Difference between RPO And Traditional Recruitment

RPO and traditional recruitment agencies are quite distinct. Traditional recruitment agencies can help you fulfil your short-term hiring goals. But if you want to focus on achieving your long term hiring objectives, then you must opt for an RPO partner to achieve far better and long-term recruiting results.

In the industry of Human Resources, one of the most frequently asked questions is “What is the difference between RPO and traditional recruitment?” Today, we will clear your doubts about RPO or Recruitment Process Outsourcing and traditional recruitment, and how they differ from each other.

Simply put, traditional recruiters for recruitment agencies and RPO partners employ very different recruitment strategies. These include:

  • How they discover top candidates for the business
  • Their service offerings
  • How they charge for their service offerings

Traditional recruitment agency

The main purpose of the traditional recruiting firm is to connect employers with the employees. These agencies mainly do their recruitment process under the brand name of the employer, and their service fees are based on the number of employees they have helped successfully recruit for the employer.

This implies that rather than advertising jobs on online portals or focusing on employee referral plans for acquiring candidates, an employer can hire a recruitment agency which will help them find the type candidates they seek. Once the hiring agency identifies the right candidate, and the candidate joins the company, the agency gets its remuneration. This policy makes recruiters more motivated to hire efficiently and quickly move to different hiring opportunities. This way, the job positions get filled quickly, as many recruiters compete to fill up the given job positions. For a business, this can become an effective hiring option initially.

However, as the business grows and expands, this strategy may not pay rich dividends. This is because, though it will help you hire quickly, it won’t provide you with long-term recruitment solutions your business needs during expansion. More importantly, you would want quality employees who maintain a long-lasting relationship with the company.

Recruitment Process Outsourcing

RPO or Recruitment Process Outsourcing is a method of outsourcing your business process to external entities. Here, the employer hands over all or a portion of their hiring processes to an external recruitment agency. These types of agencies are commonly termed as RPO Partners.

RPO partners offer their recruitment services or work as per the staff, technology, reporting and methodologies of the company. These agencies assume a role that is much more than just finding the right candidate and quickly filling up the position.

Unlike any random contingent search provider or recruitment agency, the RPO partner takes full responsibility of the entire cycle. Right from conceptualising and designing to management and execution of the recruitment processes. Further, they are accountable for the results of the processes.

The RPO partner provides a dedicated recruitment team which focuses on the crucial recruitment areas such as:

  • Finding the correct culture for candidates
  • Reducing costs on premium labour
  • Enhancing employee retention

Thus, an RPO partner is the sole recruiting partner of the employer who is entirely responsible for all the recruiting efforts, right from conceptualisation to the final result. They also provide expert insights on creating an ideal recruitment strategy for the company.

Apart from the definition and overall functioning, there exist other significant differences between RPO and traditional recruitment. Let us look at them in detail.

Best fit vs. making placement

Traditional recruitment agencies measure their success with the number of placements they make. They accomplish this objective with the help of the candidates they source and charge the employer once the candidate gets hired successfully with the company. Thus, such agencies discourage employers from creating employee referral plans or other direct recruiting methods, as these programs will create a dent in their remuneration.

In contrast, the RPO partner facilitates the sourcing of candidates through all channels. Their primary objective is to find the best fit candidate for the jobs. RPO partners prefer to provide a long-term solution to the recruitment efforts of the company. They source applicants through employer websites, online job portals, employee referrals systems and their own networks. This way, the RPO partner opens up multiple avenues to source candidates, making the recruitment process more efficient and result-oriented. Therefore, the RPO partner not only helps with recruiting the best fit applicant from the available resources, but they also help create a positive employer brand.

Ownership of the candidate

As recruiting agencies get paid for every recruitment they do, they wish to “own” every candidate they have presented to the employer — forever! This implies that an employer cannot go back to the candidate pool later, when the need arises again, and hire an applicant that was presented previously by the agency, without paying the agency for the recruitment. This is particularly a problem once the recruitment contract has expired. This ownership fiasco complicates the process of hiring for the employer.

RPO partners do not believe in candidate ownership. They feel that employers own their job seekers, whether the RPO partner has sourced the leads directly or not. This simplifies the recruitment of the most-fit candidate.

Expense

Another significant difference between an RPO and a traditional recruitment agency is the way they bill the companies for the services they provide. A recruitment agency typically charges approximately 25% to 30% of the candidates’ salary, whom they help recruit.

For instance, if the recruitment agency is hired to recruit a job position that has a salary of Rs. 2,00,000/-, then the recruitment agency will charge approximately Rs. 50,000/- to Rs. 60,000/- to recruit for that job position. This means that it costs the employer Rs. 2,50,000 to Rs. 2,60,000 to recruit the candidate for the particular position, while bearing the costs of the company’s internal team which still does most of the heavy lifting.

RPO partners approach this situation quite differently. Since RPO partners are tasked to handle the entire or part of the recruitment process of the company, they charge monthly fees to handle all the hiring functions as entitled, along with transaction fees to recruit for the job positions. Considering all this, the total fees of the RPO is still comparatively lower by 65% to 70% than the overall fees of the traditional recruitment agency. Plus, the employer has the benefit of assigning other functions their internal human resources.

RPO and traditional recruitment agencies are quite distinct from each other, and the differences are huge and wide. The decision to sign on with the appropriate recruiting partner depends on the hiring requirements of the company. Traditional recruitment agencies can help you fulfil your short-term hiring goals. But if you want to focus on achieving your long term hiring objectives, then you must opt for an RPO partner to achieve far better and long-term recruiting results.

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Shalini L
Shalini L

One of the prime contributors for this blog, Expertise in Staffing and Recruitment, Content Strategist by Profession. A Music Lover & Traveller by Choice.

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