A Comprehensive Guide to Choosing between RPO, Recruiting/Staffing Firms, and In-House Recruitment

Discover the differences between Staffing Agencies, RPOs, and In-House Recruitment. In our recent article, we break down the pros and cons of each option for finding top talent for your company.

Oz Rashid
Mar 10, 2023
# mins
A Comprehensive Guide to Choosing between RPO, Recruiting/Staffing Firms, and In-House Recruitment

A Comprehensive Guide to Choosing between RPO, Recruiting/Staffing Firms, and In-House Recruitment

Discover the differences between Staffing Agencies, RPOs, and In-House Recruitment. In our recent article, we break down the pros and cons of each option for finding top talent for your company.

A Comprehensive Guide to Choosing between RPO, Recruiting/Staffing Firms, and In-House Recruitment

Discover the differences between Staffing Agencies, RPOs, and In-House Recruitment. In our recent article, we break down the pros and cons of each option for finding top talent for your company.

It can be a real challenge for a company to find high-quality candidates to hire. 

From locating and engaging with top talent to developing hiring processes, managing logistics, and measuring results, there are certainly a lot of moving parts. 

Fortunately, there are several ways an employer can choose to handle this portion of their business, including keeping it in-house, working with a staffing agency, or outsourcing it entirely to an RPO provider.

This guide will explore the various options on the table. We’ll define each recruiting method, look at their pros and cons, and compare in-house recruitment vs staffing agencies and, similarly, RPO vs staffing agencies so a business knows exactly which recruitment choice is best for them.

Let’s get the definitions down

To start, let’s define recruitment process outsourcing (RPO), staffing agencies, and in-house recruitment and talk through how they work. 

What is Recruitment Process Outsourcing (RPO)?

In basic terms, recruitment process outsourcing (RPO) is the practice of an employer turning over its hiring needs to an external provider. 

An offshoot of business process outsourcing (BPO), this recruitment process outsourcing method transfers the responsibility of identifying qualified candidates from the company’s internal HR team to its RPO partner. 

Not only will an RPO recruiter and their team source suitable candidates for the company, they will oversee all the other related recruitment functions for the employer as well, including but not limited to:

  • customized strategy development
  • talent acquisition management
  • hiring process optimization
  • recruiting analytics and reporting
  • hiring tools and technologies
  • candidate engagement
  • employee onboarding
  • employer branding

Companies of all sizes, but particularly medium and large organizations, often outsource their hiring process to free up their HR department so it can spend time on other tasks. 

If they’ve been struggling to hire in general or to recruit folks for niche roles, partnering with an RPO provider that specializes in recruiting the best talent is many times an effective, strategic, and comprehensive solution.  

What is a staffing agency? 

A staffing agency typically assists businesses with filling short-term roles on an ad hoc basis, including temporary and temp-to-hire positions. In some instances, they also match candidates to long term roles. Acting as an intermediary between employers and job seekers, staffing agencies play a part in both the recruitment process and an employee’s orientation, training, and termination - one placement at a time.   

A staffing agency’s services are free to the candidates they recruit. Employers who hire an agency to help them find the right people to fill their open roles, however, typically pay mark-up fees in the range of 15% to 30% of the new hire’s annual wages.

In House Recruitment

In house recruitment is just what it sounds like: employees within an organization who oversee its hiring efforts. Rather than outsource recruiting, in this case the employer relies on its own in-house recruiters to find, interview, and close qualified candidates. 

An in-house recruitment team is sometimes comprised of employees from multiple departments who already work directly for the company in other roles. In this situation, the in house hiring manager experience involves sharing hiring responsibilities with regular work tasks. In other instances, a company will hire one or more employees whose sole responsibility is to run its in-house recruiting.

In House Recruiting Pros and Cons: 

Before committing to a particular hiring method, an employer should weigh the various pros and cons of each one. Let’s start by discussing the advantages and disadvantages of using an in house recruitment team.

Pros

  • You know your brand best: In house recruiters are naturally more familiar with the needs of their company and likely understand who will fit into the culture moreso than external recruiters. In house recruiting also gives the employer control over how its brand is represented to potential new hires. 
  • You can build and manage your own team: Employers maintain more control over the composition of their in house recruitment teams. They can select who they want to be a part of it.
  • You own the job requisition: Nothing gets lost in translation like it might with a recruitment agency. Although potentially time-consuming, the employer completely owns the process of creating a meaningful and accurate job requisition that will bring in the best candidates for the role.
  • You own the candidate relationship: There’s no third party edging in. Any relationships the employer builds with promising candidates are entirely theirs and theirs alone.
  • There are no conflicts of interest: Unlike a staffing agency, in house recruiters won’t share candidates with other companies since their sole focus is to fill their employer’s openings.
  • There are short term cost savings: When recruiting is kept in house, the employer avoids paying recruitment fees. However, there are other internal expenses and organizational costs associated with putting existing employees in charge of hiring.

Cons

  • You might experience increased attrition: An internal recruitment team doesn’t always have a background in hiring, which may lead to unqualified hires. This can cause high attrition and low morale, both of which are costly and damaging.  
  • You might lack the reach and network: RPO providers and staffing agencies maintain expansive networks and pools of high-level talent that internal teams simply lack. 
  • You might lack the expertise: An internal team might not have the specialized knowledge needed to hire qualified candidates for a new market or for certain senior or niche positions. The right recruitment agency will possess a deep understanding of the relevant industry.
  • You might lack the resources: It’s not always ideal to pull employees away from their primary job to have them spend time on hiring. There is always an opportunity cost. Employers might simply lack the resources they need to fill positions quickly and optimally.  
  • The process is time consuming: In house recruiting means going through hundreds of resumes and significant time spent on interviewing and evaluating candidates. Using an RPO provider or staffing agency will speed up this process, thereby reducing the crucial Time to Fill metric (the number of days it takes to fill an opening).  
  • The process is expensive: Effective recruiting requires automation tools and technologies that cost money. In addition, employers must train their internal hiring team, which is an additional cost. 
  • The incentive structure doesn’t align with top results: Whereas an agency recruiter is likely earning a commission when they place a candidate, in house recruiters aren’t. Unless they are personally motivated, they won’t have the same drive to find high-quality talent to fill an employer’s open positions.  

Staffing/Recruitment Firm Pros and Cons: 

Now let’s move on to a discussion about the positives and negatives of an organization using staffing agencies to satisfy its hiring needs.

Pros

  • You can hire quickly: A staffing agency will speed up the process significantly since they already have interested and qualified candidates at the ready.
  • You can increase your reach: Part of the challenge of finding qualified candidates is getting job ads in front of the right audience. Staffing agencies are proficient at doing this, which can be a huge help if an employer’s brand is less well known.
  • You can rely on their domain expertise: Staffing recruiters are experts at hiring in certain industries. Unlike an internal team, they have market intelligence that makes the entire hiring process easier.
  • There are existing candidates to tap: Rather than starting from scratch, employers can take advantage of a staffing recruiter’s established and likely extensive pool of candidates.
  • There are already processes in place: This is what staffing recruiters do day in and day out. They already have processes and tools in place to source, screen, and land quality candidates, unlike an in-house recruitment team.

Cons

  • You may end up spending a lot of money: When an employer hires a candidate that a staffing agency sourced, they are generally required to pay the agency between 15% and 30% of the new employee’s annual salary.
  • You can’t control how your brand is represented: Relying on a staffing agency means that a company loses control of how its brand is portrayed to prospective candidates.
  • The recruiter might not understand your business: In a similar vein, a staffing recruiter might not fully grasp how a company’s business works or what its culture is like to convey it properly to interested applicants. This can lead to new hires who misunderstand the role, the business itself, or the culture fit.
  • The talent quality isn’t always great: Recruiters who work for staffing agencies usually work on commission. They want to place the candidate - and urgently - to pad their paycheck, which can mean forced fits and lower quality talent.
  • The relationship is transactional in nature: Unlike the long-term, strategic relationship that an employer builds with an RPO provider, placements made by staffing agencies are ad hoc and transactional.
  • The candidate experience might be lacking: An employer can’t control how a staffing recruiter interacts with prospective and promising candidates. There’s always the chance of a poor candidate experience, which reflects negatively on the company.

Key Benefits of Working With An RPO vs Staffing Company: 

Finally, let’s explore all the ways an employer benefits from partnering with an RPO provider compared to working with a staffing agency.

1. RPO providers are goal-oriented and KPI-driven

Unlike traditional agencies, RPO providers place a big emphasis on measuring and reporting results. They provide regular updates that cover ROI metrics and other statistics so the employer knows exactly where they stand and what they should adjust.

2. RPO providers embrace a long-term focus

Staffing agencies make a placement and then move on, whereas RPO companies approach an employer’s hiring needs more strategically, holistically, and from a long-term perspective.

3. RPO providers give more comprehensive guidance

The advice a staffing recruiter might give is limited to placing a single candidate. If an employer utilizes RPO, on the other hand, they’ll be paired with a dedicated and supportive consultant or team who will provide comprehensive and ongoing guidance about its recruitment strategy and tactics. 

For example, an RPO partner can assist a company with cultivating a DEI recruitment process if it has recently embraced diversity hiring or help it determine how to lower its cost per hire. RPO providers tailor their advice to the individual need of the company.

4. RPO providers offer scalable and sophisticated processes

When an employer partners with an RPO provider, it gains access to proven hiring procedures, specialized knowledge, and recruiting best practices. Beyond that, an RPO company will help the employer develop its own recruitment process that is flexible, engaging, and efficient.  

5. RPO providers are more deeply involved in the hiring process

There are no consequences if a staffing agency fails to make a placement. On the flipside, RPO providers take accountability for their actions because they are fully invested in the success of the employer’s talent acquisition strategy.

The MSH Approach To RPO

Not all RPO providers are the same. MSH leverages years of experience, advanced technology, and a deep desire to truly understand an employer’s talent needs to provide customized and comprehensive recruitment strategies and solutions. 

Its end-to-end RPO services, which include strategy development, full-cycle recruitment, process management, analytics and reporting, EEO compliance, employer branding, and more, are scalable, adaptable, and designed to quickly attract best-in-class talent. 

Companies that are seeking to hand off their recruitment processes to an outsourced provider can rest easy knowing that MSH will handle it all, in turn saving them significant time and money, reimagining and improving their overall recruitment strategy, and, most importantly, solving all of their hiring dilemmas. 

Big Takeaway

There are several different ways employers can choose to meet their hiring needs from keeping it in-house to using a staffing agency or an RPO provider. While there are pros and cons to each method, when a company wants to offload all of its recruitment processes, recruitment process outsourcing is generally the best way to accomplish this. 

In this case, the employer will partner with an RPO company who takes over all the moving parts, including strategy development, talent acquisition, analytics and insights, job profiling, and more (the list goes on and on), to free up HR and establish processes that will quickly deliver top talent to fill open positions.  

Let the team at MSH do all the hard work as you sit back and watch your company grow. Contact MSH today to get started!

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