UK
If you work for a financial services recruitment firm, the acronym ‘RPO’ is not likely to be pleasing to you. Standing for, ‘Recruitment Process Outsourcing,’ it refers to the so-called embedded recruiters placed within banks by other recruitment companies to manage their hiring process.
Embedded recruiters go by names such as Alexander Mann Solutions, Resource Solutions and Origin HR. They are used by banks such as Credit Suisse and Deutsche.
The head of one financial services recruitment firm outlines (at length) his RPO- related issues. They include allegations (levelled at no RPO firms specifically) that:
1) Embedded recruiters are partial to their own recruitment arms when they’re handing out hiring contracts.
2) Embedded recruiters are unduly harsh when it comes to negotiating down fees.
3) Sometimes, embedded recruiters take CVs sent in by external recruitment agencies and forward them to their own recruitment agency businesses.
He says he refuses to work with them for all the above reasons.
None of the embedded recruitment firms we tried were able to respond before our deadline to our call for them to defend their industry. However, one senior recruiter who was formerly embedded in an investment bank, told us it’s inevitable that agencies will gripe.
“The function of an RPO is to help a client gain control over their recruitment process,” he says. “Agencies want control so that they can charge as much as possible, but the RPO will stand between the agencies and the line managers. As a result, agencies end being little more than CV introducers.
“And that makes you wonder whether it’s really worth paying agencies’ 20% fee.”
RPOS are keen to point out just how much money they save their banking clients. However, the head of HR at one North American bank in the City, says he’s saved money by using neither RPOs nor recruitment agencies.
“We’ve saved 1.5m this year by having our own recruiters in-house, getting them to network with people they know, and increasing staff referrals,” he says.
RPOs are just HR+COI : Conflict of Interest.
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However, the subtle but most-serious problem they create is that they guarantee a loss-of-quality-of-result for their banks. “the RPO will stand between the agencies and the line managers” — this is what HR tries to do too, to justify their existence and improve their status. but the RPOs are fanatical about it (see “COI”, above).
Problem: if a headhunter can’t discuss needs with the front-line, that always dramatically reduces the quality of the process (“firing blind” with CVs, wasting line managers’ time and energy (“oh great, another 20 rubbish CVs”)) and also typically reduces the quality of the end-result :- hiring merely the best you saw, rather than the best the HH could have found you if only he’d known exactly what you were looking for, informed further by your direct feedback re candidates as you go.
most RPOs are now being relegated to temp, IT or junior recruitment and a lot of banks are reviewing their contracts with them or devoting them to just menial tasks. A lot of banks want to now control vendor management or even promote lateral (direct) recruitment. RPOs are big, rigid and pretty much useless when it comes to fast paced front office recruitment + they are clueless about the market. They are easy to spot in a bank: usually a bunch girls in their early 20′s on temp contracts who have no more than a couple of years experience. They get mauled by the business and upset all the recruiters. They do not understand the intricacies of financial recruitment and certainly do not understand how to manage recruiters. Banks unfortunately sign big outsourcing deals and do not necessarily realise the damage done by these people …
RPO’s save money for the bank by consolidating invoicing and managing the recruitment. However they add little value in regards to quality.
They will have there own onsite recruitment team which never compete with the independent agencies and the managers I deal with generally see them as a bottle neck which ultimately cost them the best talent because of there long winded approach and over policing.
The recruitment industry appears to be past it’s peak, which was about 15 years ago, and this ‘embedded recruiter’ concept is a tactic to delay the decline.
If anyone was involved with recruiters in the 1990′s, they were virtually the gatekeepers to getting a new job. Companies wanted smaller HR departments, so outsourced their recruitment to ‘headhunters’. Remember when the newspapers had all those expensive adverts, and the big recruiting firms would have their logo’s on all the ads?
Now, with online job sites, and company career sites, employers can now do this function cheaply inhouse.
Some employers even use ‘linkedin’ as a search tool to get candidates, further bypassing recruiters. There is also a cultural shift at employers from 10 years ago, in that they no longer believe recruitment is ‘rocket-science’ or a ‘black box’
The days of easy money as a recruiter are over, and if they don’t change and offer companies a better value propostion, more recruitment will continue to move back in-house to firms.
My prediction is that only recruiters with a particular niche will survive in 15 years.
I agree with “An independant recruiter”, as a successful headhunter I avoid firms that have in house recruiters. In house recruiters may be cheap but they have no urgency or quality control as they know that they will get the placement. This makes them lazy an apathetic. The tide is turning back in favour of quality, I have never had so much new business.
Line managers are becoming increasingly frustrated with the internal firms who put junior or poor consultants into firms because they know they will get the fee anyway. They have had it too easy for too long!
Also, before the barrage of comments come re: “If it is so easy why don’t you go and work in house?” the answer is easy. What if your firm goes belly up? I like working with clients, networking and developing business. Working on one account is super boring!
Damn Xanthus, now you tell us, and I’ve just extended my retirement age by another 20 years.
Now let me see, where’s that phone directory of City RPO firms…..
Is it just me but aren’t things great at the moment. I’m back in 2005/6/7 the inhouse teams can’t handle the work / do the work and there seems to be less RPO’s about at least on my patch and the ones that are are begging me to help which is something i consider doing in my spare time but if it carrys on like this my spare time will be more and more focused on spending rather than earning money :-)
What are the implications of RPO for candidates: good, bad or neutral?
As a director and owner of an established City search and selection consultancy I think the core of the problem is that HR management refuse to break the salary structures and pay recruiters more than generalists. But now they can palm it off (or “outsource”) to a embedded recruiter who will (in theory) provide a commercially accountable service with defined SLAs, which is cost neutral to the bank on the basis they beat down agency rates and cream a percentage off each placement to fund their business.
Once the account is won by a shiny Director they staff these accounts with juniors (the old Accenture model) often managed by failed or burned out recruiters who will accept a moderate base salary in exchange for an easy life.
So now we deal with bitter ex recruiters throwing their weight around, pushing down rates and passing CVs back to the parent companies…. instead of incompetent HR generalists just waiting for the next rotation to the safety of compensation and benefits dept
The only winner in this senario is HR and of course the directors at origin and resource solutions… the loosers as always are the candidates and line managers.
Did i just zoom back in time to the 80′s? Is this article for real? Have those who are commented above been smoking crack?! No wonder external recruiters businesses are being marginalised when they have such backward thinking people in them.
To sum up RPO’s and HR in the way you have done just demonstrates your ignorance. And no, its nothing like the late 90′s or early 00′s. Things are very different now but I guess in your KPI obsessed, target driven and pin stripe suited world you wouldn’t see that.
The world is changing people. Wake up.