Recruitment Process Outsourcing
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Recruitment Process Outsourcing (RPO) 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.
To quote the Recruitment Process Outsourcing Association, "Recruitment Process Outsourcing is 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 on-boarding 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."[1]
On the other hand, 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.[2] 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.
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[edit] 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 wasn't 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 geatest 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 1980's and 1990's 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 outsouring. In the early 2000's 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.
[edit] Benefits
RPO's promoters claim that the solution offers improvement in quality, cost, service and speed.
RPO providers claim that economies of scale enables them to offer recuritment processes at lower cost while economies of scope allow them to operate as high-quality, specialists.[citation needed]. Economies of scale and scope are said to 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 vary 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.
[edit] Problems
If a company failed to define its overall recruitment strategy and hiring objectives, then any recruiting program may fail to meet the company's needs. This is especially true for outsourced programs like RPO. 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. A company must provide initial direction and continued monitoring to assure the desired results. Overall, providing guidance to external activities can present a significant management challenge. Outsourcing of company processes may fail or prove a poor organizational fit. Improperly implemented RPO could reduce the effectiveness of recruitment.[citation needed]
The costs charged for recruitment transactions may total more than the cost of the internal recruitment department.
RPO service providers may fail to provide the quality or volume of staff required by their customers.
Placing all recruitment in the hands of a single outside provider may discourage the competition that would arise if multiple recruitment agencies were used.
An RPO solution may not work if the company's existing recruitment processes are performing poorly. An RPO solution may not work if the service provider has inadequate recruitment processes or procedures to work with the client.
RPO may not resolve difficulties that organizations have hiring staff when the organization is perceived negatively by potential employees. This will instead require improved branding and an adjustment of image.
Organizations with efficient hiring process that are viewed as employers-of-choice by potential staff may stand to gain negligible benefits from RPO.
