Recruitment Process Outsourcing Over Recruitment Agencies in Talent Acquisition: A Literature Review

Employees are a company's most important asset, and their skills and knowledge are essential for survival, growth, and expansion. Organizations must have effective control over the talent acquisition process and its assessment to gain a competitive advantage. External recruitment assistance may be necessary when hiring for niche profiles, focusing on core business activities, or expanding. An effective recruitment partner must understand the organization's brand value, culture, and the strategic importance of talent acquisition and management. Until recently, organizations relied on recruitment agencies or consultants to source candidates for open positions. However, these agencies often struggled to meet the demands of rapid expansion, niche profile location, time-bound delivery of service, and additional reinforcement and promotion of vacant job profiles. These shortcomings led to the development of Recruitment Process Outsourcing (RPO). RPO is an innovative HR approach that helps organizations achieve effective talent management. RPO goes beyond simply identifying manpower gaps to ensure that each position has the right blend of skills and knowledge to outperform competitors. It encompasses the entire recruitment cycle, from sourcing to onboarding, and provides organizations with the personnel, technology, methodology, and reporting they need to improve efficiency and reduce costs. This paper aims to review and compare RPO and recruitment agencies as talent acquisition strategies, and to identify the best practices for each approach.


Introduction
Strong talent in key positions drives organizational performance and delivery.However, talent management is increasingly challenging as demand for highly skilled individuals exceeds supply.The primary culprit is attrition, which remains a major concern in industries such as IT, telecom, and pharmaceuticals.Employees with multiple job offers hold employers hostage with exorbitant compensation demands, sign-on bonuses, and other benefits and incentives.In some cases, employees accept an offer and then renege within months, causing significant financial losses for the organization.Furthermore, organizations typically only hire when an existing employee resigns, leading to time gaps that cost the company money.Organizations that recognize the importance of talent management and value their employees will be global leaders.MNCs are making significant investments to retain top talent, • Email: editor@ijfmr.com

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Volume 5, Issue 6, November-December 2023 3 RPO is the fastest-growing segment of the HRO market today, and it is in high demand due to a shortage of in-house talent and skilled expertise, as well as the need to keep up with talent demand in emerging economies.Additionally, RPO is becoming increasingly popular due to the ongoing battle for talent in specialized skills.
Organizations typically adopt RPO services in the following situations: • Expansion in pipeline or large-scale hiring: RPO providers can help companies scale their recruitment efforts quickly and efficiently, especially during periods of rapid growth.• Demand for niche skills: RPO providers have access to a wide network of candidates with specialized skills, which can be difficult for companies to find and hire on their own.• Desire to outsource the entire recruitment function: Some companies prefer to outsource their entire recruitment function to an RPO provider, so that they can focus on their core business functions.• Implementation of centralized hubs to drive optimal performance: RPO providers can help companies centralize their recruitment functions, which can lead to improved efficiency and performance.

Methodology
This literature review followed the principles of a systematic review, as outlined by Jesson et al. ( 2011): 1. Mapping the field through a scoping review: The authors conducted a scoping review of the literature to identify the key concepts, theories, and debates in the field of talent acquisition, with a focus on RPO and recruitment agencies.This helped to inform the development of the research questions and the search strategy.2. Comprehensive search: The authors conducted a comprehensive search of the literature using a variety of databases, including Google Scholar, Scopus, and Web of Science.The search terms used were "recruitment process outsourcing," "RPO," "recruitment agencies," "talent acquisition," and "talent management." 3. Quality assessment: The authors assessed the quality of the included studies using a set of criteria, including the study design, methodology, and findings.4. Data extraction: The authors extracted the relevant data from the included studies, including the research questions, methods, findings, and conclusions.5. Synthesis: The authors synthesized the data from the included studies to identify common themes and patterns, and to compare and contrast RPO and recruitment agencies as talent acquisition strategies.6. Write-up: The authors wrote up the findings of the literature review clearly and concisely, with a focus on the implications for talent acquisition professionals.
The authors' research questions were: • What are the key differences between RPO and recruitment agencies in terms of their approach to talent acquisition?• What are the key benefits and drawbacks of RPO and recruitment agencies as talent acquisition strategies?• How can talent acquisition professionals make the best decision about whether to use an RPO or a recruitment agency?The authors followed the above methodology to identify relevant studies, assess their quality, extract data, synthesize the findings, and write up the review.

Literature Review
Recruitment Process Outsourcing emerged as an idea in the 1970s in the United States, as the demand for technical skills increased in high-tech firms, primarily information technology and manufacturing firms.Hiring costs for tracking external experts were rising, and at the time, RPO was only used to contribute the most value-with the most difficult technical staff.Companies began to recognize the importance of lowering the fixed cost of HR, which was mainly related to recruitment, in the 1980s and 1990s.The first academic papers on it date from the mid-2000s.Because of its recent past, recruitment process outsourcing has received little attention.As a result, while the literature contains a wealth of process-related perceptions, general discussion, and relevant data from subjects such as human resources outsourcing, it lacks a fundamental rationale for the process itself.The RPO situation changed dramatically in the early 2000s.Furthermore, with the launch of HRO Today Magazine's "The Baker's Dozen Survey," the top thirteen RPO vendors in the globe are showcased.RPO became a major business option for talent management in 2002.Breaugh and Starke (2000) provide a useful starting point by reviewing some of the existing recruitment theories and highlighting their limitations.According to the study, the primary objective of any recruitment outsourcing procedure is to find the best candidates for the right positions as quickly as possible.
According to a study conducted by FutureStep-A korn/ferry Company, RPO means transforming end to end talent acquisition.It was stated that those recruitment models which just focus on cost-reduction and process have failed to integrate talent acquisition and management with the strategic imperatives for talent demanded by the business.HR functions in partnership with their service provider must be more outwardly oriented , in closely managing and evaluating the various human capital vendors and partners with whom they work and through innovative strategies and tactics that create value while simultaneously driving down cost.And the recruitment agency model mainly does not work on any talent management strategies for the organization.The report suggested that an effective RPO provider will work in collaboration to set the talent agenda and then execute by integrating people, process and technology to drive competitive advantage through the appropriate talent solutions.Later, the CIPD's 2007 Recruitment, Retention and Turnover survey highlighted a number of issues that merited further exploration, largely centering on relationships between HR and recruitment agencies and the issue of performance evaluation.Only 36% of the organizations surveyed had a structured approach to evaluating the performance of recruitment agencies.According to the CIPD's 2008 Recruitment, Retention and Turnover survey, 78% of employers in 2007 used recruitment agencies to attract and recruit employees.But historically relationships between employers and recruitment agencies have been marred by a range of pressures and degrees of mistrust from both sides.At the same time, the employer-agency relationship has traditionally been one based on best value and low cost, with contractual decisions made predominantly on this basis.Whelan & Carcary (2011) in their study stated Recruitment, whether outsourced or not, deals directly with talent management.The acquirement of talent is linked with the firm's core functions and understanding the impact that talent management may have on RPO is extremely important.Also, knowledge management plays a role to some extent especially when combined with talent management.

The major growth in RPO over recruitment agencies can be witnessed by the following studies which shows the added advantages of RPO adoption against traditional recruitment agencies for talent management.
A study by the Yankee Group shows that the worldwide HRO market went up to $80 billion in 2008, at a compounded annual growth rate of 12 percent."High quality, cost-saving HRO services have paved the way for businesses to increase their use of recruitment process outsourcing.Since its launch in 2000, Kelly HR has experienced the strongest year-over-year growth of all of Kelly's business units.According to the report, in 2004 the Kelly business unit hired more than 15,000 people through its client RPO programs.The overall implementation of RPO service proved a big boost in revenues for those companies and they further realized significant savings as well, and lastly, the companies were able to deliver more complete services than traditional competitors.In a study, by RPO in 2009, it was revealed that 62% of organizations that fully or partially outsourced recruitment were able to reduce cost per hire and it helped build a business case for considering RPO as a practical solution.It was further stated that RPO is yielding significant performance gains across the board.The findings also introduced key performance areas of RPO such as time to fill positions, hiring manager satisfaction, and new hire retention.Aberdeen Group research study in 2010 was able to build a long-time-awaited business case for RPO.It was stated in the report that "If an organization is challenged by uncertainty, legacy processes, and resource constraints, RPO can provide the flexibility it needs to compete for key talent by innovating its processes and allowing resources to focus on core business competencies.Rather, organizations must identify the major holes and work with the provider to plug them.It was stated that when implemented successfully, RPO can yield great gains in business outcomes and other metrics.Not surprisingly, 77% of organizations in RPO engagements recommend it to peers compared to just 9% that do not.The key to unlocking effective RPO programs lies in gaining hiring manager satisfaction and clearly defining, measuring, and reporting on metrics to track RPO performance., the same was very difficult in the case of recruitment agencies.According to Everest Group, Recruitment Process Outsourcing (RPO) Annual Report 2012: The research report provides a comprehensive coverage of the 2011 RPO market, key business drivers, buyer adoption trends, solution and transaction trends, and service provider landscape.Some of the findings in this report stated that beyond cost savings and efficiency, buyers increasingly aim for business impact through RPO.According to 2015, Enterprise Sales reports, more than 70 per cent of Indian employers are likely to outsource their recruitment function either partially or completely.The current valuation of the RPO industry in India is INR 400 crores and is expected to grow at a rate of 45 -55 per cent.By enrolling an RPO partner, the Organization also benefits and can save as much as 40 -50 per cent of their recruitment cost.The core teams can concentrate on doing more strategic work and quality hiring rather than doing transactional work.With the support of a good RPO partner companies can achieve their objective of quality and faster hiring with WOW employee experience.As HR has evolved from a mere support function to a strategic function geared towards organizational development, RPO is becoming critical to HR.

RPO advantages:
• Quality of hire is improved.
• Acceleration of projects and quicker time to market • Standardization of processes • Ability to tap into best practices.
• Cost effective solutions.
• Predictable expenditures • Release of bandwidth of key people from transactional activities • Better compliance and governance in the processes • Better control According to Technavio's November 2018 market research report, the global recruitment process outsourcing market will expand at a CAGR of more than 14% during the forecast period.One of the main trends observed in the global recruitment process outsourcing market 2018-2022 is the rise of data analytics and artificial intelligence.Data analytics and artificial intelligence are rapidly revolutionizing recruitment procedures.Huge amounts of data are generated and analysed to make appropriate recruitment choices.Certain analytical tools are used to extract the necessary information, which can be in the shape of big data or real-time data.HR executives use this information to successfully manage recruitment.People analytics and recruitment analytics are important in data analytics because they produce scientific information from raw data.-These sources of interpreting massive amounts of data assist recruiters in selecting strong applicants and improving their ability to fill job openings quickly.As a result of the numerous benefits associated with data analytics and AI, the market is anticipated to grow during the forecast period.Companies are constantly approaching RPO firms to lower their cost per hire.RPO is needed to continuously add business value while reducing operational costs wherever feasible.Thus.During adverse market conditions, RPO can avoid a demand-supply imbalance.When a company expands into a new product category or a different part of the globe, its recruiting requirements skyrocket.Similarly, during downturns, labour retrenchment is required.Such inequalities are costly to any business.To address such market imbalances, RPO partners streamline the recruiting process.This happens due to the active involvement of RPO partners in examining recruitment process workflows to determine the overlaps in processes, the excessive costs incurred, and the curbing of inefficient practices.Thus, the need of various organizations to reduce their operating costs by streamlining the hiring process is expected to fuel the growth of the global RPO market during the forecast period.According to a senior analyst at Technavio for research on IT professional services, "Along with streamlining the hiring process, another major factor such as the advent of meritocratic recruitment is expected to boost the growth of the global recruitment process outsourcing market.Meritocratic recruitment is introduced to improve decision-making when it comes to hiring employees.This process of recruitment moves away from how the employees were previously recruited.Based on prioritizing candidates' abilities over their experience, meritocratic recruitment focuses on acquiring a candidate based on his/her performance on a practical assessment instead of CV-based assessments and competency-based interviews.Since it is a skill-based system of recruitment, it focuses on avoiding biases in the recruitment process.Currently.the number of companies adopting meritocratic recruitment is increasing."The worldwide recruitment process outsourcing market was valued at USD 5.48 billion in 2019 and is projected to grow at a compound annual growth rate (CAGR) of 17.4% from 2020 to 2027, according to Grand View Research, USA, Marketing research report 2019.The two main factors driving the market growth are the need for an efficient recruiting procedure and the reduction of overhead costs.Recruitment Process Outsourcing (RPO) service providers handle a variety of duties, from sourcing to selecting candidates and maintaining recruit quality.According to the report, one of the main factors driving the RPO market is the rising attrition rate across multiple industries.To stay competitive in the market, many service providers easily offer a replacement for any applicant who leaves an organization in a short period.
According to Teamlease's white paper in the year 2020, many companies are looking for ways and means to improve their recruitment function, either by revamping their internal function or by leveraging external expertise like RPO firms to spruce up the recruitment process efficiency.In India especially, the RPO industry has not yet standardized its service offerings, providers use different terminology to describe services, and different providers offer all or a subset of these services.This makes it challenging for both RPO providers and client organizations.Demystifying RPO is therefore essential to uncover and clarify the grey areas and bridge the gaps.RPO is not just an on-call permanent placement service or a "headhunter" that is available to fill permanent positions.It's also not for the 'one-off job opening or meeting a quick list of hiring needs.It is a sustained and clearly defined process that provides a predictable and customized sourcing and/or recruiting engine for your business.RPO is often misunderstood and confused with Human Resources Outsourcing (HRO).While RPO is focused on the sourcing and recruiting aspects, HRO is more concerned with the functional HR processes, such as input of information into HR systems, onboarding paperwork administration, benefits administration, or performance management.While some RPO processes, such as onboarding, may include some aspects of HRO, the intent is that the RPO program is related to sourcing, recruiting and/or hiring and typically involves processes related to 'candidates.According to The Future of RPO Report (Talent Works, 2020), this study found that RPO is becoming increasingly popular as organizations seek to improve their recruitment efficiency and effectiveness.In particular, the study found that organizations are using RPO to: • Reduce the cost of hire.
• Improve time to hire.
• Increase the quality of hire.
• Build a stronger employer brand.The study also found that RPO providers are evolving to meet the needs of the modern workforce.For example, RPO providers are investing in new technologies, such as artificial intelligence and machine learning, to help them source and screen candidates more efficiently.Additionally, RPO providers are focusing on developing more diverse and inclusive talent pipelines.According to Gartner Report (2020), the study found that RPO clients outperform organizations that do not use RPO in terms of recruitment performance metrics such as time to hire, cost of hire, and quality of hire.The study also found that RPO clients are more likely to have a strong employer brand.The study attributed these benefits to several factors, including: • RPO providers' deep understanding of the recruitment process and best practices.
• RPO providers' access to a wide network of candidates and sophisticated recruitment technology.
• RPO providers' accountability for the results of the recruitment process.The State of RPO in 2021 report by Forrester, the study found that RPO is the fastest-growing segment of the HRO market.The study attributed this growth to several factors, including: • The increasing complexity of the recruitment process.
• The growing demand for specialized talent.
• The need for organizations to improve their recruitment efficiency and effectiveness.The study also found that RPO clients are increasingly focused on using RPO to achieve strategic goals such as diversity and inclusion, talent pipeline development, and employer branding.The Benefits of RPO in the Age of COVID-19 (AMS, 2021) report found that RPO can help organizations to navigate the challenges of recruiting in the age of COVID-19.For example, RPO providers can help organizations to: • Shift to remote hiring.
• Develop new recruiting strategies for in-demand roles.
• Create a safe and welcoming workplace for new hires.The study also found that RPO can help organizations to save money and time during the pandemic.For example, RPO providers can help organizations to reduce their reliance on expensive third-party recruitment agencies.Kaiser Permanente 2021 Report used RPO to hire top talent for critical positions that were difficult to fill.Kaiser Permanente is a healthcare company with over 220,000 employees.The company used RPO to hire top talent for critical positions in nursing, pharmacy, and other healthcare professions.As a result, Kaiser Permanente was able to fill these critical positions with qualified and experienced candidates, which has helped the company to improve the quality of care it provides to its patients.According to the Business Wire Global Recruitment Process Outsourcing (RPO) Market Report August 2022, the global recruitment process outsourcing market is expected to grow at a CAGR of 13.9% from 2022 to 2030.The growing global adoption of outsourcing services drives the recruitment process outsourcing (RPO) industry.The majority of businesses are searching for external service providers to help them reduce their overhead costs.Furthermore, outsourcing recruitment processes to a third-party provider allows organizations to concentrate on their core competencies, improving company operations.Outsourcing recruitment procedures allows businesses to hire candidates based lon their needs without incurring any internal costs.Furthermore, demand for RPO services has increased significantly due to their significant advantages over conventional methods of recruitment.As a result of these factors, the recruitment process outsourcing market is anticipated to grow rapidly during the forecast period.According to the Everest Group Market study report September 2022, the demand for Recruitment Process Outsourcing (RPO) services has increased in the aftermath of the COVID-19 pandemic, with organizations reexamining their talent acquisition processes in the midst of the Great Resignation.The study discussed the need for RPO buyers to renew their goals, as well as how buyer-provider relationships have evolved since the pandemic, as well as how buyer perceptions of provider performance, including shortcomings, have changed.A business participates in recruitment process outsourcing when it outsources all or a portion of its permanent hiring to a third party, according to Sky Quest Technology Consulting Private Limited, Global Recruitment Process Outsourcing Market insights report, October 2022.In most instances, a provider acts as an outsourced HR resourcing department for a company, providing a complete hiring solution while on the client's premises.It views recruitment process outsourcing as a subset of the business process outsourcing industry, in which a company outsources all or some of its recruitment-related processes to a third-party provider.The vendors' RPO services typically cover applicant screening, execution, job posting, and other critical steps in the recruitment process.The report also stated that RPO should not be confused with staffing services, as the latter involves competent hiring process management and responsibility for the results.RPO allows a company to outsource all or a portion of its hiring process to an outside company that acts as an extension of the human resource department, allowing the department to concentrate on its core competencies.It stated that there are several benefits to outsourcing a skilled recruitment process provider as a wonderful way to maximize recruitment efforts that any human resource team may not have the time or capacity to do on its own.RPO assists the company in focusing on its core business operations and provides a significant increase in prioritization.
Google 2022 Report used RPO to improve its time to hire by 15%.Google is a technology company with over 160,000 employees.The company used RPO to improve its time to hire for critical positions.As a result, Google was able to reduce its time to hire by 15%, which helped the company to stay ahead of the competition in the fast-paced technology industry.JP Morgan Chase 2023 used RPO to reduce its cost of hire by 20%.JPMorgan Chase is a global financial services company with over 260,000 employees.The company used RPO to streamline its recruitment process and reduce its reliance on expensive third-party recruitment agencies.As a result, JPMorgan Chase was able to reduce its cost of hire by 20% without sacrificing the quality of its hires.Walmart 2023 Report used RPO to increase the diversity of its workforce by 10%.Walmart is a retail company with over 2.3 million employees.The company used RPO to develop and implement a more strategic approach to diversity and inclusion in its recruitment process.As a result, Walmart was able to increase the diversity of its workforce by 10%, which has led to improved employee engagement and performance.These examples demonstrate the effectiveness of RPO in helping organizations to achieve their recruitment goals.RPO can help organizations to reduce their cost of hire, improve their time to hire, increase the diversity of their workforce, and hire top talent for critical positions.Overall, the findings of these studies suggest that RPO can be a valuable tool for organizations that are looking to improve their talent acquisition process and achieve their business goals.Overall, the literature reviews which has been shared provide strong evidence that RPO is an effective way for organizations to improve their recruitment process and achieve their recruitment goals.RPO can help organizations reduce the cost of hire, improve the time to hire, increase the quality of hire, build a stronger employer brand, and achieve strategic goals such as diversity and inclusion.

Significance of the Studies
The above studies are significant because they provide quantitative evidence of the benefits of RPO.These studies are also based on data from a large number of organizations, which makes the findings more generalizable.

Implications for Organizations
The findings of these studies have important implications for organizations.First, the studies suggest that RPO can help organizations to reduce the time it takes to fill open positions.This can be critical in competitive industries where companies need to be able to quickly hire and deploy top talent.Second, the studies suggest that RPO can help organizations to improve the quality of their candidates.This can lead to better hiring decisions and improved employee performance.Third, the studies suggest that RPO can help organizations to reduce their recruitment costs.This is because RPO providers often have economies of scale that allow them to offer lower rates than traditional recruiting agencies.Overall, the findings of these studies suggest that RPO can be a valuable tool for organizations that are looking to improve their talent acquisition process and achieve their business goals.

Conclusion
Recruitment Process Outsourcing (RPO) is becoming an increasingly popular talent acquisition strategy for organizations of all sizes.RPO offers several benefits over traditional recruitment agencies, including: • Reduced time to fill open positions: RPO providers typically have a larger pool of candidates to draw from than recruitment agencies, and they can also use specialized technology to more efficiently source and screen candidates.• Improved quality of candidates: RPO providers have a deep understanding of the organization's culture and hiring needs, which allows them to identify and attract the best candidates.• Reduced recruitment costs: RPO providers can offer economies of scale that can help organizations to reduce their recruitment costs.• Increased access to skilled talent: RPO providers can help organizations to access skilled talent in new markets or for specialized roles.• Improved employer brand: RPO providers can help organizations to develop and implement employer branding strategies that attract top talent.• Reduced administrative burden: RPO providers can take over the day-to-day tasks of recruitment, freeing up internal HR staff to focus on other priorities.However, it is important to note that RPO is not without its drawbacks.For example, organizations may lose some control over the recruitment process when outsourcing to an RPO provider.It is also important to carefully select an RPO provider that is a good fit for the organization's culture and needs.Overall, the literature suggests that RPO can be a valuable talent acquisition strategy for organizations that are looking to improve the efficiency, effectiveness, and cost-effectiveness of their recruitment process.However, it is important to carefully weigh the benefits and drawbacks of RPO before deciding to outsource recruitment processes.

Implications for Talent Acquisition Professionals
Talent acquisition professionals who are considering using RPO should be aware of the following best practices: • Carefully assess your organization's needs to determine whether RPO is a good fit.
• Select an RPO provider that has a good track record and a cultural fit with your organization.
• Clearly define the roles and responsibilities of the organization and the RPO provider.
• Maintain ongoing communication and collaboration with the RPO provider.
• Measure and track the results of the RPO partnership to ensure that it is meeting your expectations.By following these best practices, talent acquisition professionals can maximize the benefits of RPO and improve their organization's talent acquisition process.In addition to the above, talent acquisition professionals should also be aware of the following trends in the RPO market: • The increasing use of technology: RPO providers are increasingly using technology to automate and streamline the recruitment process.This includes using artificial intelligence (AI) to source and screen candidates, and to develop personalized candidate experiences.• The growing focus on diversity and inclusion: RPO providers are increasingly focusing on helping organizations to build diverse and inclusive workforces.This includes developing and implementing diversity and inclusion initiatives throughout the recruitment process.• The rise of global RPO: RPO is becoming increasingly global, with organizations outsourcing their recruitment processes to providers in other countries.This is due to the increasing availability of skilled talent in emerging markets.
Talent acquisition professionals who are considering using RPO should stay updated with these trends to ensure that they are getting the most out of their RPO partnership.