Why RPO – Why Now?

For those of us keeping a watchful eye on the staffing industry, the growth of recruitment process outsourcing (RPO) has been on our radar for more than a decade. Based on a recent survey, Staffing Industry Analysts estimates RPO is a $4 billion global market that is showing no signs of slowing down. So why are more and more businesses making the move to outsource their hiring processes? While each business case is unique, there are some common circumstances, both in the economy and in our industry, that have encouraged companies to move toward a RPO solution.

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Businesses have long relied on internal staffing functions and outside staffing companies to find qualified people to fill their open positions. From small businesses that lack the internal resources to conduct an adequate candidate search to large companies wanting to expand their talent pool, using a staffing agency is a commonly-accepted, readily-utilized business practice. This comfort level with staffing providers,combined with a stabilizing economy,helped to set the stage for the recent growth of RPO.

This is especially true for companies facing complex challenges like global expansion, acquisitions, mergers or other high-growth initiatives. All of these issues could spur the need to implement a RPO; especially if that growth strains already taxed staffing resources. A move to a RPO model gives companies the ability to rapidly scale their recruiting efforts, both with additional recruiters and pipelines of candidates, to meet increased demand. In addition, all the recruiting efforts of a RPO proliferates the client’s brand instead of marketing individual candidates to several companies as is the case with staffing agencies.

The rise of technology has played another important role in the move toward RPO. Many of the tasks that used to be controlled by internal staff are increasingly handled by technologies; making them largely self-service.Automation has allowed companies to reduce the administrative burden but has done little to affect the need for strategic planning and forecasting. The resources to handle these high-level tasks, plus access to the latest recruiting tools and technologies,are tactical advantages that remain firmly in the realm of HR service providers.

Another issue driving RPO is the recruiting of recruiters. Businesses looking to hire internal HR teams are finding it harder than ever to find top-quality recruiting talent. The increase of RPO providers has taken the best recruiting talent off the market. Companies find themselves hard-pressed to “woo” prospective recruiters away from highly-specialized RPO providers who can offer a compelling career track. This lack of supply is compounded by an increased demand for HR professionals as the economy continues to recover. In combination, these forces have created a talent drought that is driving companies to increasingly rely on RPO providers to meet their recruiting needs.

Another factor to consider is the significant cost savings that a RPO can deliver. These financial benefits are derived primarily from the contracts that govern the RPO relationship; allowing placements to be discounted based on volume and fee structures rather than the “one-off”pricing available through traditional staffing agencies. This ability to leverage long-term spend within a RPO program means companies can realize substantial hard savings with a measurable impact on their bottom-line.

All of these factors combined have played a large role in the changes the industry has experienced over the last decade. And while process efficiencies, compliance and cost savings are all important, the decision to choose a RPO partner is ultimately about gaining a knowledgeable partner that will support the company’s big-picture, enterprise-wide goals. This expertise and strategic thinking is the backbone of a successful RPO engagement and it will continue to be the defining difference between how hiring was done in the past and how it will be done in the future. It is a great time to be part of this industry and I am excited to have a front row seat on all the changes yet to come.

MORE: Can Technology Drive RPO Success?