What is RPO and How does it work?
PRO stands for Recruitment Process Outsourcing when an employer decides to give the responsibility of finding potential job candidates to a third-party service provider. This method is the perfect solution for hiring qualified candidates who align perfectly with the company without involving human resources in the hiring process.
This process usually starts with an agreement outlining the project, timing, and cost. As the applications start to arrive, the outsourcer circles back with the employer to make any changes to the requirements if needed. Then, based on the screening results, the RPO team identifies top candidates for the employer to vet and proceeds to facilitate the interview process.
Types of RPO
The different types of RPO have to do with the different engagement models that exist for partnering with RPO providers. This typically depends on the organization’s needs and the characteristics of the specific project.
On-demand
This kind of engagement is used when there are a limited number of job openings, a designated location, and a defined timeline. In other words, the provider recruits an agreed-upon number of roles over a fixed period of time. This kind of arrangement can also be used as a pilot, but you should keep in mind that not every RPO provider offers this kind of single project service. This dynamic is mostly used as a test for longer RPO engagements.
Hybrid-select
For this engagement type, RPO providers increase their internal employer recruitment resources for specific open jobs, business units, locations, and recruitment processes. This is a more timely project as it requires a more detailed analysis of the candidates who need to be hired.
Contingent
This new kind of engagement appeared due to an expanding economy. For this type, RPO companies provide direct sourcing for temp and contract labor hires, and it can be offered with a permanent placement RPO solution or independently.
Enterprise full talent lifecycle
Finally, for this engagement model, companies hire multiple RPO providers to manage several skill sets, business units, and locations. Employers also have the flexibility to transfer their staff to the RPO provider if needed. Again, this is a more time-consuming process than just hiring for a limited number of positions.
How much does RPO cost?
The costs of an RPO provider can vary, and they usually depend on the employers’ specific needs and the kind of engagement they’ll need for a particular project. However, there are some payment models for hiring an RPO.
Pay for performance
This is a more flexible model compared to the other ones. It is also easier to scale and allows recruitment expenses to align with the employer’s hiring needs. The RPO provider will typically charge an open fee for each open job requisition and a close once the position is filled. With this pricing model, the PRO faces low risks.
Management fee pricing
The provider charges an hourly or monthly fee to cover staff costs, technology, sourcing, account management, overhead, and other expenses. This is also known as the fixed-fee model, and although it is easier to budget, it is difficult to scale. This model represents a higher risk than others.
Hybrid-blended
This method combines the two we previously explained. It can give you scalability without being too difficult to budget. The most desired type of Hybrid-Blended model is a True-up Pricing Model. A True-up Model adjusts transactional open and close fees to one minimum monthly fee. This is typically one payment of the higher fee between open and close fees.
Why you should consider using RPO
RPO providers are highly beneficial for companies that want to hire qualified professionals who align with their interests. These providers are experts in the hiring field, saving costs and making efficient use of the company's resources. They also stay on top of compliance and have advanced technological solutions for analyzing metrics and data.
Selecting the right provider for your company
As you’ve seen, selecting the right provider for hiring in your company can have several benefits. These experienced professionals can make the whole process go more smoothly and become a real asset to your organization.
