Recruitment Process Outsourcing: The Overall Guide

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Fred Monnier
By
Fred Monnier
|
Chief Staffing Operations Officer
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Table of Contents

Many companies have already flocked to recruitment process outsourcing (RPO) providers to ease the hiring process and make it more efficient.
Published on
June 22, 2022
Updated on
June 26, 2024

Unlike traditional hiring agencies, RPO providers are subject-matter experts in their chosen industry and take more control and responsibility for the entire hiring and recruitment process. RPO providers may also act as an extension of the Human Resources (HR) department and manage every aspect of the hiring process.

Technological advancements have made it easier for employers to connect with prospective hires. However, hiring the best candidates is still a struggle, considering the global talent shortage and other social dynamics that continue to impact the market.

What Is An RPO?

An RPO is a type of business process that involves an employer assigning all or part of the recruitment process to a third-party external provider—often called an RPO provider. Upon taking over the duties and responsibility for the process, the RPO provider helps the company source, hire, and onboard the best talent for the job.

The RPO services differ depending on the company in question or the plan you choose for your company. RPOs may use their own or assume your technology, recruiters, reporting, and methodologies.

RPO vs. Staffing Agency

Although they may appear similar at first glance due to the type of work, RPOs, and traditional recruitment agencies have many differences. Here's an outline of their main operations and ways of work:

Staffing Agencies

Staffing agencies help multiple companies identify and hire talent. Their main goal is to spot potential candidates, get their resumes, and present them to you. In other words, these agencies play the middleman in the talent acquisition process and introduce candidates to you—so you decide whether they're a good pick for your team.

Staffing agencies typically don't have their talent pool. They need to compete against other agencies to source candidates with specific skill sets. Therefore, recruiters often have difficulties sourcing leading-edge talent in competitive industries like programming, web development, artificial intelligence (AI) coding, big data, and blockchain.

RPOs

Unlike recruitment agencies, RPO companies provide a much higher level of commitment and engagement. Instead of competing with other agencies for candidates on sites like LinkedIn and Indeed, RPOs source candidates using their pre-vetted talent pools, which means less competition compared to traditional staffing agencies that have to actively seek out qualified candidates.

Most RPO companies also provide trackable metrics that allow clients to focus their resources on other business-critical functions. Some of the hiring metrics RPOs measure include the following: 

  • Costs per hire 
  • Time to hire
  • Required skill sets
  • Source of hire
  • Retention levels

In short, partnering with an RPO often means less work for internal hiring teams and higher-quality candidates based on organizational needs.

Benefits of RPO

Outsourcing employee selection provides multiple advantages, such as improved scalability, flexibility, and efficiency. Most RPO companies attract clients through their established talent pools and ease of hiring, though top companies provide several other key advantages.

Pre-Vetted and Exclusive Talent Pool

As previously discussed, RPO providers boast exclusive access to extensive databases of hard-to-find talent. All the personnel in these databases have been pre-selected and tested for their English proficiency, skills, and experience. This makes it easier for RPO providers to curate a list of best matches for companies seeking talent.

Flexible and Scalable Services

The hiring needs of most organizations change throughout the year depending on external factors such as demand and supply and internal goals, targets, and budgets.

Traditional hiring agencies may find it difficult to adjust to these needs. They often don't have in-depth knowledge of their clients' ways of operation and goals, which prevents them from delivering the necessary support at crucial times.

In contrast, an on-demand RPO firm has a much deeper relationship with you—it knows your goals and milestones, when you want to achieve them, and what kind of personnel you want to hire. Accordingly, your RPO representatives will be able to anticipate and handle your needs with ease.

Streamlined and Efficient Hiring Process

With the help of RPO providers, organizations also enjoy a more streamlined and efficient hiring process. RPOs are experts in their chosen field, so they usually source and hire employees for your team much faster than other agencies.

Often, RPO companies have a well-developed pipeline of job-ready passive candidates, which significantly expands a traditional talent pool. RPOs use other active localized talent sourcing strategies, including:

  • AI practices
  • Talent communities
  • Employer branding strategies
  • Industry or niche-based landing pages 
  • Marketing outreach via SMS, email, and social media

Additionally, RPOs provide consistent and efficient recruitment methodologies that may be applied uniformly across an organization. This feature is handy for startups with multiple branches or locations.

Data to Strengthen Business Models

Since they possess extensive talent databases and analytics tools, an RPO helps analyze and predict future trends that affect your organization, such as:

  • Widening talent gaps and how to address them
  • Loosening or strengthening education, experience, and skills requirements
  • Demand and supply of key personnel for essential roles
  • Unemployment rates for targeted skill groups
  • Changing salaries and hourly rates
  • Why candidates have been saying yes or no to certain offers

These statistics are often invaluable and help you develop a better idea of how to create in-person or remote work policies at your company. Additionally, statistics allow companies to upskill, reskill, and retain talent through a more refined employee reward system.

Compliance With Local Hiring Regulations

Many countries—including Venezuela and Cuba—have strict recruitment laws that make it challenging for companies to hire international talent. You may face fines or criminal charges if you don't follow these rules.

For instance, former President Trump's Executive Order No. 13884 prohibits hiring a Venezuelan programmer who acts directly or indirectly on the Venezuelan government's behalf. If you violate this order as a U.S. citizen, you may get your property blocked worldwide.

That's where trusted RPO service providers come in. Unlike traditional hiring agencies, which typically only employ locally and provide no guidance for onboarding international hires, RPO firms have extensive knowledge and experience in domestic and international labor laws. Besides compliance, RPOs also assist clients with: 

  • Payroll
  • Onboarding
  • Immigration
  • Taxes
  • Benefits and engagement

Improved Employer Branding

An experienced RPO firm will research your brand and competitor positioning, align your brand strategy and vision, and develop effective recruitment communications. All of this will emphasize why talent should work with you. In simple words, the right RPO provider will be a brand ambassador who communicates your employee value proposition (EVP) to leads.

Disadvantages of RPO

While RPO solutions provide significant advantages for companies with the capability to outsource, certain considerations must be made before hiring an RPO. Despite the strong benefits, there are also some drawbacks to consider before you outsource recruitment:

Possible Cultural Clashes

Often, it’s difficult for an RPO to perfectly match a client’s culture and priorities. For instance, your RPO partner may onboard Waterfall methodology computer programmers when you have an established Agile approach to software development.

To prevent these cultural clashes, give the RPO firm everything it needs to understand your company culture. The additional information will help your partner hire the candidates you want.

Less Control

With any business process outsourcing, companies must prepare to have less control over intricate processes and small details. However, if you choose the right service provider, you may reap many benefits without significant risk. Remember that your RPO provider has ample experience and knowledge about the hiring process, and it’s in their best interest to see your recruiting strategy succeed. 

Communication Issues

Misalignment between the client's expectations and the RPO provider's understanding of the requirements may lead to communication gaps and misunderstandings. Additionally, failure to provide regular and comprehensive reports on recruitment progress and performance often creates transparency and accountability issues. Without proper communication, ongoing RPO use could lead to a high turnover rate, poor engagement, and workflow barriers.

RPO Models

Each company has its talent challenges—some want to improve their candidate experience, and others to shorten their time to hire. The best RPO provider will assess your circumstances, pinpoint the core issues, and tailor a solution for your specific needs. Most of these solutions will fall under one of these three models:

Enterprise RPO

Also known as full-service RPO or fully outsourced RPO, enterprise RPO involves outsourcing all your recruitment functions to an RPO provider. Your RPO partner will design and implement a recruitment and hiring program that meets your needs. They'll also be responsible for:

  • Defining and meeting all metrics for your company
  • Managing recruitment resources
  • Selling your brand to prospective employees

Hybrid RPO

If you aren't comfortable outsourcing all of your recruitment team functions to an external provider, consider choosing a hybrid RPO model. As its name suggests, hybrid RPO involves assigning some recruiting roles to an RPO provider while leaving the rest to your internal HR team. It allows you to capitalize on the strengths of your dedicated HR team and your external RPO provider.

Project RPO

If you only need a specific number of hires within a short period and your internal HR team is already fully occupied, consider picking the project RPO model.

Project RPOs are a great way to quickly source people for short-term projects that only last weeks or months. For example, you may use project-based RPOs to hire and onboard new programmers if you need to create, test, and launch a new app in four months.

How To Choose an RPO Provider

Choosing the right Recruitment Process Outsourcing (RPO) company is crucial for enhancing your organization's talent acquisition strategy. The decision should align with your company's long-term goals, culture, and specific recruitment needs. Consider the following when vetting RPO companies to use:

  • Track record: Look for an RPO with a proven track record in your industry. Their experience and understanding of your market greatly enhances the quality of candidates.
  • Flexibility: Choose an RPO that scales its services up or down based on your changing needs. Their ability to adapt to your company's growth or downsizing is vital.
  • Technology and innovation: Assess the technological tools the RPO uses. They should offer innovative solutions and platforms that facilitate efficient and effective recruitment functions.
  • Cultural fit: The RPO should understand and align with your company culture to ensure that the candidates they recruit will be a good fit.
  • Cost structure: Understand the cost implications and ensure that the pricing model of the RPO aligns with your budget and expectations for return on investment.
  • Reporting: Clear communication channels and regular reporting are essential. Ensure that the RPO provides transparency in its processes and results.

Selecting the right RPO is not only about outsourcing recruitment but forming a strategic partnership that enhances your workforce quality and operational efficiency.

RPO Pricing

RPO pricing varies significantly based on several factors, including the scope of services, geographic location, industry, and the complexity of the client's hiring needs. Often, exact RPO cost is tied to the cost per hire metric and the number of successful hires an RPO makes in a defined time period.

Some basic RPO models, which usually include core recruiting and onboarding functions, range from $1,000 to $3,000 per hire. More complex RPO models that include advanced workforce planning, full onboarding, and reporting may be closer to $6,000 per hire—or more.

Note that these price ranges are general estimates, and the actual cost of RPO services may vary based on specific client requirements, market conditions, and the competitive landscape. Additionally, some RPO providers may charge fixed management fees, retainer-based fees, or a combination of pricing structures, making it essential for organizations to carefully evaluate their needs and negotiate an outsourced pricing model that aligns with their goals and budget.

Start Recruiting With Revelo

If you want a flexible, cost-effective solution for your recruitment process outsourcing needs, consider partnering with Revelo. We help you source, hire, and handle web developers all on one platform. You'll also gain access to a talent pool pre-vetted for knowledge, skills, and English proficiency.

Contact us today to learn more.

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