Outsourcing recruitment expensive? Here's how to save costs and time

An honest look at the costs and benefits of Recruitment Process Outsourcing

Every day that a vacancy remains open costs money. Yet, no action is taken. Vacancies remain open, the recruitment process does not run smoothly and, in the meantime, the consequences (such as loss of revenue) accumulate. Outsourcing recruitment could be a solution, but isn't it far too costly? Outsourcing recruitment may sound like a luxury, but for many companies, it is a strategic investment. What does it cost and what does it yield? Read and calculate with us!

What is an RPO?

RPO stands for Recruitment Process Outsourcing. It means that your organisation hands over the recruitment process (partially). Specifically, this means that a team of external recruiters (or one recruiter) becomes part of your organisation and takes on the vacancies. In addition, you are provided with all the supporting tools, such as: software to manage applications (ATS systems), channels to find candidates (LinkedIn seats), reports, and strategic advice (think of: referral schemes). Everything needed to make recruitment a success.

In essence, this means that as an organisation you can rely on:

• A dedicated experienced recruiter (or multiple recruiters) who actively hunts and takes care of the applicants;
• Access to recruitment channels such as LinkedIn and software to keep track of the applicants;
• Reports, process optimisation and advice;
• The knowledge and expertise of an entire RPO team who share their best practices from other RPO projects.

What does an RPO really cost?

The costs of an RPO depend on the number of vacancies, the duration, and the extent of outsourcing. In practice, many SME clients work with an RPO structure on a project basis. Think of a monthly amount between €6,000 and €8,000, depending on the number of vacancies, locations, and profile complexity. Often this monthly amount is combined with a fee per placement. This fee again depends on the complexity of the profile. The great advantage of this model is that costs increase when recruitment is successful. No placements? Then you pay less – fair enough. 

What are the costs of not outsourcing recruitment?

Of course, there are other recruitment options, but they also come with costs. Do the math.

The (invisible) costs of doing nothing
In this option, there is no or too little focus on recruitment. For instance, there is one person handling applicants, but they are not sufficiently successful. As a result, the vacancies are not properly filled, which incurs costs due to the inability to grow as a business. Production declines and with it the company's revenue.

Recruitment & Selection

In recruitment & selection, you pay an average of around 20 to 30% of the candidate's gross annual salary for one placement. For a position of €50,000 per year, you quickly pay €10,000 to €12,500 per placement. Do you have multiple vacancies? Then costs quickly add up.

Sourcing yourself (in-house recruitment)
 Doing it yourself seems cheaper, but consider this:

• Recruiter on payroll: €50,000 - €70,000 per year
• Tools and licenses for ATS systems and hiring platforms: €5,000 - €10,000 per year
• Optional hidden costs such as inefficiency, mis-hires, lengthy lead times, time loss for managers, and training recruiters: €1,500

A simple comparison table (RPO vs. R&S vs. Interim)
Below you will find an existing calculation example for an IT consultancy firm wanting to make at least two hires per month.

In this example, the cost per hired person for an RPO is €5,250. This only gets lower with a higher volume. With an RPO model, you often pay less, gain more flexibility, and only pay extra if it works. This makes it an efficient and predictable choice for many SME companies. 

What is the right choice?

Is recruitment a top priority for running the business, and do you have at least ten vacancies per year? Then RPO may already be the most cost-efficient and successful solution. In addition to low costs, you immediately benefit from the other advantages that RPO offers:

• Scalability: You only pay for what you need. Do you have more or fewer vacancies? Then recruitment capacity can be scaled up or down.
• Speed: Thanks to the recruiter's experience and accessibility to an ATS system and recruitment channels, candidates can be recruited quickly.
• Quality: The recruiter becomes part of the organisation and has access to an experienced RPO team. Consequently, the quality of recruitment and candidates is high.
• Transparency: No surprises. You pay more with success and less with no success. Fair enough.
• Strategic advantage: You not only get people but also process improvement, data, and advice.

Curious if RPO can also make your recruitment smarter and cheaper? Get in touch.