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HCMWorks Insights

What’s the Difference Between Recruitment Process Outsourcing (RPO) and a Managed Services Provider (MSP)?

Posted by Julia Fournier on 30 Sep 2019

Outsourced workforce management has become hugely popular for mid-sized organizations and large enterprises in recent years. In fact, outsourcing talent management to a third-party partner can help your company realize a wide range of benefits.

An outsourced talent management firm can help your company fulfil its workforce requirements, acquire top talent, access specialist skills, implement innovative technologies - all of which are difficult to obtain and are expensive without third-party help.

The top benefit, however, is the significant cost savings your company can receive from outsourced recruitment. Statistics from Brandon Gaille have found that 46 percent of companies outsourced to reduce operating costs.

Not only that, but outsourcing recruitment can help your company find solutions for the growing industry skills shortage.

In this blog, we take a look at recruitment process outsourcing (RPO) and managed services providers (MSP), which both aim to improve the efficiency of your company’s hiring process and empower you to acquire the best talent within your industry.

What is RPO?

Recruitment process outsourcing is the act of transferring all, or part, of your company’s permanent recruitment to an external firm.

By acting as an extension of your organization's HR or procurement team, an RPO will deliver the necessary full-time staff, technology and hiring processes that help fulfil your business's recruitment requirements.

An RPO firm will take control of any areas associated with hiring in your firm, such as candidate sourcing, candidate screening, and candidate onboarding. Working closely as an extension of your talent acquisition team, either on-site or off-site, an RPO can easily be scaled up or down depending on your company’s hiring needs at certain points of the year.

What is a managed services provider?

An MSP is an external, outsourced company that operates as an external arm of your company to help drive growth and the success of your organization. A managed service provider handles various processes and functions on behalf of your company to improve operational efficiencies and cut costs.

By creating specific programs, an MSP focuses on making the core competencies of your business more efficient.

MSP services are wide-ranging - from IT, internal workforce management, payroll, HR, vendor management, procurement, sourcing and much more - but in recent years have become popular for its contingent workforce expertise.

A managed services provider offers similar end-to-end recruitment offerings to RPO but focuses entirely on temporary workers. This includes freelancers, contractors, consultants, and all other non-permanent staff.

By taking over the complex processes involved in your firm’s contingent workforce management strategy, an MSP will help your company realize a wide range of benefits, including:

  • More visibility and control into contingent workers.
  • Saving you a significant amount of money.
  • Automate traditionally manual processes.
  • Implement better talent acquisition strategies.
  • Access to world-class technology, such as a vendor management system (VMS).

3 key differences between RPO AND MSP

1 - The type of workforce

The most prominent difference between an RPO and MSP program is the type of worker they supply to your company.

A managed services provider focuses mainly on providing top contingent talent to fulfil both temporary and long-term needs for your organization, while a recruitment process outsourcing firm will employ long-term and full-time employees for your company.

2 - How the workers are sourced

Using a vendor management system, an MSP works with an established list of staffing agencies and other vendors to find top talent that will fill skills shortages within your business.

An RPO, however, does not use staffing agencies. Instead, they source candidates themselves through their network using an applicant tracking system (ATS). RPOs find full-time workers through social media, industry contacts and a pre-existing database of talented workers.

3 - The technology used

This leads us nicely onto our next key difference, the technical differences between an MSP and RPO. While an RPO will use an applicant tracking system, an MSP will use a vendor management system.

There is some overlap in functionality between the two technologies, but the functions of a VMS are far more complex and superior when it comes to hiring and managing top talent. In their simplest definitions, an ATS is designed to get employees through the door of an organization, while a VMS is designed to manage a contingent workforce from procurement and performance, all the way to payment.

Which is the right choice for you?

An RPO solution helps find highly qualified full-time candidates for the internal position within your organization, while an MSP solution provides access to many vendor sources for contingent placement and the implementation of a successful contingent workforce management strategy.

Which solution you choose will depend on your organization’s needs - are you looking to fill a high volume of contingent positions and create a talent pool of potential job candidates, or are you looking to fill full-time positions? If it’s the former an MSP is the answer for you, but an RPO will be the right choice if you want to outsource your internal hiring processes.

Are you looking for more information on how HCMWorks can help your business reach its workforce targets through our innovative and tailor-made MSP services? Contact our team of experts today. We would be more than happy to answer any questions you have.

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Tags: Workforce Management

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