What is recruitment process outsourcing (RPO)? Benefits, models & how it works

What is recruitment process outsourcing (RPO)?

Recruitment process outsourcing is when a company hands over part – or all – of its hiring process to an external service provider. 

RPO is a form of business process outsourcing (BPO), and most providers operate with front- and back-office functions to efficiently handle high volumes of hiring. Depending on the model it uses, an RPO provider can focus solely on recruitment or take control of the entire talent acquisition process. (More on this in the next section.)

Many companies turn to RPO providers to solve their most pressing recruitment problem: finding suitable candidates who will become great employees. But plenty of businesses also use RPO to reduce hiring costs or free up capacity as their operations scale.

Types of RPO models

RPO has been around for nearly 20 years, and today, you’ll find several types of RPO models depending on how much support an organization needs. Here are the four most common types:

End-to-end/full-service RPO

Full-service RPO covers everything: sourcing, resume screening, interview scheduling, preparing and presenting offers, employer branding, talent marketing, and even onboarding. 

It’s usually the most cost-effective option and can dramatically improve the quality and consistency of your hires. But it also takes the most time and effort to implement since it involves every aspect of your recruitment process.

Project-based RPO

Project-based RPO works like full-service RPO but for a specific project, such as opening a new branch of an office, launching a product, or creating a new team. You get a highly experienced team that will handle the project’s recruitment, and your internal HR team can learn a lot from them.

It’s an excellent solution if you need an end-to-end approach for a limited time but still want to retain internal processes and the capacity to recruit people yourself. It’s also a great way to “test drive” an RPO provider, see what the results will be, and then decide if you want to commit to a long-term partnership.

Selective/hybrid RPO

Selective RPO, also known as hybrid RPO, is typically used when a company needs help with only one aspect of recruitment, such as sourcing or screening. It’s fairly flexible and easier to implement than some other RPO models since it’s limited in scope.

Recruitment on demand (ROD)

ROD gives you access to extra recruiters from an RPO provider who already understands your company’s messaging, workflows, and needs. It’s mainly used to handle hiring spikes or new projects rather than to transform your whole recruitment process. 

Typically, one or two recruiters from the RPO provider join your team for a set period and help manage hiring for a specific project or initiative. They bring their experience and expertise to the existing process, improving the candidate experience and helping you meet your hiring goals.

In-house vs. outsourced recruiting

Many teams hit the same hurdle at some point: “Should we keep things in-house or outsource HR, such as to an RPO provider?” 

In-house recruiting gives you more control over your employer branding and processes, and it’s great for roles that require strong cultural alignment or frequent collaboration with your hiring managers. But internal recruiting can be slow, and it isn’t always the best option for filling roles that demand specialized expertise. 

Outsourcing through an RPO can bring additional skills, tools, and bandwidth to your team. And because RPO providers focus just on recruiting, not the full range of HR tasks, they often work faster and more efficiently, too. This can save you time and money, improve hiring quality, and make scaling easier (since RPOs already have proven, efficient processes in place).

RPO vs. agency outsourcing: What’s the difference?

RPO providers and recruitment or staffing agencies are often lumped together, but they aren’t the same. Here are the key differences:

• Agencies are built to fill individual roles, often quickly or for hard-to-find positions. Once a role is filled, the engagement usually ends. 

• RPO providers are designed to support ongoing hiring – even in shorter-term partnerships, such as under a project-based model. They often work across multiple roles or teams or over time. 

• Recruitment agencies typically manage applicant relationships on their own and then present candidates to your company. On the flip side, RPO providers don’t “own” the candidates they deliver to you.

• Staffing agencies generally charge per hire, often through a commission structure.

• An RPO provider may charge cost-per-hire, cost-per-transaction, or monthly management fees (which is the most common).

What are the benefits of recruitment process outsourcing?

With RPO, you can reap several benefits, including:

Better, more consistent hiring outcomes

Companies that use recruitment process outsourcing often hire better – and more consistently – than those who rely exclusively on internal recruiting.  

A study by the Recruitment Process Outsourcing Association (RPOA) links adopting RPO services to better-quality hires, more reliable recruitment processes, and more consistent hiring results. 

Plus, research from Aberdeen Group found that organisations using RPO are 17% more likely to report that “more than 50% of their workforce is top-quality” talent than companies that don’t outsource recruitment.

Faster hiring, with less pressure on your team

RPO services can significantly reduce time-to-hire. A Randstad Enterprise case study, for example, notes that a company cut its time-to-hire by 30% – but other industry reports indicate that businesses can achieve 40–50% faster hires by outsourcing recruitment. 

This quick hiring reduces pressure and stress on your internal hiring managers. It also frees up their time to focus on other tasks, such as developing vital management skills, developing a talent strategy, and building an organizational culture.

Cost savings

Industry data shows that businesses can save 30–40% on overall costs – and 30–50% on cost-per-hire, specifically – by outsourcing recruitment. 

This makes sense: Not only are RPO providers generally more affordable than staffing or recruitment agencies, but they also have highly efficient processes for sourcing and vetting top talent. In other words, roles are filled faster, with less wasted energy, and without steep fees. 

Easier scaling as your hiring needs evolve

RPO makes it easy to ramp up or pull back your recruitment without hiring, training, or reducing internal recruiting staff. Providers work with established teams, workflows, and technology that allow them to increase capacity in busy periods and scale down when demand slows. 

They also track key performance indicators (KPIs) to ensure hiring stays efficient as needs fluctuate. These KPIs include:

• Cost-per-hire 

• Time-to-hire 

• Quality of hire

• Strength of the candidate pipeline 

• Compliance with employment laws and regulations 

• Hiring manager experience

• Candidate experience and satisfaction

Strong employer brand (when RPO is done well)

Well-done recruitment process outsourcing can also help you build a positive employer brand. This is because RPO providers help deliver a more consistent, professional candidate experience through clear communication, fast response times, and structured hiring processes. 

When candidates feel valued and respected throughout the recruitment process, they’re much more likely to view your company positively – whether or not you hire them.

Do RPOs have any downsides? 

Like any outsourcing method, RPO has potential trade-offs. Here are the ones to be aware of:

• Communication gaps. When you decide to hire an RPO provider, you give them the right to lead part or all of the hiring process. That can sometimes lead to fewer real-time updates – unless you set clear communication expectations up front. 

• Less direct control. RPO providers don’t just recruit on your behalf; they also represent your employer brand. This means you give up some control over how candidates experience your company – which can be a strength when done well! To achieve this, give your provider clear brand guidelines early on and check in regularly. 

• Culture mismatch. Since RPO providers don’t sit inside your organization, they may not immediately understand your company culture, values, mission, or ways of working. This can cause a domino effect that can slow down recruitment or even lead to poor-fit candidates. Be sure to conduct a proper, detailed onboarding with your RPO provider to avoid misalignment. 

• Ramp-up time. RPO providers need time to learn your business, especially in industries like finance, tech, or legal that have specific needs and requirements. This will inevitably take some time, which may not be feasible for companies that need to fill positions ASAP. 

How to pick the right RPO provider

Do the RPO benefits outweigh the potential drawbacks for you? Before you pick a provider, consider these factors:

Industry experience

First, be sure to pick a provider with experience in the roles and industry you’re hiring for. This way, they’ll have a better idea of what strong candidates look like – and how to assess them. 

For instance, if you’re hiring a fintech software developer, an RPO provider in fintech and/or software development will know what questions to ask and tests to do to give you the most accurate picture of a candidate’s skill set.

→ Skills-based talent assessments can support this process by offering a clear, objective view of what candidates can actually do. Tools like TestGorilla are often used by both in-house recruiting teams and RPO providers to evaluate role-specific skills in a structured, consistent way and source without reinforcing bias.

Tech and automation stack

Ideally, you want your tools to integrate with your RPO provider’s or to have access to their tools. That way, you can track what’s going on, and it’s easier to discuss candidates because you can find the information you need easily without waiting for them to send it through.

Additionally, you should see how the provider uses AI and automation in the hiring process. You want to ensure their use aligns with your company values – especially if they use AI to assess candidates’ skills. 

Data privacy

Data privacy can be a slippery slope if not taken seriously. The more reliant we get on technology, the more risk-averse companies need to be to protect themselves and their employees.

You want to ensure any RPO you work with is on the same page as you when it comes to data privacy. There’s nothing worse than you insisting on using a password manager when you’re working with a company that still copies and pastes things into an email in plain text.

Reporting and KPIs

To get the most out of an RPO, you need to agree on success criteria before you start. That way, they know what they’re aiming for, and you can measure how well their hiring efforts are working.

KPIs to measure might include:

• Time to hire

• Cost to hire

• Number of applicants

• Number of interviews

Alongside this, you also want to agree on how you’ll report results. Will it be monthly meetings? Weekly emails? Something else? Get on the same page early – and check in regularly – to save everyone from miscommunication headaches.

Cultural add

You’ll want to find a provider that shares your values or has a culture similar to your business. For instance, if you have a no-emails-on-weekends culture but the RPO provider you choose does most of its work out of hours, it can slow down processes and end up wasting more time rather than saving it.

Scalability

Lastly, when you’re evaluating RPO providers, you look at how each one scales and whether it can keep up with the pace of your business’s growth.

Implementing RPO

Here are the steps to follow to adopt recruitment process outsourcing in your business:

• Assess your needs. Consider what you need from your RPO provider using the vendor criteria above.

• Choose an RPO provider. Pick the RPO that best matches your needs and can grow with you. 

• Onboard and share context. Once you’ve chosen a provider, spend time getting them up to speed – share details about your roles, company culture, hiring managers, and internal processes. The provider will also walk you through how they operate.

• Define success up front. Before the first hiring push, align your internal team and your external provider’s team on what success looks like. Discuss things like ideal time to hire, cost per hire, and hiring quality.

• Launch and keep improving. RPO works best when it’s treated as an ongoing partnership. Check in regularly to review progress and results, make adjustments to workflows, and refine over time as your needs change.

Strengthen RPO with skills-based hiring

Recruitment process outsourcing (RPO) helps companies hire faster and more effectively without stretching internal teams too thin. The right RPO model and provider for your business will depend on your goals, hiring volume, and level of support you’re after. 

Skills-based hiring can make RPO even more powerful by showing what candidates can actually do, rather than what’s listed on their resume. 

Whether hiring stays in-house or is outsourced, TestGorilla helps teams assess candidates’ real-world skills so all hiring decisions are based on data, not guesswork. Plus, our platform offers AI-backed sourcing and supports high-volume hiring – perfect for internal and external recruitment setups where speed, consistency, and quality are key.

Want to learn more? Book a free demo or create a free TestGorilla account today.