Recruitment process outsourcing (RPO) is a form of business process outsourcing (BPO) where an employer outsources or transfers all or part of its recruitment activities to an external service provider.
The Recruitment Process Outsourcing Association defines RPO as follows: "when a provider acts as a company's internal recruitment function for a portion or all of its jobs. RPO providers manage the entire recruiting/hiring process from job profiling through the on boarding of the new hire, including staff, technology, method and reporting. A properly managed RPO will improve a company's time to hire, increase the quality of the candidate pool, provide verifiable metrics, reduce cost and improve governmental compliance".
The RPO Alliance, a group of the Human Resources Outsourcing Association (HROA), approved this definition in February 2009: "Recruitment Process Outsourcing (RPO) is a form of business process outsourcing (BPO) where an employer transfers all or part of its recruitment processes to an external service provider. An RPO provider can provide its own or may assume the company's staff, technology, methodologies and reporting. In all cases, RPO differs greatly from providers such as staffing companies and contingent/retained search providers in that it assumes ownership of the design and management of the recruitment process and the responsibility of results."
Benefits of RPO
RPO has lowered the costs of recruitment because the economies of scale enables them to offer recruitment processes at lower cost while economies of scope allow them to operate as high-quality specialists. Those economies of scale and scope arise from a larger staff of recruiters, databases of candidate resumes, and investment in recruitment tools and networks. RPO solutions have changed fixed investment costs into variable costs that flex with fluctuation in recruitment activity. Companies may pay by transaction rather than by staff member, thus avoiding under-utilization or forcing costly layoffs of recruitment staff when activity is low.
There is also higher quality, because the commercial relationship between an RPO provider and a client is likely to be based on specific performance targets. With remuneration dependent on the attainment of such targets, an RPO provider will concentrate their resources in the most effective way - at times to the exclusion of non-core activity. Traditional internal recruitment teams are less likely to have such clearly defined performance target