Outsourcing recruitment, either all of it or some, to another provider has become commonplace. Startups and corporations alike rely on it. There are two broad options available to a business - recruitment process outsourcing (RPO) and managed service provider (MSP).
When a business outsources talent acquisition to a third-party team, it is called recruitment process outsourcing or RPO. The service provider typically offers an end-to-end solution, from designing the hiring model to onboarding a new employee. In some cases, they might take over only a portion of recruiting and hiring.
RPO teams know the company brand and culture inside out. They not only help tap top talent but also promote brand reputation as an employer. It is easy to scale RPO based on the lows and peaks of the hiring season.
Managed service providers or MSP help out with just hiring. They specialize in temporary employees such as freelancers. So, when a business requires seasonal workers, MSP is the right choice because they work with temp agencies. Essentially, an MSP is a middleman between a company and various agencies.
Both RPO and MSP reduce the workload on human resource teams. For smaller businesses, they enable focusing on core operations. That said, they do have key differences.
RPO services modify the search based on a company’s criteria, industry, and geographical location.
MSP doesn’t attract and recruit candidates. They rely on temporary staffing agencies to do so. An MSP simply leverages the network of those agencies to find the best candidate for an organization. A managed service provider seldom hires talent from the public pool.
MSP offers one rigid plan. They take a commission out of the wages paid to the temporary workers. RPOs, on the other hand, offer flexible and variety of plans. Some may charge a fixed monthly fee. Others may ask for a per-hire charge. Then there are few RPO services that use a hybrid of the two.
Technology is another element where RPO and MSP differ. MSP providers do not manage candidates. They use software to manage temp agencies. So, their tech is typically a vendor management system. RPO teams capitalize on applicant tracking systems (ATS) and other tools to manage talent.
From vetting to interviewing to onboarding, the software is used for every phase of the acquisition process. This allows everyone to remain on the same page, creating consistency in the hiring procedure.
The final question is which one adds more value to a business. In the short term, it is MSP since they don’t plan for the long-term goals. Their value proposition is simple – fill vacant spots cheaply and quickly.
For true recruitment purposes, it is RPO that adds the most value. Recruitment process outsourcing services not only help hire quality talent, but also work at reducing the cost per hire and overall turnover!