Recruitment Process Outsourcing (RPO) is hot and shows no sign of cooling. As globalization continues to impact the global talent pool and overall corporate competitive landscape, it is becoming more difficult for organizations to achieve excellence. Organizations looking to capitalize on core organizational capabilities and streamline costs are considering RPO as an effective alternative to establishing internal recruiting systems and processes, and freeing up internal resources to focus on core strengths. 

In March 2008, Aberdeen Group's Human Capital Management practice completed a research study on Recruitment Process Outsourcing (RPO). This study, which included surveys of more than 200 organizations worldwide, uncovered Best-in-Class strategies and processes in three areas: (1) assessing what recruiting functions to outsource, (2) deciding which outsourcing services to utilize and (3) managing RPO providers. Small and mid-sized businesses (SMBs) with fewer than 1,000 employees were represented by half the survey sample. 

Like most companies in the study, SMBs are driven to outsource all or part of their recruitment process due to insufficient resources. Their HR personnel instead focus on core HR functions such as payroll accuracy and timely enrollment in benefits. This ensures that their strategically using RPO to improve employee satisfaction from the post-hire perspective. 

Findings

Forty-four percent (44%) of SMBs currently outsource elements of their recruitment process. The data shows that they are less likely to select an RPO provider based on price/cost. Whereas price is a top-two criterion for selecting an RPO provider for larger organizations, it ranks fourth on the list for SMBs. This is further revealed by their use of metrics to assess the performance of the recruitment process. SMBs are 36% less likely than larger companies to measure cost per hire as a performance metric for recruitment. 

On the other hand, SMBs are 26% more likely than larger organizations to take the ability of outsourcing select aspects of recruitment into consideration when evaluating RPO providers. This is not surprising considering that SMBs are limited by resources and may not find ROI in outsourcing the whole recruitment process. Furthermore, partially outsourcing the process decreases switching costs and facilitates seeking different providers if an SMB is not satisfied with its current provider. In fact, the data shows that almost half of SMBs have switched RPO providers within the last five years. 

All companies confirm that the main reason for switching providers is quality of service. However, SMBs are 88% more likely than their larger peers to seek another RPO provider due to insufficient quantities of candidates sourced. Nearly half of SMBs want to see more candidates via their RPO provider. 

In terms of services are being utilized by SMBs, the data clearly shows that they are focused on sourcing and screening:

Background / reference checking – 71%

• Candidate interviewing – 69%
• Resume qualification – 64%
• Phone screening – 59%
• Applicant tracking – 50%

However, larger companies are substantially more likely to partner with the RPO provider more strategically and adopt services such as process design consulting, employment brand management and marketing, behavioral assessment, reporting, offer negotiation and on-site staffing support. In short, they are more likely to have an external recruiting department.

Conclusion 

When it comes to selecting RPO providers, SMBs are less concerned about cost and more about the quality of the service and the amount of candidates sourced. Cost per hire is not an issue for them. However, it is important to understand that SMBs do not aim to outsource their entire recruiting process; rather they are more likely than larger companies to implement RPO initiatives to address specific needs where internal HR resources are not sufficient enough to handle. 

The full findings of the study are available for complimentary access until May 30. To learn how Best-in-Class organizations manage their RPO providers and support their initiatives, visit http://www.aberdeen.com//summary/report/benchmark/4653-RA-recruitment-process-outsourcing.asp

 Kevin Martin (kevin.martin@aberdeen.com) is research director and practice leader, and Jayson Saba (jayson.saba@aberdeen.com) is a research associate with the human capital practice in research and m