What Recruitment Process Outsourcing (RPO) really is, and why it’s the best-kept secret for startups.
We’d call this article The Hiring Solution Staffing Firms Don’t Want You To Know, but we don’t want it to be mistaken for clickbait.
If you don’t know about Recruitment Process Outsourcing (RPO), you might be spending too much time and money on low-quality hires. You’re probably missing out on a turnkey solution that’s allowed some of our clients to leave competitors in the dust.
Unfortunately, RPO isn’t well known, and some traditional staffing firms wouldn’t mind keeping it that way.
Staffing agencies and internal recruiting teams are the most common options for recruiting tech talent. They can be a helpful, temporary solution. But they can be time consuming and expensive. They can limit your options and tie you to high, unpredictable contingency fees, or saddle you with employees you don’t need.
When you work with an online recruiting platform or traditional staffing agency, you might spend a lot of money, and give control over your hiring process to a third party. You could still find yourself weeding through unqualified candidates or figuring out backend processes. The agency might avoid difficult hires, and they’ll often send you the same candidates they’ve sent to 10 other companies.
An internal recruiting team isn’t always the right solution, either. You might go months without making a single hire, only to suddenly need more hires than a single recruiter can handle.
So what is Recruitment Process Outsourcing (RPO) and how can it help?
I’ll start with the formal definition, then give you the TLDR. Here’s the official definition of Recruitment Process Outsourcing:
Recruitment Process Outsourcing (RPO) is a recruiting model in which a company increases its hiring reach, and efficiency, by subcontracting out most (or all) of its backend recruiting work to outside specialists — usually over the course of several months or years.
Unlike the one-time, transactional services of traditional staffing agencies, an RPO firm will typically integrate with a company’s internal processes, embed themselves in your culture, set up an Applicant Tracking System (ATS) if needed, and conduct candidate searches, outreach, and pre-screening. They submit only the most qualified, pre-vetted candidates for your internal team for review.
If that sounds like a mouthful, here’s the short version. RPO is like an internal recruiting team in your back pocket. Traditional staffing agencies are like old taxicabs: you flag down the closest random one you can find, hope they get you close to where you’re going, and never see them again.
RPO is like Uber: right in your pocket, personalized to you, connected the entire way.
Why would I want to outsource hiring? I want to control such important decisions.
There are a few common objections to RPO models. One of the most common concerns hiring managers have is whether RPO will take away control. Hiring the right people ranks as one of the most important activities leaders do. You might be concerned about handing over such a vital process and tying yourself to yet another 3rd party.
You’re right. Recruiting is one of the most important things you’ll do, especially if you’re running an early-stage startup. You don’t want to leave it in the hands of strangers, and you don’t need extra hassle in your schedule.
So how does RPO help?
An RPO model is best suited to protect you from both of these issues. RPO is integrated, relational, scalable, and gives you access to extensive tools, networks, and databases. You increase your reach and the quality of the candidates you receive. At the same time, you remain in control of your hiring decisions. RPO is usually easy to scale up, down, or switch off and on as needed.
Speaking of control, RPO allows you to be you. No more cold emailing/calling people. An RPO solution allows you to focus on your job. Without it, you’d spend hours each day combing through resumes, sitting through initial phone screens, and figuring out backend operational work like scheduling and applicant tracking. With RPO, you can do what you want, and know that you’ll get a curated list of top candidates. RPO keeps hiring decision-making where it belongs — with you.
Hiring key hires shouldn’t be like ordering a burger at a drive-through or waving down a random taxi. RPO firms know you, your needs, your culture, and your tech stack. An RPO firm ensures that you get candidates that fit your vision. They even market you to the local community and provide a level of expert feedback you couldn’t find any other way.
And when you need to fill positions fast, you won’t have to wait months to find the right people. Your RPO team will be standing by with a list in hand.
An RPO makes you competitive with Fortune 500s. Big companies are able to pour resources into large recruiting teams. Now you have access to the same resources, at a fraction of the price.
RPO is often the best solution for startups.
Startups face a unique set of challenges. The hires they make will set the tone and define your company’s product and culture for years to come. At the same time, when you’re a technical founder:
· You typically don’t have a robust system for recruiting and onboarding employees yet, such as an applicant tracking system or an efficient way to manage your network.
· You face uncertainty around finances. You may have to do more with less.
· You have limited time, and employees are pulled in many directions, unable to specialize.
· You can experience periods of rapid growth when you need to hire several people quickly, and other periods when you won’t need anyone at all.
RPO is the only solution that helps solve all these problems.
· RPO will allow you to build the backend processes you need. Once built, you keep them, even after the RPO relationship ends.
· Since RPO programs like Scale by hatch IT often don’t charge contingency fees, your costs will probably be lower and more predictable. You’ll never have to justify to your board why you spent $150,000 in one quarter on five engineering hires — yup, that’s a real number we’ve seen.
· You’ll have a dedicated recruiting team at your disposal, making you competitive with large corporations. You’ll save weeks of time that you would otherwise have spent on recruiting.
· You’ll be able to scale your team up at a moment’s notice, even if you have a difficult tech stack or a selective, rigid hiring process that traditional staffing agencies would avoid.
So how do I get started?
RPO still isn’t well known, and finding a human capital firm that specializes in it may be difficult. Providing an RPO model, especially for software startups, requires firms to have highly specialized teams. The return on investment for firms can be lower, and the bar for performance is higher. Many staffing agencies prefer traditional models, so they can choose the easiest hires, and give up on a search if it proves too difficult. They prefer a quick buck to a relationship that demands a lot from them.
The good news is that the demand is getting high. RPO models allow small startups to outstrip the competition, and the other startups are starting to notice. Next time you talk to a staffing agency, ask if they have an RPO model. In the meantime, check out Scale by hatch IT to learn more about how RPO works.
Tim is the Founder & CEO of hatch IT, a D.C. based recruitment consultancy that specializes in building engineering, product, and data teams for early-stage and high-growth product startups in the DMV area.