August 7, 2023
Today’s volatile economic landscape makes recruiting a challenging task for companies competing for top talent. The labor market is in the middle of a fundamental transformation; add current inflation—which eats away at budgetary margins quickly—and it’s easy to see why businesses struggle to meet staffing needs. To many, navigating through the current job market presents a maze of confusion—which is why an increasing number of companies are turning to recruitment process outsourcing (RPO) as a solution.
RPO streamlines hiring, leveraging process expertise along with AI, machine learning, and other advanced technologies. It’s rapidly becoming the foremost recruitment solution for companies in a tight labor market—so let’s unpack how RPO can give your business a competitive edge.
We all remember how Covid-19 roiled the landscape of labor. Three years on, Americans are back to work—but not quite in the same numbers as in 2019. Unemployment rates resting at just 3.4% as of May is evidence that the labor market remains hot, tight, and incredibly competitive for top talent. It’s fundamentally a job seeker’s market.
In addition to post-Covid ripple effects, there are more widespread trends stirring the water. The current workforce is aging, and new generations are stepping in to fundamentally transform work environments. These trends, which are not reversing, require companies to allocate more resources toward talent acquisition than ever before. The lag effect of trying to scale recruiting efforts is evidenced by chronic understaffing, which severely impacts revenue and margins.
Let’s explore these deeper trends in more detail.
The US labor market has for decades been dominated by the baby boomer generation. However, we’re on the precipice of a great “aging out” of this historic generation, as more and more of these workers enter into retirement. This is something of a natural progression—but to fill the space left by such a robust generation’s exit from the labor market, companies need to ramp up recruiting efforts to attract new faces.
The scale of the transition comes with other, less immediately apparent concerns for businesses as well. Baby boomers have helmed 21st-century business—and their mass exodus presents a potential brain drain, leaving a deficiency in advanced skills, experience, and proprietary knowledge. More traditional generational handoffs typically leave enough time to upskill younger workers, but baby boomers’ sweeping exits will leave knowledge gaps and make training a process of rediscovery.
Younger generations also have different expectations in terms of work-life balance, flexibility, job security, and benefits. Basically, entry-level workers may demand more at a time when companies are already stretched thin (we’ll touch on this more below).
This interplay can quickly lead to a scarcity of skilled workers, driving up costs as some businesses turn to expensive overtime, third-party contractors, or temp staff to manage extended recruitment times. This is one of the major reasons companies are turning to RPO solutions.
Talent acquisition needs to adapt to meet the expectations of millennials and Gen Z—whether they want to or not. Younger workers expect employers to prioritize social responsibility, company culture, and work-life balance. Basically, they’re setting boundaries that companies may not be accustomed to.
While some companies may resist these social shifts, the reality is that younger workers can use social media, employee review sites like Glassdoor, and job boards to find companies that cater to their needs. Digital natives have access to thousands of competitive job postings—and they expect a high degree of technological integration in the recruitment process.
A younger workforce brings different skills and perspectives to the table. Failing to attract these candidates will hinder your ability to innovate and stay competitive; companies must revamp their benefits, development opportunities, recruiting process, and flexible work options to catch this budding talent.
The two previously-mentioned challenges are generational shifts, meaning they’re coming for your business no matter what. But they compound to create another potential trap: understaffing.
Chronic understaffing buffets your finances from a number of different directions, making it a profitability killer in the long run. Consider: when your business is understaffed, your organization's objectives are hampered by missed deadlines, lost revenue, impaired product or service quality, and customer dissatisfaction. Limited staffing makes it all the more difficult to catch up, turning this into a self-perpetuating cycle.
The constant scramble quickly burns out your current workforce—and where burnout goes, turnover is sure to follow. This only exacerbates your hiring crisis further, straining already-tight recruitment budgets. Chronic overtime and spiraling recruitment expenses then strain company finances, especially if the company is implementing traditional hiring initiatives that aren’t yielding positive results.
This is where solutions like RPO can step in to head off staffing crises before they swallow your business whole.
Recruitment process outsourcing presents a fix for many businesses who see the looming challenges of the current market. Recruitment is expensive and time-consuming—and businesses simply may not have the internal bandwidth to handle the the array of tasks necessary to find and engage top talent. RPO services put your recruitment efforts in the hands of professionals who deeply understand the currents in the labor market (and how to attract candidates in spite of the changes).
With chronic understaffing and generational turnover about to overwhelm businesses, companies need to use every tool in the toolbox to prepare. Let’s dive deeper into how RPO can position you for success in a turbulent labor market.
RPO services empower companies to scale their recruitment operations up or down based on need. This is especially helpful for companies that experience high-volume recruiting due to seasonal spikes in their labor force.
RPO providers assign dedicated professionals with the expertise to leverage the latest AI and other technology to analyze market factors and streamline hiring. This in turn allows companies to hire at scale, as the process can move at the necessary volume and speed on demand.
Boosting a company’s ROI is all about deriving more value from less cost. This means that when it comes to a function that has fluctuating needs and value—like recruitment—an in-house workforce is not ideal.
A stable internal workforce in this department will actually lose value when it comes time to scale back hiring initiatives. On the other hand, RPOs offer variable-cost recruitment, so companies can scale costs at the same rate as output—resulting in a higher overall ROI. Companies only have to pay when a good fit hire is made, helping them eliminate those fixed expenses that loom heavily on the bottom line when recruiting activity slows down.
Essentially, RPO hands the management of the recruiting funnel over to the specialists. These experts know the best ways to find and engage top talent and track key metrics such as hire quality, time to hire, cost per hire, diversity, and candidate experience; they merge their insights with a deep understanding of your needs to build a staff that helps you excel.
Recruitment experts also leverage cutting-edge tools like AI, predictive analytics, applicant tracking systems (ATS), mobile outreach methods, and video interviewing to find and screen candidates faster. Used intelligently, recruitment technology is a game-changer, reducing time-to-hire, improving candidate quality, alleviating routine or manual tasks, and greatly enhancing the entire experience.
RPO presents an obvious solution to the current recruiting crisis. However, as with any area of business, choosing a quality partner makes all the difference.
Source2 is the leading RPO service provider, offering innovative and flexible RPO services that help organizations streamline their recruitment process and find the right candidates quickly and efficiently. With a proven track record of success, Source2 is the go-to provider for companies looking to transform their recruitment strategy.
Written By: Cassie Nordyke