Use this guide to determine whether RPO is a good option for your business.
Today’s hiring climate is competitive. In fact, Gartner reported in late 2022 that 50% of organizations expected the competition for talent to increase significantly over the next six months[1].
If your current recruiting strategy (or lack thereof) isn’t helping you keep up with the competition, outsourcing the responsibility to a recruitment process outsourcing (RPO) agency could be the right move for your business.
We’re here to help you, a business owner or HR leader, determine whether RPO is the answer to overcoming the hiring hurdles your organization is facing. With insights from Gartner’s Playbook for Making the RPO Decision[2], this guide will lay out everything you need to know about RPO, including the different types of RPO models and when it’s best to use them.
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What is RPO?
RPO, also known as recruitment process outsourcing, involves transferring some or all of an organization’s recruiting activities to an external provider. Depending on the terms of the partnership, tasks such as job scoping, advertising, candidate sourcing and screening may be handled by an RPO for an organization.
Unlike recruitment agencies, which are generally used as an ad hoc solution to meet sudden staffing demands, RPO providers are seen as long-term strategic partners to the business. And while RPO providers have been around for a while, they’ve recently evolved to provide more than just the traditional benefits associated with outsourcing the task of staffing. Today, organizations that partner with RPO providers gain access to niche talent pools, emerging technologies, and advanced analytics capabilities.
RPO is primarily used by enterprise businesses in the healthcare, manufacturing, and customer service sectors (industries that are vulnerable to labor shortages). Small businesses typically have budgetary constraints to work within and less roles to fill in general, making it preferable to manage hiring in-house.
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How does RPO compare to in-house recruiting?
There are benefits to both in-house recruitment and RPO, as is covered in the table below.
In-house recruitment | RPO |
|---|---|
In-house recruiting teams typically have a better understanding of their organization’s business and talent strategies. | RPO firms have a more flexible capacity to respond to hiring surges and slowdowns. |
In-house recruitment teams have firsthand experience they can use to communicate their employer’s culture and brand. | Businesses can take advantage of an RPO firm’s expertise in niche labor markets. |
Keeping candidate and employee data in-house can give the business a competitive edge. | RPO is more cost-efficient than alternatives such as search firms. |
3 common RPO models (and when to use them)
In a 2021 survey from Gartner, just over a quarter (28%) of recruiting leaders said they used RPOs for their recruiting function[3]. To help you determine whether this strategy could also work for your business, we’ve given a brief overview of the three most common RPO models below.
1. On-demand RPO
With on-demand RPO, an RPO provider makes a defined number of hires for an organization, usually for key projects or during a particularly busy business quarter. On-demand RPO offers organizations the ability to quickly hire up without having to make a long-term commitment to an RPO company.
When to use on-demand RPO
There are a couple of primary use cases for on-demand recruitment outsourcing:
If your in-house recruiting team is overall effective but struggles to keep up with hiring surges, this model can offer the temporary support needed to get by (project-based RPO is an example of this).
If your organization needs to hire for hard-to-source roles (for instance, positions that require niche technical skills), on-demand RPO can be used to develop a targeted campaign to attract and onboard qualified talent quickly.
2. Partial RPO
Partial RPO is a model where a portion of an organization’s recruiting activities is managed by an RPO firm. This could mean that some stages of the recruiting process (such as sourcing or screening candidates) are managed through RPO, or it could mean that recruiting for certain kinds of roles (such as IT positions) is handled by a third-party recruitment agency.
When to use partial RPO
Partial RPO is a good option for organizations that need to strengthen aspects of their talent acquisition strategy. Obviously, some responsibilities are best managed in-house (such as interviewing applicants), but tasks such as running background checks or screening candidates can be outsourced effectively. In fact, 14% of organizations use recruitment process outsourcing providers for sourcing[4].
Further, if your recruiting team has historically struggled to fill roles related to a certain business function, partial RPO can help. For example, an RPO partner can be used to hire C-level executives or IT personnel, and oftentimes, these firms have the advantage of recruiting from an existing talent pool of candidates they’ve interacted with in the past.
In general, a good rule is to identify bottlenecks in your current recruitment process and focus on applying partial RPO there.
3. Enterprise RPO
Unlike the two models covered above, enterprise RPO is a model where all of an organization’s recruiting activities are managed through an RPO service. Because of this, enterprise RPO is sometimes referred to as full-service RPO or fully-outsourced RPO.
With this model, the organization will work closely with an RPO provider to come up with an end-to-end talent acquisition strategy.
When to use enterprise RPO
If your organization’s in-house recruiting team lacks the skills, expertise, or resources needed to fill roles, enterprise RPO could be right for you. Gartner suggests that organizations whose recruiting function lacks maturity can benefit from RPO if they find a provider who is well-suited to recruit in their industry[2].
Here are a few other factors to look for that can help you determine whether this model is a good fit for your business:
Project-based or cyclical hiring patterns that are hard to predict
Low employer brand recognition that makes it difficult to attract talent
Widespread workforce distribution (i.e., employees are spread out across regions)
Ready for RPO? Here’s what to do now
If you have a hunch that RPO could work for your business, follow the three tips below in order to determine which kind of models and providers you should consider.
Assess RPO models
We’ve made this one easy for you, because not only did we cover when to use each model in the sections above, we’ve also created a tool you can use to judge whether in-house or RPO recruitment is a better fit for your business. This tool factors in things like role complexity, hiring volatility, and the strength of your employer brand in order to guide you in the right direction.
Scroll down to the bottom of this page to download our version of Gartner’s Framework for Assessing Fit for Enterprise RPO.
/ Tip
If you find that your business lands right in the middle of the two options, a hybrid strategy that incorporates either on-demand or partial RPO is likely the right choice.
Identify hiring challenges that could be addressed through RPO
In order to find success through RPO, you need to have a good understanding of the top challenges your organization is facing that a provider can address. We’ve curated a list of questions below you can use to help pinpoint problems within your recruiting strategy:
Which recruiting activities does our team struggle with the most?
Where is it hard to fill roles, despite available talent?
Where is business growth outpacing our ability to hire?
Where do we experience the most hiring volatility?
Has it been challenging to use contractors to alleviate role volatility?
Where is project-based work growing the fastest?
Where, if at all, do we use agencies most often?
Meet with members of your recruiting team to discuss these questions and determine what the biggest challenges facing your hiring team are so that you’ll be able to better assess providers’ abilities to alleviate them.
Evaluate RPO providers
Lastly, it’s time to shop around and evaluate different RPO providers. Similar to the software selection process, you’ll need to prepare for this endeavor ahead of time. Use the best practices below to ensure a successful evaluation process:
Determine what your ideal partnership will look like: How do you want the RPO provider to structure their recruiting teams? Do you want to share RPO recruiters with another company or not? Figure out what your ideal RPO partnership would look like and use that as a guidepost when assessing providers.
Use clear selection criteria when shopping for vendors (i.e., set a budget and determine whether you’re looking for providers with experience in a certain industry or geographical area).
Ask providers to connect you with past clients: Talking to a provider’s past clients will help you understand what they do well and what they can work on improving.
Lastly, bookmark our services directory, where we’re regularly adding new information about service providers that can help you find the strategic partner your business is looking for.