Recruitment process outsourcing was in its infancy not many years ago. Now it’s grown up a bit.

“We’re not the toddler anymore, we’re actually the teenager or young adult,” says Robert Lopes, president of Randstad Sourceright RPO. What was technologically advanced, three, four or five years ago now is table stakes.

RPO suppliers today report more interest among buyers, including more midsize companies. They also say the space evolved with buyers sending more hard-to-fill positions as well as expressing interest in taking their RPO programs international.

And RPO has experienced a growth spurt. The share of staffing buyers using RPO roughly doubled over the last five years, according to the 2014 North America Contingent Buyer Survey by Staffing Industry Analysts. It’s now more common than master supplier programs among large staffing buyers.

The US economy helped with growth, but other drivers also exist.

“One of the most predominant trends going on right now is the mid-tier market getting real busy with RPO,” says Mike Mayeux, CEO at RPO provider Novotus. RPO clients have traditionally been large, enterprise companies, but now more midsize firms that may hire 50 to 1,000 people per year are bringing in RPO.

One reason: finding qualified talent has become very difficult, Mayeux says. RPOs can have access to the latest recruiting tools to which companies outside the Fortune 500 may not have access.

It’s also difficult for mid-level client companies to get the right number of internal recruiters on staff given the ebb and fl ow of hiring, says John Younger, founder and chairman of RPO provider Accolo. It’s easy to have too many or too few. Internal recruiters also need time to get up to speed; RPO teams, however, can always be ready.

“The ability for an RPO to ramp up or ramp down is far easier,” Younger says.

Another trend: the lines between RPOs and traditional staffing firms are getting blurred. RPOs can provide temporary workers, project-based work and contractors.

Younger cites the example of a client who uses Accolo to find workers then engages a payrolling firm to employ those workers.

Still, the truest form of RPO is an ongoing relationship. Many deals start off as a 50- to 100-job pilot deal and build from there, Younger says. Most RPOs offer project work as a gateway to an ongoing relationship. If clients like the work, they will sign an annual agreement — usually to fill 50% to 75% of the jobs they think they will have open.

RPO providers also report calls to find workers for harder-to-fill positions. And the percentage of high complexity job openings has risen, says Novotus’ Mayeux.

“RPO was typically used on high volume, low-complexity hires,” Mayeux says. “More RPOs are being exposed and being required to recruit over a more highly complex job title.” Now it can be any job from janitor to a vice president.

Cultivating Talent

The value RPO adds now goes past just funding and hiring to cultivating talent for the tougher-to-fill positions, Randstad Sourceright’s Lopes says. RPO may also have traditionally been about finding workers who were making themselves known, now it’s more about finding the highly qualified passive candidates who aren’t discoverable just on job boards.

“How do you actually go out and find the candidates that aren’t looking [and] you don’t know that much about? How do you differentiate from those who have put their hands up?” Lopes says. “The former is where you need to be to win in the future.”

Beyond the passive candidates, HR leaders also want to bring in more women, veterans and diverse workforces, Lopes says. Clients and prospects are also looking at more end-to-end RPO — that finishes with onboarding but begins from even before candidates are found.

“It isn’t just the finding, it’s the understanding of what needs to be found that is really the beginning of the process to us,” he says. “It is integrated talent management.”

Not Just Price

Another change: clients’ perception. RPO clients are more accepting of RPOs as experts or consultants, not just as a vendor competing on price alone, says Jack Unroe, founder and principal of WorkPlaceTalent, an advisory firm to C-level and recruitment executives, including RPO providers. Unroe is also the Onshore Advisor for IMS People, a provider of offshore recruitment services to staffing companies.

“I think clients have been slow to recognize that RPOs can, and do, have expertise in the recruiting sector,” Unroe says. “What the end clients are realizing is that there is a growing demand for talent, and a continuing shortage of talent, which is not going to end, requiring more sophisticated approaches, including using RPOs.”

However, RPOs must continue to educate clients on their value. Providers must also continue to up the quality of their teams.

There is also a need for clients, in general, to do a better job of integrating RPOs into their hiring processes, Unroe says. They must ask themselves what is the role of the HR department and how do they work with third-party vendors? Is their hiring process well-thought out?

The conversation has to take place at the senior-executive level. Right now, seamless coordination between human resources departments and RPOs is still not as cohesive as it could be. For example, sometimes HR posts the same jobs as those given to RPOs — causing confusion and wasting resources.

Candidates are also a concern, and Unroe says RPO providers must differentiate themselves from vendor management systems. Many candidates who have experienced a VMS process don’t have positive feelings about automated hiring systems, he says. RPOs must differentiate themselves to candidates as being more relationship-focused. If not, candidates may avoid it.

Growing Together

There also appears to be a growing interest in potential acquisitions of RPOs.

“I’m seeing how many people are approaching us on the acquisition side and it is picking up a lot,” Accolo’s Younger says. Traditional staffing and RPO are different models, and it can be difficult for a staffing firm to build RPO on its own.

“I think that you’re going to see more and more of the larger firms or more of the midsize staffing firms gobble up RPOs,” he says. “They get a turnkey business model where they don’t have to learn it over the next three years and go through the pain the RPO model probably had to go through.”

Moving Out

As RPO becomes more mature, the next step may be leaving home.

Unroe says another trend he sees is end clients looking into taking RPO programs international. There are only a few such requests right now, but RPOs need to begin developing specialized strategies for hiring on a global basis.

But whatever RPO’s future may hold, it is here to stay. It will be interesting to follow its progress as it continues to pick up steam.

Recruitment Process Outsourcing (RPO) — Partial or full outsourcing of the internal recruitment function to a third-party specialist provider, which serves to provide the necessary skills, activities, tools, technologies, related recruitment supply chain partners and process methodologies to assume the role of the client’s recruiting department by owning and managing its recruitment process and related recruitment supply chain partner relationships. RPO is more commonly used as a method for employers to recruit direct-hire personnel, particularly in the US. In Europe, contingent workers will also be included within that scope in some instances.
—Staffing Industry Analysts’ Contingent Workforce Lexicon of Terms