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5 of the biggest myths about Recruitment Process Outsourcing

Posted by Jarrod Mollison on 09 Feb 2016
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I've been selling Recruitment Process Outsourcing solutions for over 10 years. I am always open to learning new things and every day is a school day as they say, but often when I meet with a potential new client,  I'm asked similar questions.

I don't want to come across blasé or arrogant, so it is very important to give consideration to a potential clients concerns, especially when they are new to RPO.

I've compiled a list of the top 5 RPO myths I've come across and given some of my responses as well.

1) Our agencies won't work with you

Well its true that some of them may not, but when some clients I meet with have 100 or more agencies, they are probably using too many anyway. In reality we find that very few won't work with us, in fact we tend to find that we already work with around 70% of a clients existing providers, and by the time we go live, 99% of them will continue to supply. The reason we have such a high success rate is that we are not asking agencies to work on ridiculously low margins, just fair and reasonable ones. We also see agencies as our clients just as much as our clients, its a two way street, we wouldn't exist without them.

2) Agencies will just place their best candidates elsewhere

This would be true if they took a very short term view and didn't look at the bigger picture of a longer term account where they can grow their business. In reality most agencies will take a reduction in margin to secure longer term contracted business. The other key factor in securing the best candidates is to make sure pay rates are properly managed. If the pay rate for a role is too low, then the best candidates will naturally go elsewhere, this is nothing to do with margin!

3) We can get better rates ourselves

It is possible that going through a tender exercise would result in a comparable (or lower) margin. This may result in a short term benefit but ultimately may not be sustainable, we often find that these savings are purely paper based. Managing agencies is a full time job and without resource and technology systems in place, any benefit in margins can be quickly swallowed up by rate increases. Rather than looking at margins in isolation, it is much better to look at standardising margins across all suppliers ensuring that they are all fully engaged.

Working with a good quality RPO provider will help to reduce the operating costs of agencies by streamlining their processes, for instance ensuring that they get paid quickly and on time, thus allowing them to operate on lower margins than they would directly.

4) This will cost us more

By putting in place standardised margins, pay rates and ensuring that they are adhered to, will generate a saving for the client. We tend to find that savings vary from 5% up to as high as 18%. In these cases there is enough of a saving to pay for our services and return a saving to the client, even without accounting for demand and tenure management which makes further savings.

By the time you have factored in the reduced number of invoices and reduction in management time, there is also a large indirect savings to consider.

5) We don't need to worry about legal compliance, that's down to the agencies

It is true that agencies should check that workers have valid rights to work, CSCS card, DBS check, driving or operating licences depending on the type of role they are performing. However, if they don't, then you could be left hugely exposed, if you haven't done your own due diligence you could end up in the press or even in court. As an example, the government has launched a campaign recently called Operation Magnify to clamp down on illegal workers in the construction industry and there have been a number of well publicised cases where illegal workers have been found and fines imposed. In fact I found this only yesterday 257 illegal construction workers arrested !

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Topics: Recruitment Process Outsourcing