RPO or Recruitment Process Outsourcing is the practice of outsourcing (having a third party person, agency, or company) certain elements of recruiting. Generally speaking, RPO is meant for corporations, versus third party recruiting agencies. The company looks to improve productivity, save recruiting costs, and perhaps improve hiring compliance by outsourcing some aspects of the recruiting function within the corporate Human Resources (HR) department.
Like other practices of outsourcing, RPO is a relatively new trend. Outsourcing did not become prevalent until the last twenty years, but recruitment process outsourcing often represents a much different type of business transformation that other forms of outsourcing. Outsourcing (very often used pejoratively) usually refers to the practice of giving away lower end functions of your business. Most outsourcing projects deal with non-strategic functions of the business that are not core competencies of the company. RPO is quite different in this regard; no business process is more strategic than hiring and talent management. That is why RPO engagements, instead of simple cost-cutting measures, are often more strategic initiatives meant to drive real improvements in recruiting, versus simply driving recruitment efficiencies.
In very recent history, RPO has developed into an entire industry. Many times, companies providing recruitment outsourcing specialize in more than just RPO: they are often the same firms providing staffing and direct placement, assessment services, and off-boarding and executive coaching. Some RPO companies are small recruiting firms which bill their staff out at hourly rates. However, other RPO firms are very sophisticated specialists in talent sourcing and employee planning. Their recruitment services encompass the full lifespan of employee hiring, but these type of RPO providers also add value to the company by implementing best practices in compliance and ongoing employee management.
RPO is seemingly mired in contradiction: the more strategic value an RPO provider places on the talent management process (justifying their own value), the less companies are willing to outsource the recruiting function. However, RPO providers move beyond that inherent contradiction because the recruiting function is now seen as a separate competency. Companies succeed at RPO when their initial efforts are not meant to necessarily cut costs within the recruiting and HR department, but instead to place an even greater value on talent sourcing and development. Recruitment process outsourcing providers are seen as real experts in the field of recruiting and talent management, and therefore their value in the marketplace is recognized. The trend of RPO continued unabated throughout the downturn and decrease in hiring over the past few years.
Instead of saving costs on a non-strategic function, RPO attempts to improve the efficiency of a company’s most important procurement process – the process of acquiring and developing human capital. It is very important to take RPO initiatives very cautiously and with the oversight of senior management, because the hiring process dictates the entire future success of any organization.