How much does RPO cost? Many managers considering using Recruitment Process Outsourcing ask themselves this question. Today we have decided to answer it! We will show you what is included in the service and what your company pays for.
What is Recruitment Process Outsourcing?
Recruitment Process Outsourcing is a strategic partnership between an organization and an external service provider, where the provider manages some or all of the organization’s recruitment activities.
The purpose of RPO is to enhance the quality of hires, reduce time-to-fill, and improve the overall efficiency of the recruitment process. Some key benefits of RPO include access to a larger talent pool, reduced hiring costs, and the ability to scale recruitment efforts according to the organization’s needs.
More about RPO benefits can be found here.
The cost of RPO
Understanding the Recruitment Process Outsourcing cost is essential for organizations considering this approach. The cost of RPO can depend on several factors, such as the scope of services, the size of the organization, and the complexity of the recruitment process.
ROI of RPO
To fully understand the ROI of RPO, organizations must consider both the direct cost savings and the indirect benefits of implementing RPO solutions:
- Reduced recruiting costs: As discussed earlier, RPO can lead to lower recruiting costs, which can be quantified and factored into the ROI calculation.
- Improved employee retention: RPO providers can help organizations attract and retain high-quality candidates, reducing turnover rates and the associated costs of hiring and training new employees.
- Increased productivity: By streamlining the recruitment process and improving candidate quality, RPO can contribute to increased productivity and overall organizational performance.
- Reducing time-to-fill: RPO providers can help organizations fill open positions more quickly, reducing the costs associated with prolonged vacancies.
- Streamlining the recruitment process: RPO providers can implement efficient recruitment processes and technologies, reducing the administrative burden on internal HR teams and lowering overall recruitment costs.
Factors that affect the RPO cost
We’ll talk about Recruitment Process Outsourcing pricing models in a moment, but before that, we’d like to explain to you what goes into RPO pricing.
Many people think they are simply paying to find the right person. And ultimately, of course, that’s what it’s all about, but RPO is Recruitment PROCESS Outsourcing. The word process is the key to understanding the whole complexity of the price.
What affects the final price of an ROP?
- Know-how: Let’s start with one of the most often overlooked factors. Unique, expert know-how is an extremely important component of RPO. Many years of experience in conducting recruitment processes in a given industry is an invaluable contribution to finding the perfect candidate for you.
What’s more, by outsourcing a recruitment project, you can directly learn the most effective market practices, which you can later implement in your company. - Scope of services: The more comprehensive the RPO services, the higher the cost. For example, an RPO provider that manages the entire recruitment process, including sourcing, screening, and onboarding, will likely charge more than a provider that only handles specific aspects of the process.
- Size of the organization: Larger organizations with more complex recruitment needs may require more resources from the RPO provider, resulting in higher costs.
- Industry and job complexity: The complexity of the jobs being filled and the specific industry can also impact RPO pricing. For example, hiring for highly specialized roles or in industries with strict compliance requirements may result in higher costs.
Each component contributes to the total cost of RPO services, and understanding their impact can help you or your boss make informed decisions when selecting an RPO provider.
Different RPO pricing models
One of the biggest advantages of RPO is flexibility. To show you what we mean, here’s a brief look at the Recruitment Process Outsourcing pricing models our clients most often opt for.
Cost-per-hire model
The cost-per-hire model is a popular RPO pricing model where the RPO provider charges a fee for each successful hire. This model is straightforward to understand, as the cost directly correlates with the number of hires made.
Benefits
The benefits of this model include its simplicity and the ability to budget for recruitment costs based on the number of open positions.
Disadvantages
However, in case you do a lot of recruiting or you also care about the ability to develop the knowledge of your HR team, it may be less beneficial for you.
Cost-per-hour model
With this model, you pay for the time of a specialized recruiting team. The scope of their work then includes the active search for candidates, pre-selection, preparation of the best resumes for you, and ongoing reporting on their activities.
Benefits
This is the most cost-effective model for you, especially if you are looking for a complex set of competencies, your recruitment needs are greater, or you are looking to implement a robust recruitment process in-house.
Disadvantages
If you are only looking for one specialist and know that your needs are not going to increase anytime soon this model may be for you. In this case, it’s worthwhile for you to also consider other forms of team expansion, such as perm recruiters or IT outsourcing.
Additional costs in RPO
While Recruitment Process Outsourcing (RPO) can lead to cost savings and improved efficiency, it is essential to be aware of the potential additional costs that may arise. In this section, we will discuss the hidden charges in RPO and provide tips on how to control recruitment costs and manage unexpected expenses.
RPO cost – Case Studies
Our recruiting team works with many business partners on RPO. We have prepared 2 case studies for you, in which we show you what RPO costs look like. And most importantly, why RPO can be profitable for you.
RPO – Fintech Company
A large Fintech company was looking for a Software Tester, with a broad set of tools he should know. It searched for 3 months using its internal HR department, which did not specialize in finding technology positions.
Internal recruiters reached out to people in similar positions, but could not find someone who knew at least the necessary tools to get started. The process dragged on, and the deadline for a Tester to join the project began to approach while threatening to meet the project schedule.
How much did it cost?
3 months of recruiting work amounted to about 25-30,000 PLN (approximately 7,000 Euros)
Ads on the most popular advertising platforms – 2,000 PLN (500 Euros)
After 3 months, of budget spent, the company was still struggling with a lack of employment.
What has the RPO changed?
- Our team joined the project using dedicated methods to reach out to specialists.
- We did not use the most popular recruitment services.
- Instead, we actively went out to candidates who were in our database and did extensive external research.
Within 7 days we presented resumes of proposed candidates, then did in-depth interviews with those selected by the client. Within a month the selected candidate signed a contract with our client and began preparations to join the team.
Cost of RPO = unique know-how + proactive outreach to candidates + in-depth interviews + extended notes + ongoing contact with the client + reporting on specific topics + fee
RPO – Technology start-up
A start-up dealing with advanced technological solutions became our client. Its dynamic growth required more and more recruitment. Until now, this had been handled by the management team, which at the same time began to lack time for this. Eventually, processes dragged on, and the best candidates accepted other offers.
The company began to build its internal recruitment team, but the process itself was also taking time, given the need for onboarding, implementation of new people, and their technical preparation.
How much did it cost?
Shortage of technology staff and related overtime and outsourcing to subcontractors – PLN 10,000 (€2,500)
Onboarding of a growing HR department – PLN 20,000 (€5,000)
Advertisements on popular job portals – PLN 10,000 (€2,500)
What has the RPO changed?
- We joined the project while recruiting for 5 technology positions.
- We prepared a dedicated recruiting team for the client, which proactively sought candidates and conducted initial and in-depth recruitment interviews.
- We were in ongoing contact with the recruiting team that was building up, who simultaneously learned from us about recruitment in the technology sector.
- Based on an audit of our client’s needs and capabilities, we prepared a recruitment process on which the internal HR department began work.
The cost of RPO = audit + candidate research + conducting recruitment and in-depth interviews + setting up the recruitment process + support with formalities.
