Recruitment Process Outsourcing (RPO) is revolutionizing the way employers approach hiring and talent acquisition. In recent years, RPO has evolved from being solely a cost-effective solution to a strategic partnership that brings unmatched expertise and technology to the table.

Lamees Abourahma of RPOA spoke with Terry Terhark, RPO pioneer and founder of NXTThing RPO, about the transformative effect of RPO on employers, exploring its value proposition, its role in improving hiring consistency, and real success stories showcasing how RPO firms have helped employers overcome significant hiring challenges. The following is an edited version of the second part of this Talent Leader Council interview.

RPOA: What value does RPO bring to employers today and beyond?

Terry Terhark:  Early on, RPO was more of a cost play. Companies asked if we could do it better, faster, and cheaper. Generally, most of that has changed dramatically. RPO firms today bring expertise that is often difficult or even impossible to get into a company on their own.
For example, our recruiters average 15 years of experience in a particular vertical, whether that’s life sciences, manufacturing, or something else. The knowledge they provide to the clients is incredibly deep, and the hiring managers know that. They know when they’re dealing with someone who’s very seasoned.

The RPO provider can also bring an outside look at how the process can use technology. We’ve heard so much about AI in recruiting over the past six months and two years. Ultimately, recruiting is the blend of art and science and using technology to make your process more efficient and accurate. That’s the direction we’re going, and RPOs are continually investing in new technology, new solutions, and new ways to help clients find the right people. The science comes from those many years of experience the recruiters bring to the individual client.

Q: How does RPO improve hiring consistency?

Terhark: In today’s world, RPO firms are providing their clients with tools that were not available a few years ago and are often cost-prohibitive for a company to purchase on its own.
RPO providers bring clients tools to understand labor markets, compensation, and supply and demand. These tools are essential to effectively understanding the labor market as it relates to that specific company and that specific geography for that particular position. They are also core to being able to source suitable candidates.

The level of expertise that the RPO recruiter brings to a client, for example, and leveraging LinkedIn or Indeed or whatever job boards, they’re maximizing the deep experience that we have as an RPO industry to manage those postings, searches, or relationships on LinkedIn and maximize the tools. Most companies need to gain deep expertise to maximize those tools. RPO brings not only resources but a level of knowledge to utilize those tools to the fullest.

The other thing is that the RPO Provider has deep experience with the client’s applicant tracking system. That level of expertise can often improve process efficiency or activate unrealized existing features and functionalities to the fullest. The experience and different relationships that they bring can improve the overall usage of technology.

I hear from clients regularly about our ability to use technology to benchmark. Most RPOs work in various industries and with many different customers. With that, they see the pressured and non-pressured environments- whatever the labor market is doing. RPOs sharing that expertise with clients provide perspectives their clients often do not have.

Over the last couple of years, I have watched in-house talent acquisition have this insatiable need for analytics. Having data is one thing, but having analytics is super helpful. The labor markets over the past three years have changed wildly from post-COVID, immediately post-COVID, where there’s 15% unemployment, to highly pressured labor markets. Hiring managers want to know what they can expect in terms of candidate behavior. How should they pursue them? How should they think about making offers?

The data and insights we can offer our clients today are more critical than ever for the RPO industry. Data has inundated RPOs and talent acquisition. RPO can transform this information into clear and meaningful insights, enabling clients to make informed decisions. If a company is not positioned competitively in the market, it can take specific steps can be taken to enhance competitiveness. For instance, we adjust candidate criteria based on market trends or refine our sourcing and screening tactics. This approach applies to every aspect of our role as RPO providers today. I presented for a client’s entire C-level about changing dynamics in the labor markets because they wanted their executives to understand what’s going on within the labor markets to help them make more consistent hiring decisions.

Q. Can you share two success stories of how your RPO firm helped employers overcome their hiring challenges?

Terhark: We help a high-volume retail client hire 15 to 20,000 seasonal workers every year; when we came in four and a half five years ago, they experienced a relatively high level of turnover. This client has a couple of seasonal increases throughout the year: one in summer and one in early winter. They had never been able to go back to those seasonal workers to see if they might be interested in returning. We’re starting over every time, going out to the market to source and screen a new pool of candidates. Over the past four years, we’ve gotten the returnee, meaning someone who worked the seasonal hours before and then returned the following season, up to about 40 percent of the hires.

The benefits of hiring returning seasonal workers are that they know what they’re getting into, and they’re much easier to hire because you’ve already got all their information,
The other success story involves a life sciences client. They have challenging roles that include bio and biotech; life sciences is very pressured. There are particular roles within life sciences, such as research scientists, who become incredibly pressured. In this specific example, about five years ago, they ran about a 10 to 12 percent turnover rate annually, slightly higher than what the industry had experienced; however, it was not terrible. Over the last five years, we’ve reduced their turnover rate to 6 percent, effectively reducing their turnover by about 50 percent. All of that is attributed to the deep sourcing and direct recruiting that we’re doing, from understanding the requisition to understanding what the hiring manager wants and then using all the tools and resources to screen effectively to ensure the hiring manager makes a good decision.

In Conclusion

Recruitment Process Outsourcing (RPO) stands as a transformative force in talent acquisition, offering unparalleled expertise, innovative technology, and proven strategies to meet the evolving needs of employers. Terhark shows how RPO is reshaping the hiring landscape, from its value proposition to its role in enhancing hiring consistency and the real success stories of its effect. RPO’s broader implications extend to empowering businesses to navigate dynamic labor markets, make data-driven decisions, and achieve sustainable hiring success in an increasingly competitive environment. As RPO continues to evolve, its potential to drive organizational growth and success remains a compelling narrative in the broader context of human capital management.