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Pros and Cons of RPO: truLondon Live Blog

Michelle Krier works for an RPO in the US and she claims that her organisation have hired over 100 people in the last year; an impressive figure in a recession.  IT and Sales vacancies are driving this growth and companies are looking at RPO as a way of saving money in recruiting staff.  Kevin Wheeler works for an independent, not for profit Agency that represents RPOs.

First up we are going to crowd source for a definition of RPO: most people agree that it includes outsourced recruitment provision but some suggest that it includes the entire HR function. Typically it involves contract recruitment staff working on-site within an organisation impacting their hiring decisions. Jakob classes himself as a self employed RPO contractor as he works on site as an outsourced recruiter.

Michelle’s definition is that it is the recruitment process in its purest sense but RPO’s are becoming an extension of the HR department in the US.  They try to steer away from the outsourcing word as it scares HR folk and makes them think that they will lose their jobs.  They have moved into recruitment advertising and employer branding, providing contract HR assistants, all driven by customer demands.  RPO is evolving into HRO or HR Outsourcing.

Kevin suggests that companies previously went to RPOs out of desperation when they couldnt find the staff themselves but these days it is more about upskilling and downskilling as needed without having to lay off staff or find your own people.

SLA’s will include things like cost to fill, time to hire, quality of hire, although this latter metric is hard to measure and Michelle says that they try to steer clear of such KPI’s as they are outside the remit of the recruiter and are more talent management issues.

In the US “Insourcing” is defined as RPO where the HR/ Recruitment staff sit within the business but get paid by the RPO/ Agency.  This has become increasingly popular during the recession and most major corporates run their HR organisation this way.  IBM’s top thinkers suggest that companies are moving towards the day where only revenue generators and senior management work for the company, all support services are outsourced.

When you work for an RPO you are going to be treated as a professional, when you are internal you are nothing but an overhead expense and when times are bad you will be thrown out the door.  But is there a good argument to be made that RPOs cannot attract the best recruiters as they will not want to work for large “body shopping” RPOs.

What is the cost saving for a business in using RPO?  Michelle’s largest client saved over $1m, representing 40% of their costs.  Is this not down to better direct sourcing than RPO per se?  Yes, initially but they also make long term gains according to Michelle.  Kevin argues that cost is the worst reason possible to outsource, you outsource for efficiency, better service and a host of other reasons. But isnt this the main reason why firms look at it?  Yes, but once the corporates engage in dialogue with the RPO provider they start realising the value in other areas. Kevin concedes this point that cost brings them to the table but its not why people sign up and stay with RPOs.

It’s just not just large corporates who are turning to RPO, start-ups who have just taken on VC funding are looking to RPOs as a quick and effective way to get scale quickly.  They focus on what they do best and outsource areas such as recruitment and HR from the get go.

Michelle’s firm uses a “bench” model whereby they have a constant team of recruiters on the bench, ready to go who are hired once a new contract is signed.

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