Talent acquisition agility: The advantages of RPO

Recruitment process outsourcing (RPO) is thriving and has been for some time. The industry has seen double-digit growth every year since 2015, driven to some degree by the demand for talent that has put pressure on internal recruitment functions. RPOs have developed global operations and have the capability to source and recruit anywhere.

Many organizations expect RPOs to take over the entire spectrum of recruitment, including tapping into and hiring the internal and contingent workforce. While large firms have been more likely to engage an RPO, recently, most growth is from the mid-sized and smaller firms, especially in Asia. RPOs are capable of quickly responding to both startup and large multinational firms’ changing needs. They allow corporations a flexible recruitment strategy that can adapt to the ups and downs of markets.

The challenges faced by internal talent acquisition

Internal talent acquisition has never been immune to significant downsizing or even elimination during economic turmoil. Leaders often see it as a function that can be turned off and on as needed. An internal function has to be as efficient as or more efficient than an outside provider to remain competitive. This means continually improving operational excellence, adding appropriate technology, accessing detailed market information, coaching hiring managers, and building a reputation for adding real value through the quality of talent it provides.

Internal functions often have difficulty developing efficient, streamlined processes and lack a coherent talent strategy for several reasons. First of all, recruiting is often seen as a steppingstone to a broader HR role and not as a career, which leads to short tenures and a lack of continuity.

Recruiting leaders also struggle to get the support and budget required to create an efficient and proactive function. There are many expenses involved in putting together a recruitment function. Also, recruiters need to be trained and incentivized to perform. As new technology becomes available, it needs to be evaluated, purchased, and integrated with other HR and organizational software. Most recruitment functions do not have skilled IT professionals to help source and evaluate technologies, and internal IT departments are often busy with higher priorities. The budget burden is high, and very few internal functions can fund all of these needs adequately.

Without technology, internal functions lack the data and analytics that help determine where the best talent is located, what attracts them to the firm, and what skills are most likely to lead to success. In effect, they are recruiting with only anecdotal evidence to support their sourcing and assessment of candidates.

On the other hand, RPOs hire IT professionals to purchase or develop technology and spread costs over many clients. Therefore, they can afford to invest heavily in technology and other services. Because of their clients and analytics, they have wide-ranging knowledge of the recruitment landscape, the skills a particular employee needs, the pros and cons of various technical solutions, and deep expertise gained through engagement with numerous clients.

Why investing in technology is key

Over the past 10 years, recruiting technology has developed to augment many recruitment activities with artificial intelligence, machine learning, and natural language processing.

For example, programmatic advertising can target individuals with specific skills and interactive websites incorporating chatbots engage, inform, and even screen candidates without a recruiter involved. A variety of available tools can screen and assess candidates and rank them according to predetermined requirements. Other automated tools can schedule interviews, recommend salaries, prepare offer or rejection letters, send emails, deliver documentation, conduct background screenings, and provide engaging and virtual onboarding.

This means that in a function that takes advantage of these technologies, recruiters have more in-depth knowledge of where candidates are located and what skills they need to have. Recruiters can spend more time talking to and engaging candidates, discussing job requirements with the hiring managers, building relationships with potential candidates, and getting to know internal employees’ capabilities.

Many internal recruiting functions have not implemented technology in a comprehensive or integrated way. They do not have an integrated series of tools and continue to use people to source, screen, schedule interviews, and do all the other tasks associated with recruitment. They have not been able to reduce costs or staff nor increase the number of positions a recruiter can handle. And, they have not had the tools to build talent pools or develop robust talent pipelines.

Internal functions are also missing the insights that artificial intelligence can provide about candidates through better assessment capabilities. AI-enabled tools can objectively assess a candidate’s skills in an area such as programming and do personality and culture fit tests. Without this capability, they cannot quickly and objectively assess multiple candidates. After interviewing several candidates, it becomes harder to remember each one’s strengths and characteristics. Automated tools can stack rank and tap into far more data than humans can process.

On top of these issues, in-house teams have to manage internal politics, regional conflicts, the different needs of each hiring manager, complex bureaucracies, and lack of senior-level alignment.

Advantages of recruitment process outsourcing (RPO)

For a long time, internal talent acquisition used RPO functions to offload recruitment for high volume roles such as retail sales associates or call center staff. As these roles were considered high turnover and low-skilled, the internal TA function used cost as their primary selection criteria for an RPO. Top-level executive roles were outsourced to executive recruiters or agencies that specialized in executive talent. The internal function focused on primarily recruiting mid-level professionals.

But RPOs have grown in their ability to recruit both the volume roles and the more complex ones. RPOs can target candidates across various occupations, employment types, RPOs or vertical markets of specialists such as medical professionals, academics, or financial professionals. RPOs have developed complex, customized solutions for clients.

For example, a global healthcare company with over 21,000 employees has been using RPO to deliver a best-in-class, centralized talent acquisition function focusing on speed, scale and experience. The RPO consolidated over 100 individual recruitment centers into a single centralized structure that delivers a consistent process and experience for hiring managers and candidates. This has also enabled the firm to expand existing centers and add new ones to their network. Rather than continue with the usual reactive recruitment process, with an “evergreen requisition,” the team utilized historic turnover data for each role and reengineered the process to hire proactively for each critical role before the need arose. The RPO reduced costs by 10% while improving the time to fill and cost-per-hire significantly.

RPOs can provide innovative solutions like this because of their expertise in technology. They have technical experts, highly trained interviewers, candidate engagement specialists, and skilled and experienced recruiters. These employees often come from top-notch corporate recruiting functions or recruitment agencies. RPOs also invest in training recruiters, which many internal functions do not have the resources or time to do.

The growing benefits of RPO

The coronavirus has forced organizations to restructure how employees work and allow greater flexibility in work arrangements. This will continue after the pandemic as organizations employ globally dispersed workers, many of whom may not be permanent employees. Employers are utilizing the skills of more part-time and contract workers, expanding their talent pools and making sourcing more complex. RPOs are well-positioned to source and recruit the virtual and gig workforce through their global networks. Some RPOs can also offer additional services such as managing the contingent workforce, doing payroll, and supporting other administrative services.

With profound investments in technology, RPOs can offer far more than simple source and screen services. RPOs have developed deep databases of potential candidates in many verticals, which they can quickly tap into to find the best candidates. RPOs can provide other services such as video interviewing and virtual job fairs to clients who lack these services or skills. Some RPOs are even offering outplacement and coaching services to laid-off employees.

The high level of data collected and analyzed by RPOs allows them to provide clients with a great deal of market intelligence. They can gather data about talent availability, including its location, which skills are most in-demand and the hardest to find, what marketing techniques are the most successful, what salary levels are normal and much more. Internal functions rarely gather and analyze this amount of data.

Many talent leaders consider RPO to be more expensive than internal recruiting, but the RPOs ability to leverage technology and put in place efficient, proven processes is often overlooked. This allows them to offer superior service at a lower rate. Compared to RPOs, internal functions carry costs that are often overlooked – their staff’s continuing salary with benefits and other expenses, physical buildings, equipment, leases, and licenses. On the other hand, RPO can be price competitive and often less expensive.

How firms are using RPO

Augmented recruitment

Existing talent acquisition functions use RPOs to manage the recruitment for some roles but not all.

The mix of roles taken on by an RPO varies according to industry and employee type. Typically, perhaps 40-60% of roles are sourced and recruited by the RPO, with the rest retained by internal TA. RPOs are often chartered at first to recruit the high-volume roles and over time take on recruitment of professionals. They may have responsibility for advertising and branding, sourcing, assessment, and even hiring. In other cases, their role may be only to source candidates or source and screen them and then turn them over to an internal recruiter.

In most cases, internal TA retains university, senior-level and executive recruitment. The range of RPO services is large and growing and includes many services not offered by internal functions.

RPO can help internal functions scale fast. For example, RPO enabled a large health system to hire all staff levels quickly. They entered into an RPO partnership and set goals that included strategically enhancing the talent acquisition function, ensuring compliance and governance, improving service levels to hiring leaders, and optimizing the candidate experience for internal and external talent.

One of the other advantages of using an RPO is that a client can have the RPO either utilize their existing ATS and technology or allow the RPO to bring their own proprietary technology to the partnership. Because of their investment in technology, RPOs can usually offer a more comprehensive and integrated solution than firms, allowing greater efficiency and lower costs.

Total recruitment replacement

Many firms find that letting the RPO manage all of their hourly and professional recruitment is an optimal solution. RPOs can provide a candidate experience that maintains the organization’s culture while enhancing or replacing their technology.

Organizations can scale down their internal team to a smaller group of experts with broader and more strategic roles while allowing the RPO to take on the end-toend recruitment process. This lowers their cost by eliminating the need to purchase, upgrade, and maintain recruitment tools and technology and the overhead and salary costs of a recruitment team. It allows maximum flexibility of labor costs and enhances the global sourcing of candidates.

Many firms transition to RPO in stages by letting the RPO support recruiting for lower-level positions and then gradually allowing them to assume responsibility for additional roles.

When transitioning to RPO, the head of talent acquisition at the firm acts as the strategic facilitator of the partnership, responsible for working with the RPO to build a recruitment approach connected back to their organization’s broader people and business goals. The talent acquisition team’s role becomes setting strategy, working to define needed skills, anticipating the future talent needs of the firm, and influencing and coaching hiring managers.

The hybrid recruitment model

Hybrid models are becoming more popular because it gives TA leaders scalability and a variable cost structure so their function and strategy can respond to shifting priorities or external factors.

In the model below, the internal performance office is the strategy development and overall integrator of numerous elements needed for a complete talent picture. It is responsible for ensuring the organization has the skills and people it needs to meet future requirements. Working with an RPO, this office could use the data and analytics collected to prioritize resources, decide what roles might be contingent or permanent, advise senior leadership on the talent marketplace, and develop long-term strategies. It also should set standards and negotiate contracts with vendors, including the RPO.

The future of recruitment and RPO

Over the next decade, organizations will experience profound changes in their structure and workforce. The pandemic has had the effect of accelerating a trend toward virtual work. Firms will reduce their permanent workforce and leverage more contingent and virtual workers. They will also focus much more on internal mobility and employee development. RPOs are well-positioned to tap into the total workforce, whether internal or external, contingent or permanent, local or global.

Unless organizations invest considerably more in their internal function, it will be increasingly challenging to provide the quality, speed, and efficiency offered by the modern RPO provider. As a total talent acquisition philosophy becomes normal, firms will need to seek people with the required skills and abilities no matter how they prefer to work. The contingent workforce will continue to grow and become essential to success. Finding people that fit the culture of the firm will also be necessary. RPOs can use their data to analyze the corporate culture and ensure that all matches are compatible with both the overall culture and the hiring managers.