Is RPO the Answer to Labor Market Volatility?

Better than expected U.S. and Australian unemployment statistics have gotten many recruiting organizations around the world asking: how can we prepare to hire again in the near future with our remaining recruiting capacity? Recruiting teams have certainly not been immune to organizational displacements—quite a few teams are looking much leaner these days than a year ago.

While hiring internal recruiters is one option, some recruiting organizations are toying with the idea of recruitment process outsourcing (RPO). RPO (defined for our purposes as the transfer of process management for a critical mass of recruitment activities to an external third party) has seen an uptick in interest recently. Organizations are considering RPO as an alternative to hiring internal recruiters because they feel uncertain about labor market recovery: will the job market make a quick comeback or drag its feet, as it did in 2001 and the early 1990s? Using an RPO vendor, in theory, will allow organizations to effectively manage employee headcount and reduce costs in the event of continued market volatility.

When the Roundtable first evaluated RPO several years ago, results for RPO engagements—quality metrics (i.e., quality of hire, level of service to hiring managers), cost, and cycle time—were lackluster, at best. For instance, one main reason why recruiting organizations previously selected RPO was to reduce costs; however, only about one-quarter of the organizations using RPO services saw a decline in costs.

Lesson: working with an RPO provider doesn’t necessarily guarantee positive results. Be sure to do your due diligence by establishing clear baseline metrics in advance and understanding the repercussions outsourcing will have on every function, business unit, and candidate population that you plan to outsource. For selection and implementation support, check out our RPO resources (members only).

We recently kicked off a research initiative to evaluate the current state of RPO. If you are using or considering RPO, take 15 minutes to complete our survey.


Written by: Xi Chen