Why RPO’s don’t solve all your Recruitment Programs

Recruitment Process Outsourcing (RPO) became a fancy industry term for outsourcing recruitment  about 20 years ago 😊. 

RPO vendors boasted they could outperform your internal recruitment function and provide higher quality service, faster and at less cost.  They incubated the notion that “recruitment” was not a “core” function of your business and that it made sense to outsource it.

I have been following and analyzing performance of RPOs since 2002.  And while there can be significant ROI when outsourcing recruitment services when you:

  • Don’t have time or have a spike in hiring needs
  • Have a Confidential Search
  • Lack expertise to fill a position and want to deploy your recruiters are core positions
  • Need competitive intelligence

I have not seen any evidence thru my research that an RPO can outperform a properly funded, well managed internal recruitment organization. 

Now before I continue, I want to make a key point.  “They cannot out perform a properly funded, well managed internal recruitment organization.” 

On too many occasions, I come across an organization that has engaged an RPO.  I would ask them why they decided to do engage them, and they often would say. . . “because our internal team was not getting the job done”

Analyzing the situation further, I find that recruiters were managing 50-100+ requisitions at any given time, they were not investing in recruitment marketing strategies, and not efficiently managing the process.  So instead fixing their internal strategy, they would outsource at MORE cost with hopes for a better solution. 

HMMM?

Here are some insights as to why I don’t think traditional RPO solutions are usually the best solution:

  • To get the right cost, they usually hired inexperienced recruiters – Remember the old cliché “If it sounds too good to be true, maybe it isn’t true”?  At the price points most RPO’s charge (4-7% of salary), they must create a very low cost of delivery solution. Most recruiters are very entry level and get paid a low wage. Many use offshore recruitment solutions.  In either case, they are usually not Expert Recruiters performing at the Top of their Profession (see article on this topic on our site – www.roguesearch.com).   This can provide a variety of performance issues including the inability to recruit top talent for difficult to fill positions, poor candidate experience, and poor hiring manager experience.
  • Solution is built to fill the 70% of positions that are easy to fill, not the 30% that are difficult and critical to fill – Because of the cost of service, recruiters usually cannot recruit top talent for difficult to fill positions and/or don’t invest the time to fill these positions (because they are too hard to fill for the low fee %).  So, they end up filling the easy to fill positions (which you probably could have done internally) and the difficult to fill positions stay open!  Lean Human Capital has been benchmarking Healthcare Recruitment performance for over 10 years (link).  They have found that about 70% of positions that are easy to fill usually get filled in 23 +/-days.  The 30% that are difficult to fill take over 120 days (4 months).  We find this same type of performance consistent with RPO solutions.
  • An ‘Outsourced contractor’ preaching . . . “come join our team” – This one is personal to me.  I am a 100% believer that hiring top talent is the most important “core” job of any organization.  It should be personal.  Most of us spend more time with our co-workers than we do with family and friends at times 😊. So, to have a “outsourced” worker boost about why it is so great to join the “family” when they technically aren’t seems a bit strange to me.  But maybe this is just me 😊.

As mentioned, outsourcing recruitment should be a part of your recruitment strategy as outlined above.  But to outsource your entire recruitment function (or big chunks of it) to an RPO probably isn’t!  We have no evidence that this solution outperforms a properly funded, well managed internal team with respect to quality of service, speed, costs or quality of hire.