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April 23, 2024

RPOs vs. In-House Recruiting


A constant source of tension for Talent Acquisition leaders is adapting to fluctuating hiring demands. It’s not that recruiters are incapable – more often than not, inaccurate workforce planning on the part of business line leaders prevents TA leaders from properly resourcing the team. This can leave TA teams overwhelmed in periods of high demand, with recruiters facing burnout-level requisition loads, and vulnerable to layoffs in periods of drought.

Outsourcing through RPOs (recruitment process outsourcing) is sometimes hailed as a solution to this problem. It is touted as an agile, scalable, cost-effective solution that can ramp up faster than building a capable internal team and ramp down without layoffs. But this picture of RPOs belies a rather unpalatable reality.

Deconstructing the Myth of RPO Flexibility

  • • Scaling Up is Not Easy: Contrary to popular belief, ramping RPOs up and down is not always straightforward or quick. The barrier to entry often includes long waiting periods, lengthy onboarding processes, and steep fees for immediate support.
  • • Ramping Down Rapidly Has Costs: RPO usage isn’t a faucet that can be turned on and off without consequence. If hiring demand falls quickly, contracts can be severed, but this can damage company reputation and keep RPOs from wanting to engage with the organization in the future.
  • • Flexibility is Costly: Having RPOs on standby can be a costly fallback option, particularly when companies face lengthier periods of low hiring demand. Further, there are non-monetary costs to consider, such as the time needed to train RPOs on internal systems (e.g., ATS, CRM), coordinate with hiring managers, and establish reporting structures with in-house recruiting team members.
  • • Misaligned Incentives: RPOs are optimized for cost and speed. It is in their best interest to recruit as quickly and as cheaply as possible, and this can be at odds with building more diverse talent pipelines. Further, with quality of hire gaining ground as a top TA performance metric (it was the #1 most prioritized metric for improvement in 2023, relying on an RPO to find talent may not be a company’s best bet.

 

Should Companies Bring Everything In-House?

In short, no. It’s not realistic to think every company can or even should build an in-house team to handle all their hiring. RPOs have a very real time and place. But, there is at least a case for building a strong in-house team that can be augmented in a very principled way with RPOs.

Why TA Teams Need Capable In-House Recruiting:

  • • Cultivating Relationships: In-house recruiters can forge stronger relationships with hiring managers and candidates – relationships that pay off over the long-term. Many TA teams are prioritizing upskilling their recruiters beyond just requisition fillers into strategic advisors. A skillset that comes with time and deepening knowledge of the business is hard to replicate in outsourced recruiters. 
  • • Alignment with Organizational Values: In-house teams, being more intimately connected with the company’s ethos, are better positioned to spotlight organizational values and demonstrate them to candidates during the recruitment process. They’re also better positioned to identify talent that would add to their company culture.

 

How Can Companies Scale Up and Down with More Agility?

3 Solutions We’ve Seen to Date:

  1. Set Thresholds for RPO Usage: Have a strong understanding of your core internal team’s capacity for hires. Once hiring demand exceeds those forecasts, ‘turn on’ yourRPO. Limits can be set so the majority of recruiting remains in-house.
  2. Assemble Team with Wide-Ranging Expertise: Build a diverse in-house team with a range of recruiting expertise to minimize reliance on external support. Consider a combination of recruiters from an agency background, who are well-versed in high-volume, low-intensity recruiting, as well as those with executive search experience, who have expertise in low-volume, high-intensity recruiting.
  3. Build in Flex with Support from Geographically Distributed Recruiters: Augment team capacity by tapping on in-house recruiters from other geographies to take on additional reqs, particularly in areas where hiring volume is low. The benefits are trifold: low-bandwidth recruiters get relief from other in-house teams, recruiters are more layoff-proof during lulls, and recruiters can upskill in new talent markets.

All told, RPOs absolutely have a time and a place. In fact, most companies will need them. But, they are neither a cure-all to the problem of flexible scaling, nor a replacement for a capable internal recruiting team.

See how TA leaders are restructuring their internal teams this year.

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