Recruitment Process Outsourcing – Friend or Foe?

Oct 1, 2007

We all see the sweep of the human resources outsourcing craze (HRO) and how it enables companies to stay focused on their core competencies and not worry about the things they never meant to worry about in the first place, like payroll, benefits, compensation, hiring, assessment, succession planning, performance programs, etc. For many the HRO craze has created pathways of new revenue sources and grown current income sources, and for others the HRO craze has been one heap of frustration.

The business process outsourcing (BPO) movement has greatly impacted the staffing, search, and recruiting industry as we know it today. RPO is a form of business process outsourcing where an employer outsources, or transfers, all or part of its recruiting, selection, and onboarding activities to an external service provider. As companies strive to stay competitive, they are exploring ways to create efficiencies in their operations, and BPO, HRO, and RPO are ways to narrow their focus, play to their strengths, and leverage their power.

Because of a demographically declining slope of skilled available people, the normal ebbs and flows of business, and a global war for rising and shining stars, the RPO market is heating up. Players from Adecco to Kelly are jumping on the RPO band-wagon, and more are engaging every day. There are even two associations and large forum conferences serving the RPO community. The concept of an employer outsourcing the management and ownership of part or all of its recruiting process was first realized during the late 1990s, and today it permeates corporate America like the smell of freshly baked apple pie in a country store. RPO was originally created to fill the talent gap in the late 1990s. Between the dot-com boom and the Y2K crisis, companies simply did not have the resources to manage their recruitment internally, and their outsourced recruiters were reportedly not giving them the quality of care they required, hence the birth of RPO.

Cutting costs is often cited as the main reason for other forms of business process outsourcing, and this may also be the case with RPO. However, when most organizations consider RPO, it is not necessarily to cut costs, but rather to make their recruitment costs more variable and more closely aligned to organizational business cycle dynamics. While there is certainly a need for temporary staffing, executive search, and contingency recruiting, where RPO dominates is in the area of multiple hires for a similar or a group of similar roles. While this is okay for many private recruitment firms, why not put our hat in the ring and compete to fill 40 to 50 similar positions? Clearly the economies of scale and scope would only leverage our ability to grow and earn stronger profits.

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. Given that there is a ton of training on “client control” and “owning the account,” I would think that for these reasons alone as an industry we would be champing at the bit to land good solid RPO contracts.

A main point to consider is that once the RPO masters the clients’ staffing requirements and creates efficiencies in the recruitment process, they could very easily become the single source provider for a company’s hiring needs. Given the mass access to offshore, virtual, and contract recruiters, who is to say that a great RPO cannot master every level of the client’s hiring needs, including the executive level? So if anything is possible, and it certainly has proven to be, why couldn’t a single source or a team of single sources band together and provide the same quality and quantity of sourcing, searching, assessment, placement, onboarding, and retention services?

The Benefits of RPO

RPO promoters claim that the solution offers improvement in quality, cost, service, and speed. RPO providers claim that economies of scale enable them to offer recruitment processes at lower cost, while economies of scope allow them to operate as high-quality specialists. Economies of scale and scope are said to arise from having a larger staff of recruiters focusing on individual clients rather than jumping from one assignment to the next; a continuous population of customized databases of candidate résumés; investment in peer-to-peer networks, associations, and educational affiliations; capital investment in sourcing tools; and high-volume buying power of hiring and selection tools.

Potential Concerns with RPO

Outsourcing of company recruitment processes may fail if not implemented correctly and with the right mind-set. An improperly implemented RPO could reduce the effectiveness of recruitment. Additionally, the costs charged for recruitment transactions may total more than the cost of the internal recruitment staff, if the internal staff is not using agencies and tools that increase their overhead. Additionally, an RPO solution may not work if the service provider has inadequate recruitment processes or procedures to work with the client.

How Can You Benefit From Incorporating an RPO Process in Your Firm?

Beginning with concrete job/role analysis and bench-marking through sourcing, assessment, and selection, as well as customized retention, onboarding, and employee-development programs, your firm can attract the same level of business that an RPO can serve. Many times, companies will choose an RPO for the process, systems, and assessment, onboarding, and retention tools and overlook a traditional search or placement company because they lack those tools.

Contrary to popular belief, most recruiting consultants who choose this profession as their life’s work embrace such service offerings, saying that they catapult their credibility and position them as true consultative partners in their clients’ businesses.

Whether you provide a complete soup-to-nuts approach or simply augment your current staffing services with segments of what the RPOs are offering, you will catapult your credibility with your clients when they are clear that you are well aware of what is happening in their world and that you are armed and ready to contribute to their talent management program at the level they require.

Competing in the HRO market allows you to leverage your economies of scale and scope while improving your efficiencies, making more placements, guaranteeing a steady stream of direct placement income, and growing your market share!

Innovate or evaporate: What are you waiting for?

Margaret Graziano, CPC, CTS, and mother of three, has been a top producer in the staffing and recruiting industry for the past 20 years and has owned her own firm since 1991. She prides herself on client retention and making the right hires. She has earned over $5 million in personal “desk production” income and has placed over 2,000 candidates in direct-hire positions. With the competitive business world and the war on talent in full force, Margaret’s company, Alliance HR Network, has ventured into new realms of talent acquisition, organizational development, and human capital consulting services, thus diversifying Alliance’s revenue streams and gaining new and exciting talent acquisition and assessment consulting opportunities. Margaret’s email is and her phone number is (847) 690-0077. The strategic planning forms are listed under a Strategic Planning Downloads section at

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