and outside of the HR department, such as creating job descriptions, designing and managing candidate portals, posting job requirements, collecting and evaluating résumés, and determining which candidate is the most appropriate for a given position.
RPO differs from other service providers, e.g., staffing companies, in that the outsourced company has full ownership of the recruitment process and bears the entire responsibility for the end results. So the biggest differentiator between an RPO firm and other types of staffing service providers is the process. In RPO, the service provider assumes ownership of the entire process, whereas in other types of staffing, the service provider fulfils only part of a process—which is controlled by the organization buying its services.
The Benefits of RPO
A properly managed RPO should improve a company's time to hire, increase the quantity and quality of the candidate pool, provide valuable metrics, reduce hiring costs, and improve governmental compliance—among other things.
RPO often provides flexibility to businesses with respect to not only services, but also pricing. Different types of payment methods are available, depending on the outsourced company you choose. For example, payment can be made on a monthly basis or at the end of the recruitment process once all required transactions have been completed. Some of the key benefits of RPO services include:
- access to a larger number of applicants
- consistent and predictable recruit-to-hire processes
- increased candidate quality
- enhanced employment brand
- flexible pricing options
- overall cost savings associated with recruiting
- recruitment expertise
- flexibility in services provided
- better control of compliance regulations
If properly executed, RPO can bring companies real cost savings compared to the traditional recruiting models—especially if you consider the fees for headhunters and salaries for in-house recruiters. Moreover, RPO firms provide organizations with comprehensive reports, savings on recruitment process spending, and enhanced compliance with government labor standards.
In terms of mitigating risk in recruitment-related legal compliance (e.g., Form I-9, Equal Employment Opportunity [EEO], and background and credit checks), RPO providers are the experts. They can not only recommend and implement fully compliant sourcing, application, and interview and selection processes, but also create and maintain all the necessary record-keeping.
If your company, for example, is doing business in different regions of the globe, you can outsource your recruitment process to an RPO provider that has a familiarity with local labor laws and regulations and experience recruiting candidates in those regions and markets. This expertise will help your business mitigate the risks associated with a large-scale multinational recruitment strategy.
Avoiding the Pitfalls of RPO
While there are definitely benefits to hiring an RPO provider, there are also certain drawbacks in having an offsite recruitment process outsourcing firm. A recent survey showed that 39% of the RPO centers were replaced in the past 5 years because they did not meet the expectations of their clients with respect to the quality of the services provided and the cost saving in job candidates sourced. While reasons for client dissatisfaction varied, in the end, clients were simply not happy with the final results.
If I were to make an educated guess about some of the reasons behind such failed partnerships with an RPO provider, I would say that it comes down to these two culprits:
- Failure to provide detailed information about “as is” (current processes) and expected “to-be” (future process). Developing “as-is” or current process maps and activity worksheets—that describe in detail the current activities that are being performed, how they are being performed, where they are being performed, and who is performing them—will help the RPO firm to understand the scope of your initiative, including any transition issues they need to address.
- Failure to ensure that the outsourced firm’s strategic direction is aligned with your company’s strategic direction. To achieve maximum benefits from your relationship with your RPO firm, it is critical that you understand their capabilities and ensure that the RPO firm’s expected long-term goals for your company are aligned with your expectations. This will enable you to build a relationship that fosters mutual understanding and support—which will help streamline the routine performing and managing of the recruitment process.
To avoid such situations, here are just a few simple things to consider.
Do your research: Ensure the outsourcing firms you are researching have enough experience to handle your company’s needs and that they will be able to meet or exceed your quality expectations. And ask for references to get an idea of the quality of services that the outsourcing firm has provided to its clients.
Get ready for a transition: If you’re changing your recruitment strategies after many years in business, the transition from in-house recruiting to an RPO firm must be well thought out. You must
- prioritize your needs by identifying tasks that detract focus of the staff from their main tasks, and assess which services your business could and would like to outsource,
- develop an effective change management strategy to help to minimize disruptions to daily activities while implementing changes to the recruitment process, and
- provide the in-house hiring staff with training on their new roles and responsibilities within the organization.
Create a partnership agreement: Both the service provider and its client must view their business relationship as a partnership. An understanding of the organization’s current and future business strategy and potential changing business profile is important before entering into any contractual arrangement. Both parties must be in agreement regarding expectations, communication, governance, and processes. Having the outsourcing firm sign a service level agreement (SLA) will help to define the requirements of both parties and detail the penalties for non-compliance. Regardless of the arrangement, the contract should be clear.
Companies that contract an RPO firm should still oversee the recruitment process. They should monitor and oversee the entire process of recruitment outsourcing to ensure that the agreement is followed appropriately by the RPO firm. Just because you will no longer be taking care of the day-to-day recruitment process, doesn’t mean you are free from its burden.
Is RPO Right for Your Business?
Any organization undergoing changes to their strategic objectives may have its HR department face undue pressure that can negatively impact its recruitment objectives. An RPO firm can offer a solution to this kind of situation—by taking over the recruitment process. But before making the decision to outsource, create a well-defined corporate staffing strategy and conduct an internal debate with key decision makers about the risks and benefits of all your recruitment options.
Once you have decided to use the services of an RPO firm, involve key people within the organization to help establish clear criteria for assessing different providers. You may, for example, want to assess the quality of the solution these providers use and the potential for cost savings, as well as analyze the specific capabilities of the different RPO solution providers and assess whether the RPO firm’s culture fits with yours. It is important to look for a partner with the ability to enhance, rather than change, the way you recruit new hires.
And finally, establish a solid relationship with the service provider, as you are entrusting this party with an important aspect of your business—to deliver quality recruitment services and outstanding results.
And as with any new process, companies hiring an RPO firm will probably experience growing pains, at least initially, until both parties settle in and establish their new relationship. Your company can play an important role in providing the necessary expertise for good decision making and a smooth transition of the outsourcing process. But as with anything, an RPO firm may not right every organization. For example, an RPO provider may not be an appropriate recruitment processing option for very small companies or startups with limited budgets and timelines for recruiting candidates.
Finding an RPO Provider
Here are just a few RPO providers your company might want to consider.
- Adecco—Addeco provides outsourced recruiting services as well as customized HR solutions for both temporary and permanent hires.
- Ceridian—Ceridian offers a suite of recruitment solutions designed to help companies find and identify high-quality candidates. It provides the people, processes, technology, and best practices to manage the recruitment cycle.
- Pinstripe Talent—Pinstripe is an RPO provider with global reach, serving organizations in financial services, health care, pharmaceuticals, technology, advanced manufacturing, biotech, telecommunications, and energy.
- The RightThing (an ADP company)—The RightThing provides offerings for the entire recruitment or talent acquisition lifecycle. It provides hiring services for companies in a broad range of industries, including pharmaceutical, automotive, technology, banking/finance, and manufacturing.
With the right planning, process, service delivery design, underlying technology, and RPO provider, it is possible to not only save money, but also increase efficiency and improve your organization’s recruitment processes—helping ensure business growth and success.