Recruitment process outsourcing

Recruitment Process Outsourcing is a form of business 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 provider acts 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 a company's time to hire, increase the quality of the candidate pool, provide verifiable metrics, reduce cost and improve governmental compliance."

RPO was first brought to the UK by former 'Dragon' James Caan who still delivers RPO to global businesses via his strategic resourcing company, HB Retinue.

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 recruitment processes 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 greatly from 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."

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, the service provider is "a" source for certain types of recruitment activity. The biggest distinction between RPO and other types of staffing is Process. In RPO, the service provider assumes ownership of the process, while in other types of staffing the service provider is part of a process controlled by the organization buying their services.

History

While temporary, contingency and executive search firms have provided staffing services for many 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 companies were hard-pressed to locate and hire the technical specialists they required, and so had little choice 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 expenses of 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 toward outsourcing 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 of potential 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 of potential candidates from which that company could hire.

Over time, as business in general embraced the concept of outsourcing more and more, RPO gained 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 labor market. As labor markets became more and more competitive, RPO became more of an acceptable option. Furthermore, through the advent in the 1980s and 1990s of human resources outsourcing (HRO) companies that began taking on the processes associated with benefits, taxes and payroll, companies began recognizing that recruiting—a significant cost of HR—should also be 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 of RPO 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 created a 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 that even 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.

Its also speculated that Prosquare LLC, a Nevada based recruitment company, first started a recruitment process in their facility in Bangalore in early 2006. Mr. Hemant Nair their global sales manager signed a monthly contract with American based recruitment group 4T technologies and called it RPO (Rhiming with the then famous BPO).

Everest Group estimates the current size of the RPO market at US$1.4billion in annualized spend with a growth rate of over 25% in 2010-11. RPO has moved beyond a nascent stage to a highly competitive environment with multiple service providers and more complex forms of RPO such as multi-country RPO and blended RPO (managing permanent and temporary hires within the same arrangement).

Benefits

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

• Quality and Cost - RPO providers claim that leveraging economies of scale enables them to 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 a larger staff of recruiters, databases of candidate resumes, and investment in recruitment tools and networks. RPO solutions are also claimed to change fixed investment costs into variable costs that flex with fluctuation in recruitment activity. Companies may pay by transaction rather than by staff member, thus avoiding under-utilization or forcing costly layoffs of recruitment staff when activity is low.

• Service and Speed - The commercial relationship between an RPO provider and a client is 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 most effective way - at times to the exclusion of non-core activity. Traditional internal recruitment 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.

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.

• Loose Definition of RPO - As RPO is a commercial concept rather than a specific definition, 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 provide the most benefit to their clients.

• Cost - The cost of engaging an RPO provider may be more than the cost of the internal recruitment department, as an RPO provider is likely to have higher business overheads.

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

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

• Lack of Competition - Placing all recruitment in the hands of a single outside provider may discourage the competition that would arise if multiple recruitment providers were used.

• Pre-Existing Issues - An RPO solution may not work if the company's existing recruitment 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 better for the company to undergo a recruitment optimisation programme.

• 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 or internal recruiting resource would.

• Engagement - Many RPO organisations perform their staffing functions and service offsite or offshore, disconnecting the provider from the client company's growth and recruiting strategy. While this effect can be mitigated through strong relationship management, some of the momentum and energy associated with the rapid upscaling of a workforce through recruitment may dissipate.

See also

• People Capability Maturity Model
• Offshoring Research Network

References

www.hbretinue.com