Outsourcing some or all of your recruiting and hiring needs to a third-party company is becoming more common, even for smaller startups and companies without big human resources budgets. When researching the options available, it’s likely you’ll hear about both RPO and MSP teams. How do these differ? And which is best for your unique needs?
Learn more about RPO vs. MSP in our guide before you make your next hire.
What is RPO?
RPO stands for recruitment process outsourcing, and it involves a company sourcing a third-party team to do some or all of their talent acquisition (recruiting and hiring). This is sometimes done through an end-to-end solution, where the RPO provider designed the hiring process and manages everything from writing job descriptions to the initial days of onboarding new full-time employees.
They get to know your culture and employer branding inside and out, along with your challenges and strengths. They also seek to promote your brand reputation while retaining top talent. You can usually scale your use of an RPO as needed to get more support during peak hiring seasons and less when you don’t have positions to fill.
What is MSP?
MSP stands for managed service providers, and they can ease your hiring burdens. They specialize in temporary workers, however, so they aren’t looking for the same type of employee that you would use an RPO for. From freelancers to seasonal workers, you would use an MSP for the hiring and managing of temporary talent. MSP solutions often work with existing temp agencies while acting as a go-between, so that you only have to interact with one contact.
Key differences between RPO and MSP
Both options can reduce your workload and allow you to focus more on your own core competencies, but how can you know which is best? Each serves a unique purpose but also has pros and cons to consider.
1. Type of workforce
As mentioned earlier, an RPO focuses on employees that will grow and advance within your company as permanent staff members. An MSP, on the other hand, is solely focused on temp workers. While both can source candidates from the same industries, each has a proficiency for their own worker classification.
2. Source of workers
An RPO looks for candidates in much the same way your own talent acquisition team would. They use their network, job fairs, ads, social media, and candidate databases to find just the right worker for your needs. They are active in their search and may tweak their efforts to reflect the challenges of your geographic location or industry.
MSP programs outsource to other agencies or networks to find and manage those hires. They leave it up to the temporary staffing agencies to attract and recruit to their networks, then leverage their data and reporting to find the best talent from among those. They rarely, if ever, reach out to recruit candidates from the general public.
3. Technology involved
Tech has really changed the way hires are made, and for the better. The RPO teams often use applicant tracking systems (ATS) to manage candidates from the initial contact all the way through vetting, interviewing, and hiring. This software keeps everyone in the company on the same page and creates consistency in hiring that matches your culture and brand.
MSP providers don’t manage candidates in the same way but rather manage their vendors (the temp agencies). Their software is a vendor management system. And while there is some similar functionality compared to an ATS, the goal is very different.
4. Value propositions
What does an RPO truly offer? Hopefully, they produce results in the form of quality hires with interest in growing with your company. Their value proposition is in hiring quickly but with the aim of reducing overall turnover and, eventually, your cost per hire.
Since MSPs aren’t interested in long-term results, they may offer a value proposition based solely on filling roles quickly and cheaply.
5. Different requirements
MSP excels in vendor management, so they create ownership for filling flexible hiring needs at a large volume. They wouldn’t make sense for just one or two hires a year or for someone who wanted to address quality issues in a long-term workforce.
RPO, on the other hand, can work with your HR teams and hiring managers to meet the obstacles of an ever-changing talent landscape, even in difficult-to-staff industries looking for long-term talent. They can craft a unique talent pipeline just for you, based on the future you envision for your company.
6. Pricing models
MSPs take a cut, or commission, of the wages you pay temp workers sent to you by their agency. RPOs, however, can have a variety of rate plans, ranging from a fixed monthly management fee to a per-hire charge. Some RPOs have a hybrid fee scale that combines a monthly charge with a per-hire cost, as well.
MSPs can handle everything after the initial recruitment of temp talent, including payroll and reporting. They can take care of additional worker procurement, as needed, too.
RPOs are really more of an HR function, doing the things your hiring teams already do. This includes everything from placing the ad to making an offer of employment. They can mix and match services and provide just what you need when you need it. They rarely handle payroll or similar tasks, though, since their competency is in talent management.
Which is the right choice for you?
If it seems that the answer is a simple one for you, it most likely is. If you’re not in the market for temporary employees, consultants, or independent contractors, then MSP options won’t be something that will help you. RPOs are better poised to help you achieve long-term hiring growth with a lower cost per hire over time. It can even get you qualified candidates set up in a talent pipeline for the future, in the event you don’t need new hires immediately. But that doesn’t mean you shouldn’t consider investigating the services of both, because you never know if the market—and your needs—may change.