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Personnel Today

Working out the cost of recruitment process outsourcing

by Jo Faragher 26 Jan 2012
by Jo Faragher 26 Jan 2012

Historically, the pricing for recruitment process outsourcing (RPO) contracts tended to be worked out on a per-transaction basis, also known as “pay per hire”. Where a supplier is sourcing a large volume of staff for generic, easy-to-fill roles, this model can work well.

Many deals now tend to consist of a mixture of transactional pricing and costs based on other metrics, for example, employee retention or payment for additional services, such as candidate testing. In some cases, suppliers charge a basic management fee and add the transactional costs on top.

Additionally, some organisations are now looking at gain-sharing with their RPO provider. This is where the customer agrees to share a percentage of savings made as a result of outsourcing aspects of recruitment with their outsourcing partner.

However, it is important that both sides agree on how to define savings: is it against historic spend? Is it on a per-transaction basis? This definition, as well as clear indications of how and when these dividends will be paid out, should be spelled out in the contract to avoid confusion.

Jo Faragher
Jo Faragher

Jo Faragher has been an employment and business journalist for 20 years. She regularly contributes to Personnel Today and writes features for a number of national business and membership magazines. She won the Willis Towers Watson HR journalist of the year award in 2015 and has been highly commended twice.

previous post
How to get the most out of your RPO provider
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Building the business case for recruitment process outsourcing

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