RPO and Contingent Staffing: What’s the Difference?

Recruitment Process Outsourcing (RPO) is helping organizations improve operational efficiency and quality of hires while reducing costs. 

But to fully understand RPO, it is vital to first grasp what it is not: contingent staffing. Such agencies are often referred to as contingency firms or temporary placement agencies. Organizations primarily seek out contingent staffing agencies on a requisition-by-requisition basis (i.e., when hiring needs arise) for a supply of temporary or “temp-to-hire” employees. For example, a company needs three forklift drivers STAT! In this situation, organizational leaders might look to contingent staffing firms to deliver a number of candidates willing to take the job tomorrow.

One issue with these types of agencies is that there are clones (competitors) at every corner providing the same services. Many businesses will partner with multiple staffing agencies at any given time in order to expedite the recruitment process. As a result, immediacy is and will always be the name of the game; reimbursement for these firms hinge on their ability to fend off competing firms and place people before competitors swoop in with their own prospective candidates. Although contingent staffing agencies can prove effective, the rapidness often means experience, quality of hire as well as hiring manager and candidate satisfaction are not be taken into account.

Rather than simply supplying prospective hires as quickly as possible, RPO providers offer strategic services uniquely built around their clients’ needs. That is, they act as an extension of the organization’s internal recruitment function and handle the entire new hire lifecycle from sourcing through onboarding and often exit management. Although handling these functions in a timely fashion is imperative, unlike staffing agencies, qualitative metrics like the previously mentioned quality of hire and hiring manager and candidate satisfaction are also a prominent focus.

RPO partnerships are meant to be long term, so that teams can build sustainable talent pipelines, establish and grow talent communities, enable leaders to focus on strategic initiatives and reduce employee attrition. This is executed through a service delivery structure that dedicates expert recruitment teams to each client. These teams, though technically employed by the RPO provider, become an extension of the client organization. As a result, recruiters are completely immersed in the client’s culture and are accessible at all times. In essence, the RPO provider becomes 100% accountable for the recruitment function in order to provide a more efficient, less expensive and customized recruiting solution.

Proactive Versus Reactive
Consider this: Across the globe, there is always the need for talent. Businesses grow and new positions develop; employees move on and attrition occurs. This creates the need for quality talent in a timely fashion—especially because growth and turnover storm through an organization on a daily basis, rarely leaving time to adjust to the swift and sudden changes they cause. The primary difference between contingent staffing and RPO can be found here:

  • Contingent staffing providers are reactive. Organizations react to turnover, growth or hiring needs by seeking the services of contingent staffing firms after the need arises. These agencies will identify and recruit talent based on current need with the goal of recruiting and filling all positions as quickly as possible. This is talent acquisition.

  • RPO providers are proactive. Conversely, others organizations are proactive by seeking partnerships with RPO providers to bridge the gap between talent acquisition, talent management and talent strategy. Rather than react to need, as an extension of the organization, RPO offers proactive sourcing and builds talent pipelines and talent communities to ensure organizations are always prepared well in advance of need.

Why Should HR Leaders Care?
When recruitment processes are handled internally, HR departments need to post job descriptions wherever possible, including job boards and social media networks. They also need to actively engage candidates on these forums day after day. They need to scour the internet for quality resumes; identify, screen, interview and bring in candidates to fill out employment paperwork. They need to conduct background and reference checks, skill testing, as well as gauge personality, work style and cultural fit.

Additionally, they need to handle post-employment tasks like evaluating performance and hiring manager satisfaction. With the rise of RPO, many businesses are partnering with a third-party to handle these laborious and cost-hungry tasks by providing comprehensive, transparent services and tailored execution with the evidence-based insight to achieve transformational results. For those of you interested in digging deeper and learning more about the trends leading the global movement to RPO, how you can define RPO for your business, questions to ask and tips to prepare your organization for RPO, check out this complimentary Cielo whitepaper: Get It Right to Get Results: Creating the Business Case for RPO.