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Posted: April 05, 2012

A hiring trend that’s here to stay

Recruitment Process Outsourcing should be on your to-do list

Steve Ziegler

Recruitment Process Outsourcing (RPO) is a big trend today in the world of corporate hiring.  As Colorado companies continue to add employees as the economy stabilizes, many are moving toward the RPO model to recruit and retain top talent. 

RPO is a form of business process outsourcing (BPO) in which a company transfers some or all of its recruitment activities to a service provider. In most cases, RPO providers or executive search firms, manage the recruiting/hiring process from job definition through the onboarding of new employees.

With the labor market turning a corner, an uptick in hiring across several sectors, and competition for talent heating up, it’s a trend that many believe is here to stay. 

RPO began to evolve in the 1970’s, particularly as Silicon Valley companies were vying for IT talent.  Labor markets became increasingly competitive and RPO became a more acceptable option for companies of all types.  In the 1980’s and 90’s, Human Resources Outsourcing (HRO) became popular as employers chose to outsource payroll, taxes, and benefits management.  Employers began to realize that recruitment could also be outsourced, and the RPO industry was born. 

Today, the rapidly-growing RPO industry is estimated at $1.4 billion. In a recent 2011 Staffing Industry Analysts’ contingent buyer survey, 30 percent of respondents already engage an RPO in some way, while another 23 percent are seriously considering it within two years.  The opportunity has made the RPO market very competitive.  Some firms are completely dedicated to RPO services, while others provide complimentary services such as staffing and placement.  RPO services have also become more complex and sophisticated, thanks to the emergence of recruitment technology, as well as employers’ global hiring needs.

We’ve worked with companies who’ve see numerous benefits as a result of the RPO process, including a direct reduction of their cost per hire.  RPO providers can improve “time-to-hire,” helping employers acquire top talent more quickly, especially in highly competitive industries such as technology.  RPO may also increase the quantity and quality of candidates, reduce employers’ overhead costs, improve governmental compliance, and most importantly, improve employers’ competitive advantage through exceptional talent.  A solid RPO provider will deliver metrics on every aspect of the recruitment and hiring process, and provide a technology platform at the core of their solution. 

For many companies, the RPO model is likely to lower business overhead and offer a consistent approach to the hiring process by using an established method for employee recruitment, even as hiring ebbs and flows.

A growing number of executives plan to step up the hiring process as the U.S. economy continues to improve.  Colorado’s economic index remains strong and we are seeing firsthand the increased optimism in the marketplace.  We are currently working with both local and national companies who are significantly growing their workforce and seeking talent at all levels.  

According to the Metro Denver Economic Development Corporation, “A recent analysis by the Brookings Institution shows Metro Denver ranked first among large U.S. metros for population gain in the 25- to 34-year-old age group between 2008 and 2010, and Denver ranked seventh on Penske Truck Rental’s list of the 10 most popular moving destinations in 2011.”  Compensation data provider PayScale Inc. ranked Metro Denver fifth among the nation’s top 10 “Hotspots for Startup IT Jobs.”

The landscape in Colorado has never been more suitable for recruitment process outsourcing as hiring increases and talent acquisition becomes increasingly competitive.  As this trend continues to gain popularity and momentum, we’ll see more and more local companies engage. If you’re a CEO or business owner in a growth mode, hiring between 10 and 100+ employees, RPO may be the next best thing on your to-do list.
 

Steve is co-founder and Chief Strategy Officer of Triworth, a Denver-based nationwide talent acquisition firm focused on recruitment process outsourcing (RPO), middle management and executive search.  Contact Steve at SZiegler@triworth.com or 303.344.4101.

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Readers Respond

The objective of creating a successful client relationship with a vendor who specializes in RPO is to ensure they are a team that you can incorporate into the 'corporate culture" early on. It may mean a little more work for the hiring managers & HR, but in order to understand the corporate culture you have to be 'in' the culture to build and adapt accordingly. Perhaps,having an on-sight recruiter in your office once, twice a week, mtg. with the hiring managers, understanding the personalities and engaging them, if we aren't building relationships with our vendors, then how can we expect to build successful professional relationships with our new hires. Suggestion-set up a contract that works for your organization. Contracts aren't 'one size fits all". Overall, letting the vendor 'in' helps reduces time to competency and definitly demonstrates impact to business by doing so. By S.Eber on 2012 04 17
Great read! Although I do see RPOs as a cost effective measure in some cases, the most ideal situation is to have a strong internal recruiting department. I will only hire recruiters with an agency background. Corporate recruiters are paper pushers and do not have the background to think outside the box, manage hiring manager’s expectations, or understand the service part of recruiting. The only point in the article that is misplaced and a bit curious is the notion that executive search firms work like an RPO firm. This could not be further from reality. I have never worked or heard of an executive search firm do anything more than recruit, submit candidates, schedule interviews, and maybe close the loop on compensation to make the offer stage less bumpy. RPOs are soup to nuts and true partners, executive search firms are nothing more than higher paid contingent/retained firms. By Karen Smith on 2012 04 05
Going with an RPO as your default recruiting function is a bad move. When a fast ramp up is needed an RPO is great but companies should never outsource the entire recruiting function. An outside recruiting function will never completely understand the business as an internal recruiting function would. The #1 thing that makes a "great" candidate a "perfect" candidate is cultural fit. An outside RPO will never understand the un-spoken aspects that go into understanding a company or department’s culture. No surprise this article was written by the Chief Strategy Officer of an RPO firm. By Tom Elder on 2012 04 05
Great points! Enabling a company to focus on their core competencies is critical and very vital and just as you've seen companies outsource accounting, shipping, etc... Sourcing and Screening candidates can also be left up to professionals. By Blair Stock on 2012 04 05
I have seen this used very effectively by a number of large local companies who have determined that a rapid staffing plan is best suited to an outsourcing firm as opposed to trying to create the process and staff in house only to be left with unneeded staff as the requirements diminish. The ROI is realized not only in the actual costs of obtaining the staff, but more importantly in the quality and fit of the employees hired during the process as a result of the resources skill sets of the RPO company. The key is to research the company you are considering and verify their results at all levels - hiring manager, employee, HR, ect. Great info... By Rick Miller on 2012 04 05
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