There are so many types of recruitment for companies to choose from that it can seem a little overwhelming when all you’re looking to do is expand your hiring. It should be simple, right? But what are the pros and cons of in-house recruitment versus using a recruitment agency and what even is an RPO? Here’s our useful guide which you can return to when making your decisions.
The in-house recruitment model
In-house or internal recruitment is when you have a dedicated recruitment team in your company who work solely for you. In this model, companies use their internal resources to source, shortlist, interview and hire all potential candidates. This can be useful for companies of various sizes–small companies may have one or two people running their hiring function, sometimes alongside their other duties–whilst larger companies might have a sizable team. Small companies might recruit through an in-house function simply because they don’t think they can afford to outsource their recruitment whilst larger companies might choose an in-house team to ensure they maintain full control over their hiring process. For larger companies who are regularly recruiting large volumes of new employees, paying the salaries of a recruitment team may seem a viable option.
One of the main advantages of the in-house recruitment model is that the internal recruitment team knows your business inside out. They are aware of your culture as well as your goals and priorities, which means they can find candidates who are a good fit. They also have an incentive to help you find candidates who will stay at your company long term. Whilst an external recruitment agency will often be paid commission in relation to the quantity or speed of a hire, the long-term, salaried relationship of an internal team focuses on quality. However, this doesn’t apply to all cases as many recruitment agencies pride themselves on getting to know a company’s culture and, as we’ll see, RPOs actually partner with your company and work alongside your team to get the right candidates for you hired.
Companies might also choose to recruit via an in-house team because they feel it allows them more control over the recruitment process, from screening candidates to what branding and communication is presented on their behalf during the hiring process. However, an RPO navigates around this potential pitfall by partnering with your company long-term and working together with you to ensure that you maintain control of your recruitment processes.
Internal recruitment teams are great at hiring at scale, as their sole function is to find new recruits for your business. This means the process can run quickly and smoothly for everybody involved. However, they can be expensive to pay, particularly at times when you want to reduce your hiring. Because internal teams are paid a salary, you can’t simply cut the costs of your recruitment team in times of economic slowdown and dedicate more resources to it when things pick up again, so it’s the least flexible of the recruitment solutions here. Moreover, an in-house team often lacks the specialist knowledge and expertise of the ever-changing recruitment landscape. They might not have the technology resources or the time to keep up to date with the latest developments and will often have less contacts than recruitment agencies or RPO providers.
Recruitment agency model
The agency recruitment model is when you hand over all of your hiring function to an external company which specialises in recruitment. The agency acts as the middleman in the hiring process–connecting you with potential candidates. Recruitment agencies deal with the initial applicant screening for roles and only present you with suitable candidates, publishing job postings, shortlisting candidates and even interviewing them on your behalf.
Recruitment agencies are experts in their field and can offer you insights into the recruitment landscape as well as their own pre-existing pool of candidates from which you can hire, which means it’s a quick and easy option for hiring in a hurry.
Using a recruitment agency can be a great ‘try before you buy’ option for expanding your recruitment. They can be used for small scale hiring if you do not have the volume required to use an RPO.
A typical advantage of using a recruitment agency is that it can be cheaper and more flexible for companies who do not want to consistently hire at scale. A recruitment agency can be used for a particular hiring drive as and when you need them and they normally just charge a commission on every hire made. Some of the typical disadvantages of an external recruitment agency are that their service is less personal than that of an in-house team, as they might not be able to get to know your business culture as well. However, some recruitment agencies like Edge1 make sure to always learn your business culture and goals before making a hire.
External RPO recruitment model
RPO stands for Recruitment Process Outsourcing. It’s an external recruitment model, which means the recruitment function is handled by a third party, unlike an in-house team. The ‘outsourcing’ part is like outsourcing any other process in your business. Although this might sound like a recruitment agency and the RPO will similarly source and shortlist your candidates, an RPO is more involved with your company from a strategic perspective. An RPO is a long-term partner, so instead of recruiting for specific roles as and when they are needed, they will stick with your company and help improve your recruitment process itself, making it more efficient and effective, even when you’re making less hires.
With an RPO, you can benefit from your own recruitment specialists (sometimes stationed onsite) without the commitment of an in-house team. RPO providers tend to be specialised in a particular area of expertise and are dedicated to keeping up to date with the most modern recruitment technology.
Embedded RPO recruitment model
The new ‘embedded’ version of RPO is similar to traditional RPO but with a key important upgrade: the recruitment function embeds fully into your company to essentially act as your in-house team but at a fraction of the cost. It’s essentially the best of both worlds of internal and external recruitment. ‘Embedded’ recruitment means that your external recruitment team works with your company as a long term talent partner company to get to know your business culture and goals, working on improving the efficiency of your recruitment process and making the candidate experience as positive as possible. An embedded RPO provider can work with your in-house talent function to expand your recruitment, adding additional expertise but allowing you to maintain the control of an in-house talent function, or act as your sole talent function.
Whilst an embedded RPO comes with many of the benefits of an in-house team, the embedded RPO is also incredibly flexible compared with an in-house team. Our services at Troi are offered on a subscription basis with packages which can be expanded or contracted, meaning you only pay for what you need. This is particularly important at the moment when times are so uncertain economically and it’s difficult for businesses to plan. Because you’re not paying salaried individuals but using a subscription, you’re not locked into any one size of recruitment team, making embedded RPO the most flexible of the options here.
Using an embedded Recruitment Process Outsourcing (RPO) solution can provide several benefits for organisations, including:
Improved Hiring Quality: Embedded RPO providers typically have the expertise and resources to identify, attract, and retain top talent, which can help organisations to make better hiring decisions and improve the overall quality of their workforce.
Cost Savings: An embedded RPO solution can help organizations reduce their recruitment costs by providing a scalable, cost-effective recruitment solution. This includes reducing expenses related to job postings, applicant tracking systems, candidate screening, and other recruitment-related activities.
Reduced Time-to-Hire: By streamlining the recruitment process and providing a dedicated team of recruiters, an embedded RPO provider can help organisations to fill vacancies faster, reducing time-to-hire and minimizing disruptions to the business.
Flexibility and Scalability: An embedded RPO solution can be customized to meet the unique needs and requirements of an organisation, providing a flexible and scalable solution that can adapt to changing business needs.
Access to Technology and Best Practices: Embedded RPO providers often use the latest recruitment technologies and best practices, which can help organisations to stay competitive in the talent market and keep up with evolving recruitment trends. This includes using analytics and data-driven insights to make informed hiring decisions and improve the recruitment process over time.