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Shopping for RPO Services

Understanding your goals and internal costs are key to formalizing the RFP process.

by Hary Bottka

The Recruitment Process Outsourcing (RPO) buzz has grown in 2008 as RPO continues to be a successful outsourcing vertical. Providers deliver outstanding recruiting expertise, a transformational approach, and improved service levels, so although economic growth has slowed a bit, TPI has seen increased demand for outsourced services as companies vie for a shrinking pool of experienced top talent.

Targeted RPO engagements have become more popular as companies look for opportunities to supplement their recruiting organization. By using an RPO provider, companies can concentrate on hard-to-fill positions or outsource lower-level positions to enable their recruiters to focus on filling strategic, higher-level positions. In addition, more clients are turning to RPO for larger, more complex deals that have a global aspect.

Globalization and the growth of multi-national companies have driven the need for recruiting across multiple regions of the world. Most RPO providers are regionally focused, forcing clients that leverage RPO globally to use multiple providers and contracts.

Partnerships have formed between regional RPO providers to address this, but these relationships are generally informal and have not been long-term.

But as the demand for global capabilities continues, TPI expects these partnerships to become more formalized and long-term. In addition, vendor M&A activity will continue to address global RPO needs because organically growth requires significant time and financial investment.

Clients engaging in larger RPO projects will need to conduct substantial planning, become educated on the providers and the market, and have clear and specific goals for the final outcome. TPI has worked with a number of clients on larger, more complex RPO engagements as an independent sourcing advisor. Typically our role during a request for proposal (RFP) process has been focused on the following key areas to ensure a mutually beneficial relationship for the client and RPO provider:

• Market Prevalence and Service Provider Capabilities.
Clients are generally interested in sending an RFP only to a vendor with a proven track record of sourcing and placing specific skill sets of similar volume and complexity to their own scope.

• Clear and Concise RFP. For the RPO providers to adequately respond and price an engagement, an RFP must include specific information about the client’s goals, accurate hiring counts and volumes, expected service levels, and detailed future service delivery requirements. TPI has found that a clear and concise RFP ensures understanding of the client’s needs and establishes a foundation for partnership early in the process. Contracting is much more protracted and difficult if new client requirements and goals come into play later on.

• Establishment of an Internal Cost Baseline. Cost is typically not a client’s main concern when considering RPO, however it is generally a significant factor in the final decision on whether to proceed with an engagement. Understanding the internal delivery cost for recruiting and staffing enables clients to validate whether there is a business case for RPO.

An outsourced model enables organizations to reduce their fixed cost through a minimum guaranteed hiring volume that is typically less than an internal delivery model. It also allows clients to flex capacity to address changing volumes. Many organizations have dealt with spikes in hiring volumes by conducting agency searches for positions that could be filled far more cost effectively through RPO. Comparing the cost of internally searching plus the internal fixed cost to the cost of an RPO engagement is a large part of the final decision.

• Coordinated and Structured Process. Clearly articulating the RFP process helps ensure that the process will move forward as expected and shows stakeholders that the process was detailed and fair. A sourcing advisor makes certain that all decisions and issues are documented throughout the process, helping to educate HR and procurement stakeholders who enter the decision-making process in the latter stages. Without client resources dedicated to the RFP process on a full-time basis, it could take up to three to four months to complete because client resources spend varying levels of time on the project. Furthermore, a structured RFP process is needed to ensure continuity and a consistent understanding of the RFP goals.

Achieving success through RPO is attainable given the industry’s track record, however achieving it is not easy and requires commitment from both the client and RPO provider. Most outsourcing relationships will experience an adjustment period as emerging issues need resolution. The most successful RPO partnerships have resulted from client and service provider collaboration to address problems. A detailed and structured RFP process will increase the likelihood of RPO success and enable companies to hire the resources needed to execute their business plans.

Tags: Benefits, Consultants & Advisors, Engaged Workforce, HRO Today Global, Professional Contribution

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