Understanding Recruitment Process Outsourcing

Recruitment Process Outsourcing (RPO) stands as a strategic hiring model wherein an employer delegates the recruitment process to external third-party service providers, commonly known as RPO providers. Unlike traditional staffing companies, RPO providers take ownership of the recruitment process, essentially functioning as an extended recruitment team employed by an external service provider but dedicated to your company.

Navigating Recruitment Process Outsourcing Pricing

RPO pricing encapsulates the financial transactions between the employer and the RPO provider for recruiting employees based on in-house requirements. The diverse landscape of RPO pricing encompasses a range of static recruitment costs and additional fees associated with managing employees. This flexibility in pricing caters to the varying recruitment needs of both small and large-scale enterprises.

Diverse RPO Pricing Models

RPO pricing models are structured based on predetermined cost models, shaped by the nature of services provided, the duration of the contract, and the volume of hiring. Let's explore some of the common RPO pricing models employed by leading service providers:

Cost Per Hire Model:

In this model, the employer and the RPO provider agree on a standard cost per successful hire, typically presented as a percentage of the annual compensation. This model offers flexibility based on industry, position, and location, with the employer paying a variable fee for each hire.

Management Fee Model:

This model involves a recurring fee paid by the employer to the RPO provider on a monthly basis for managing hiring requirements. The fee increases with the number of new hires and often extends to employee retention efforts. Suited for long-term recruitment needs during hiring freezes or periods of low hiring volume.

Management Fee and Cost Per Hire Model:

Combining a monthly fee for managing employees with a percentage of cost per hire, this hybrid model provides comprehensive assistance for both recruitment efforts and ongoing employee management. Ideal for large corporations with constant recruitment and retention needs.

Cost-Per-Slate Model:

Charging a standard fee for each set of candidates proposed as suitable for open positions, this model assists in candidate sourcing, shortlisting, and profiling. It adds value by reducing the time spent on extensive interviews, making it beneficial for the recruitment process.

Cost-Per-Transaction Model:

Operating on project-specific rates, this model determines overall costs based on the time spent on completing a project or process. Suited for short-term hiring initiatives, employers pay a fee for each transaction or candidate interviewed by the RPO provider.

RPO Pricing vs. In-House Recruitment Pricing

In the ongoing debate between RPO pricing and in-house recruitment teams, the decision-making process involves careful consideration:

• For those leaning towards an in-house team, financial structuring should include calculations for recruiter compensation, training and development, travel, software licensing, and miscellaneous expenses.
• While RPO pricing is often favored for cost savings, it offers additional benefits, such as corporate branding, access to advanced hiring technologies, labor savings, and improved quality of new hires.

For employers considering international talent, legal considerations must be factored in, potentially requiring the setup of a local entity to comply with state and federal laws. The choice between RPO and in-house recruitment should align with both economic and legal requirements.

Frequently Asked Questions

Q. What is RPO cost?

A. RPO cost refers to the financial transactions between the employer and the RPO provider for recruiting employees based on in-house requirements.

Q. How much does recruitment process outsourcing cost?

A. Recruitment process outsourcing costs vary based on predetermined models reflecting the services provided, contract terms, and the number of employees to be hired.

Q. What are the different types of RPO?

A. Different types of RPO include the Cost Per Hire Model, Management Fee Model, Management Fee and Cost Per Hire Model, Cost-Per-Slate Model, and Cost-Per-Transaction Model.