Generally speaking, a Recruitment Process Outsourcing (RPO) program—which also works as a Business Process Outsourcing (BPO) program—is a business practice in which an organization contracts with an external service provider to perform an essential business function or task. An organization typically contracts with another business for such services after identifying the need.
Remember, an RPO process is not part of its core value proposition but’s necessary for its operations. Perse, RPO is an outgrowth of business process outsourcing where medium and large-sized companies are the primary users. A recruitment outsourcing want is often favored for employers needing talent acquisition in specialized or technical areas, especially in a tight labor market.
In a marketplace where it cannot be easy to attract potential new employees, RPO can bring different perspectives, skills, and attention to workforce planning while, at the same time, freeing HR staff to focus on internal tasks and other business needs. It’s old news that locating, hiring, and retaining top talent is HR’s No. 1 challenge. Most find it difficult to outsource suitable employees.
However, the vast changes stemming from the pandemic’s impact on remote work and many people’s reassessment of their personal life choices, not to mention the “great resignation,” have exacerbated these perennial challenges. With that in mind, this article will look at what RPO entails, how it works, its benefits, and how AI is transforming the talent acquisition process.
Understanding What The Recruitment Process Outsourcing (RPO) Is All About
According to TechTarget, Recruitment Process Outsourcing (RPO) is when an employer turns the responsibility of finding potential job candidates over to a third-party service provider. The RPO method is designed to bring qualified candidates to a potential employer with minimal human resources (HR) staff involvement. Usually, an employer looking to fill open positions signs an RPO contract.
In particular, the outsourcer is responsible for finding, screening, and assessing suitable candidates. In a tight labor market—not easy to attract potential new employees—RPO can bring different perspectives, skills, and attention to workforce planning while, at the same time, freeing HR staff to focus on internal tasks and other business needs. But it’s still marred with some systemic issues.
Such as the shortage of child and family care with its outsized effect on women’s employment, the ongoing COVID-19 Pandemic toll on workforce participation and productivity, the continual healthcare professionals’ stress, and the unknown long-term COVID and monkeypox effects that present further issues. The ultimate goal in any organization focuses on employee retention.
The aim is to keep productive and talented workers and reduce turnover—by fostering a positive work atmosphere to promote engagement. It also includes showing appreciation to employees, providing competitive pay and benefits, and encouraging a healthy work-life balance for the company workers. This helps retain them during low unemployment and heightened talent competition.
How Business Recruitment Process Outsourcing (RPO) Program Works
The Recruitment Process Outsourcing (RPO) services program typically starts with an RPO agreement outlining the project’s scope, timing, and cost. The agreement can include other stipulations, such as that all recruited applicants are exclusive to the hired client and can’t be shared with other clients. Aftward, the company’s HR management staff, and the RPO service provider will meet.
Remarkably, they’ll meet to create or discuss job descriptions. From there, the recruitment agency advertises the job opening using its recruiting methodologies and technology or the client’s techniques and systems. It’s important to realize that social media recruiting is a large part of the recruitment process outsourcing program. As resumes arrive, the outsourcer assesses them.
After accessing the candidates, the outsourcer circles back with the employer if disconnects indicate the job description needs to be tweaked. In addition, the recruitment process outsourcing team also gathers and screens applicants using an Applicant Tracking System (ATS) that tracks and logs each applicant through the process. They make decisions based on the screening process results.
An RPO team identifies top candidates for the employer to vet—they then often facilitate the interview process, setting up interviews with the leading candidates. The outsourcer also sometimes makes the first offer, facilitates negotiations, and handles the early onboarding of new hires. If the process is successful, the employer will merely need to interview a few highly vetted candidates.
A Recruitment Process Outsourcing (RPO) Program Vs. Internal Recruiting
In many ways, an external recruitment process outsourcing agency working for a staffing company operates like an internal recruiter employed by an organization. But some key recruitment differences are worth mentioning. For instance, when a company hires a preferred recruitment process outsourcing provider, it may lose some control over the initial hiring and recruitment process.
However, in some cases, outsourcers bring specialized knowledge about an industry, job function, or recruitment technology, such as the latest ATS tools for business integration processes. Such knowledge can be helpful in the hiring process. Conversely, internal recruiters are likely to understand the organization and its culture well, meaning there is less chance new hires won’t fit in.
Realistically, many organizations consider processes performed the same or similarly from company to company, such as payroll and accounting, as promising candidates for RPO. Still, regarding expertise, there is an ultimate experience capacity where the provider has specialized knowledge of the client’s industry, strong relationships with talent pools, and pipelines in the appropriate fields.
Eventually, this step requires strong business process management and a good understanding of the processes within the organization. However, HR departments have finite resources for recruiting and hiring, whereas a recruitment process outsourcing provider can offer scalable capacity as a client’s needs grow. Moreover, there are many advantages of recruitment outsourcing.
- Scalability: This enables the provider to adapt and handle any size of a recruitment project.
- Flexibility: It’s a unique model that offers different approaches that can be adapted to a client’s budget and needs.
- Technology: Some capabilities include aggressively using advanced, automated recruitment technologies such as ATS.
- Collaboration: It openly involves clear communication and cooperation on unique recruitment needs and long-term talent acquisition.
Technically, RPO and BPO have their roots in the manufacturing industry. Manufacturers hired third-party vendors to handle parts of their Supply Chain Management (SCM) programs after determining they could bring more skills, speed, and cost efficiencies to those processes than an in-house team could deliver. Over time, organizations in other industries adopted the practice.
In most cases, to retain employees, many organizations use human resources technology for recruiting, onboarding, engaging, and recognizing workers. As well as offering more work flexibility and modern benefits like physical and financial wellness programs. Today, its use has expanded, with for-profit businesses, nonprofits, and government agencies outsourcing various services.
The Recruitment Process Outsourcing (RPO) Program Business Benefits
For a successful recruitment process outsourcing, startup companies, for example, often need to outsource back-office and front-office functions—because they do not have the in-house resources to perform them. Likewise, an established company may opt to outsource a task it had been performing after determining whether a third-party service provider could do the job better or cheaper.
On the one hand, some organizations outsource an entire function, such as the HR department, to a single vendor. On the other hand, some companies outsource only specific processes within a functional area, such as payroll processing, while having their team perform all other HR processes. But organizations engage in business process outsourcing for two main areas of work.
They are as follows: Back-office functions and Front-office functions. Back-office functions, sometimes called internal business functions, comprise support operations, including accounting, Information Technology (IT) services, human resources (HR), quality assurance, and payment processing. Front-office functions are processes and business operations that serve or co-relate.
Such as between existing and potential customers, including customer relation services, marketing, and sales. In addition, some companies also outsource strategic tasks, such as data mining and data analytics, which have become essential elements for maintaining a competitive advantage in a digital economy. However, other most commonly outsourced service processes exist.
- payroll and accounting
- administration and customer support
- IT management and computing services
- production and manufacturing
- marketing, research, and sales
- shipping and logistics
According to Deloitte’s “2021 Global Shared Services and Outsourcing Survey Report,” IT, finance, and payroll are the most frequently outsourced functions. In its report, Deloitte found that organizations have various reasons for outsourcing.
Some quick stats:
- 88% of the respondents cited standardization and efficiency of processes;
- 84% cited cost savings;
- 73% cited driving business value;
- 61% cited digital agenda acceleration;
- 59% cited developing capabilities; and
- 36% cited overall business strategy and plans.
Sometimes, an organization must identify the best vendor for the work and shift the position from in-house to an external provider. This requires a significant change in the management, as the move to an outsourced provider generally affects staff, established processes, and existing workflows. The shift to an outsourced provider also affects the organization’s finances in one way or another.
Not only in terms of shifting costs from the internal function to the outsourced providers but often in terms of corporate taxes and reporting requirements. As a result, the organization may also need to invest in new technology to enable a smooth workflow for the outsourced provider. Markedly, the extent and cost of that technology depend on the scope of the outsourced function.
It also depends on the maturity of the technology infrastructure at both enterprises. For such and other reasons, hiring an RPO provider is considered one of the best strategies for successful recruitment. Perse, a list of requirements and a detailed scope of work for outsourcing is vital. A practical outsourcing recruitment tasks strategy provides organizations with many benefits.
The main benefits:
- Recruitment expertise. RPO is beneficial for companies that don’t have or aren’t satisfied with their talent acquisition teams.
- Cost savings. In some cases, hiring an outside staffing agency can cost less than hiring an internal team for recruiting and hiring.
- Efficient resource use. Outsourcing saves HR and other hiring managers time and energy.
- Compliance. RPO providers know and understand changing regulations, helping employers stay current on compliance issues.
- Positive candidate experience. RPO services often have strong relationships with talent pipelines and can help the employer build its brand recognition and reputation with a positive candidate experience.
- For finding hard-to-find candidates. An outsourcer can help an employer stand out to high-quality candidates in tight labor markets and specialized fields, primarily through solid recruitment marketing.
- Advanced metrics. RPO teams can provide companies with advanced metrics, such as people analytics on hiring practices and forecasting future hiring needs.
- Technology solutions. Recruitment outsourcing firms often use state-of-the-art recruiting technology and practices, such as evolving social media platforms, that facilitate communication, provide positive hiring experiences, and fill positions faster than traditional recruitment processes.
- Diversity opportunities. Outsourcers partner with diverse organizations and networks that can help organizations find underrepresented talent and achieve Diversity, Equity, and Inclusion (DEI) goals.
In addition, recruitment process outsourcing also supports globalization as organizations expand into other countries; thus, standardizing sourcing, hiring, and onboarding processes is essential. Equally important, machine learning, natural language processing, and RPA can source candidates faster, match their skills better and vet them with less bias.
How AI Is Transforming The Talent Acquisition Process For Businesses
All is not bleak for HR teams facing employee volatility, though, as advancements in AI have increasingly been applied to talent acquisition and other parts of HR. While talent acquisition vendors tentatively poked their toes into AI pre-pandemic, they used the time to create “smart” deep-learning platforms that underlie their cloud talent cloud applications. Today, AI is a ubiquitous tool.
Ultimately, AI is increasingly making inroads in HR processes and employee management, specifically in easing issues in sourcing, hiring, onboarding, learning, and the overall employee lifecycle. For example, iCIMS, a talent management software provider, uses an ensemble AI methodology that learns from employer and job-seeker activity over more than 4,000 customers.
As well as hundreds of millions of data points across job openings, applications, and hires. The benefits are twofold: AI-powered systems can deliver expected information faster and more efficiently and provide insight into otherwise apparent areas. Applications’ ability to use machine learning to continually “learn” and adapt is fundamental to any AI program.
It’s a helpful tool for sourcing, hiring, and managing employees. Realistically, AI is not a ”product,” or a “thing” that an HRIS professional would procure. It is, rather, an underlying platform or infrastructure on which specific products, such as a recruitment system, are built. Implemented in software, an AI platform consists of various technologies, helping businesses simplify tasks.
Some topmost tools include:
- Machine Learning (ML) in human interactions
- Natural Language Processing (NLP) in contexts
- Predictive Analytics in data mining
- Augmented Reality (AR) in warehousing
- Virtual Reality (VR) in the gaming industry
- Robotic Process Automation in storefronts
- Autonomous Product Processing in the motorvehicle sector
Collectively described as an “engine,” AI can support a business process across the enterprise, creating efficiencies in supply chain management, customer relationships, product production and delivery, and business planning, to name a few. An AI engine analyzes data — ordinarily an immense amount — then decides or recommends what should happen next to complete a task.
Some products use multiple engines to improve reliability. The data could be in resumes, employee profiles, patient records, images like MRIs and X-rays, production schedules, employee promotion rates — basically anything. A company has several recruitment approaches, so organizations must consider the following questions before picking one.
- Recruitment Times. Does the organization have short- or long-term recruiting needs? For instance, if a company is generally satisfied with its internal recruitment process but has a new product launch coming up or is opening a new branch, it might need a project RPO solution.
- Hiring Practices: Is the organization dissatisfied with its hiring process and needs to transform how it recruits? If so, it might require an on-demand or end-to-end solution. A selective RPO approach might work if a company is only dissatisfied with its sourcing.
- Investment Cost: Is hiring an RPO provider cheaper than relying on an internal HR department? Companies need to do the math to answer that question. Be sure to include how freeing HR’s time to focus on other tasks affects the cost calculation and the type of solution selected.
Be that as it may, our Web Tech Experts Management Team advises enterprise executives to identify functions that can be outsourced and then determine if shifting that task to an outsourcing provider makes sense.
How Artificial Intelligence Can Be Used In A Talent Acquisition Process
Enterprise executives opt to outsource for a variety of reasons. Those reasons vary based on the organization’s type, age, size, market forces, and economic conditions. This process typically starts with enterprise leaders identifying specific functions or business processes to outsource to save money, gain flexibility, improve performance, and redirect resources to its core business.
Business leaders then consider whether one vendor should handle all the work being outsourced or whether contracting multiple providers for the various tasks would deliver the best value. For example, a company could outsource most of its HR functions and either contract a single provider to perform all the outsourced processes or hire one for payroll and another for admin.
In layman’s language, those considerations should lead to a list of requirements and a detailed scope of work for outsourcing. For one thing, most organizations use those to shape a request for a proposal and share it with vendors. These vendors can then determine whether they can meet the requirements, at what price, and with what value-adds. It must choose the type of contract.
This contract defines the kind of employees it wants to hire, especially once an organization has selected the talent outsourcing provider or employee acquisition process provider. The rapid adoption of AI-powered HR technologies is expected to increase. This is because Artificial Intelligence tools effectively enhance productivity levels and improve talent acquisition results.
1. Inventory Tracking
While every organization has a website to help them achieve their talent acquisition goals, many organizations rely on Applicant Tracking Systems (ATS) to track and inventory all the resumes and applications they receive. Notwithstanding, Artificial intelligence (AI) technologies are now a core component of the best ATS systems, and they can dramatically enhance their performance.
AI technologies today are helping professional recruiters to identify the best candidate more accurately. In addition, they are also assisting recruiters to determine the best candidates in a fraction of the amount of time it would ordinarily take using traditional processes. For example, one of the most time-consuming elements of talent acquisition is the time it takes in a recruitment process.
A recruiter has to sift through a pile of resumes for a given position when they know that many of the CV profiles will be from less-than-optimal candidates. This is where the connection between AI and talent acquisition takes place. Eventually, AI-driven technologies can provide, in seconds, what may have taken days for a recruiter to complete only a few years earlier.
2. Job Descriptions
Recruiters can’t be expected to know everything about the nuances of job requisition language, especially new recruiters or recruiters for highly technical positions. What are the keywords in a given field that attract the most qualified responses? Which words unintentionally signal gender preference? This is where AI comes into play.
Competitive talent acquisition products for several years have deployed intelligence that reviews linguistic choices and suggests alternatives. For example, if a recruiter is writing a req for a welder, and in their experience, all welders were male, the language may be unintentionally biased toward male applicants. The AI engine shouldn’t have the same bias.
As in all cases, it is necessary to apply a human eye to the results because if the AI data set consists only of male welders, the engine, looking at features that tend to surround welding skill, might conclude erroneously that other male traits are essential to being a proficient welder.
3. Vacancies Posting
CareerBuilder claims that its AI helps a recruiter create job postings five times faster. According to the company, the platform provides a candidate appeal score to help recruiters gauge how effective a post will attract applicants, increasing applications by 175%.
CareerBuilder, a hiring industry veteran, says its AI learns from data from more than 2.3 million job postings, 680 million unique profiles, 310 million resumes, 10 million job titles, and 1.3 billion skills. Recent AI tools can predict the salary range from a job posting that doesn’t include salary data, potentially giving applicants more interview ammunition than recruiters intended.
4. Candidate Sourcing
Starting with the wording of requirements in the job description, the AI engine can expand the search beyond the exact wording in the job post to related industry-specific language and terms. Unlike a simple word-matching algorithm, AI-enabled sourcing provides a semantic search by intent or meaning.
In addition, the concept of skills adjacency is addressed through the deep learning that permeates AI systems. Suppose a candidate knows how to do something. In that case, the software can infer the prerequisites of that skill or knowledge and determine the likelihood of the person having a similar but different skill based on the analysis of millions of data points.
Candidate sourcing is facilitated with a broader, more inclusive pool of candidates that humans may miss, and over time can answer some questions.
Such as the following:
- First, what are the best sources of high-performing candidates who will stay on the job for over two years?
- Secondly, what are the best sources of women who have been promoted to management positions?
- Still, what sources yield healthcare workers who can fill the position on day one?
When sourcing candidates or, later, evaluating them, AI can infer skills or interests from, for example, prior jobs held, volunteer positions, or education. Because the program is always learning, it retains associations it can apply in different recruitment scenarios. This can increase the possible positions within an organization for which the candidate or a current employee may be suited, even if they did not apply.
5. Applicants Screening
In candidate screening, as in sourcing, the kinds of data from which a machine learning program can learn rules and patterns may be varied and include past or current employee resumes; competency or skill models that are tied to the specific industry or task; incoming resumes or records of employee success or longevity based on skills, education or even location.
It may include art or design portfolios, physical objects, or electronic samples such as videos and games. External data sources such as national or international salary ranges, U.S. Bureau of Labor Statistics job classifications, etc., can also be fed into the “brain” that is AI. Machine learning can then help answer questions like “What candidate traits correlate with long-term position success?”
Some firms use AI-powered video games to ascertain the fit between the candidate’s personality or working preferences and the position. Because candidates often want to apply to a company rather than a specific job, AI can recommend vacant positions relevant to each candidate’s skill set, education, or soft skills.
The General RPO Cost Models:
An RPO provider can perform some of a client’s recruiting and hiring tasks. The following are the three main RPO engagement types:
- On-demand is where a provider recruits an agreed-upon number of roles over a fixed period.
- Function-based, also known as project RPO, has the outsourcer take on only a part of a company’s recruiting. For instance, a project RPO engagement could staff just a company’s sales department or fill positions for a unique initiative such as a product launch.
- Complete, or end-to-end, is where the outsourcer conducts the entire recruitment process.
Within these three engagement types, RPO providers offer a variety of cost models that can be customized for an organization’s pricing, recruitment, and scalability needs.
- Cost-Per-Hire: Some models charge a fixed fee per hire for each type of position.
- Management Fee: Other models charge a fixed fee for recruiting an agreed-upon number of positions.
- Cost-Per-Slate: A fee is paid for a set number of qualified candidates the outsourcer supplies.
- Cost Per Transaction: Employers are charged separately for each aspect of recruitment, including interviews and background checks.
- Selective Cost: An RPO provider helps an organization with its internal recruitment process, such as improving its candidate sourcing and screening processes.
- Cost Per Resource: This is where resources assigned to a client are paid at a fixed monthly rate.
- Hybrid Approaches: They combine two or more recruiting and hiring cost models.
Additionally, organizations must draft with their vendors the service-level agreement detailing the quality of the provided services and the metrics for determining success.
The Notable RPO Drawbacks:
Despite benefits, outsourcing the hiring process comes with some potential drawbacks,
Including the following:
- Lack of knowledge. RPO providers might not properly understand the company, company culture, or industry they’re hiring for. This lack of knowledge could lead the outsourcer to vet and suggest candidates that aren’t good fits for the employer.
- Loss of control. Using an RPO provider requires the employer to relinquish direct involvement in the hiring process, which can lead to frustration for hiring managers and HR staff.
- Dependency. Organizations that use RPO organizations might have difficulty moving recruitment back in-house or finding an alternative approach after experiencing poor results or quality declines in their RPO provider.
- Cost. The cost of hiring an outsourcer won’t always compare favorably to hiring in-house staff. For some organizations, tiny ones, outsourcing might be more expensive.
- Technological integration. Technological integrations involving data, security, and compatibility can be a challenge for companies if their RPO provider uses processes and technologies that are not compatible with their own.
As you can see, employee retention is essential to team building and cohesion in the workplace so workers can come to trust and depend on each other. Diminished productivity and competitive advantage are among the most significant losses when talented employees leave an organization. Still, high employee turnover rates can harm an organization’s ability to carry out its mission.
Partially, this is due to impairments to continuity, loss of institutional knowledge, and high costs of replacing departing workers and training new replacements. Employee departures can also lower morale and prompt more employees to leave the organization. Another adverse effect of turnover is the impact on customers who notice they’re dealing with a continual flow of new faces.
Notwithstanding, high turnover typically signals consumers that there’s something wrong with the organization or brand. As a rule of thumb, maintaining a positive employer-employee relationship is crucial. Similarly, in this era of AI technology, quality business workplace team engagement and employee experience are essential strategies for retaining valued workers.