Blogs & Articles

Decoding RPO costs: Your guide to understanding financial considerations

Content Team

May 8, 2024

Recruitment Process Outsourcing (RPO) offers an innovative approach to talent acquisition, but understanding the intricacies of its costs and financial projections can be complex. In this blog, we’ll answer some of the most frequently asked questions about RPO costs and financial considerations.

When is an RPO solution a cost-effective option?

RPO can be a cost-effective option in several scenarios such as businesses who pay high and frequent agency fees, teams with fluctuating recruitment volumes or when your internal recruitment teams lack the subject matter expertise to operate strategically in specific recruitment areas such as recruitment technology, employer brand, candidate and hiring manager experience or specific recruitment projects – to name a few. With a quality RPO partner, you will gain access to a wealth of expert knowledge, so cost-efficiencies and value can be gained broadly.

How do RPO pricing models work?

RPO pricing models come in three basic cost models:

Management fee: Under this model, an annual management fee is charged, in 12 equal monthly instalments. The fee is linked to the agreed size and cost of the team dedicated to your business, as well as the annual number of placements.
Variable placement fee: Unlike the annual management fee, variable placement fees are charged only when a successful placement is made. These fees can be structured as a flat fee or a percentage of the candidate’s salary, offering flexibility to align with the role’s level and/or source of hire. In some regions, this often looks like an open/close fee where 50% of the fee is due at the opening of the requisition, and the other 50% when the offer is accepted.
Hybrid fee: The Hybrid model combines elements of the two models mentioned above. RPO service fees are a mix of a fixed management fee and a variable placement fee. This hybrid approach offers a balanced and adaptable way to meet your organization’s unique needs.

Who is responsible for managing financial and performance metrics in an RPO contract?

Maintaining leadership oversight of an RPO partnership is important to ensure you are making the most of your solution. We always recommend allocating the necessary time and resources for managing the relationship with your RPO team. Regular insights and reporting from your RPO partner will help you understand how your investment contributes to your recruitment process, identify areas for improvement, and forecast future needs.

In the world of Recruitment Process Outsourcing (RPO), there’s no one-size-fits-all solution. Every organization is unique, and the benefits of an RPO partnership can vary depending on your specific needs and goals. If you’re eager to explore how an RPO solution could work for your organization or if you have any questions about how RPO can transform your talent acquisition process, don’t hesitate to get in touch with our team of experts.

Hudson RPO

Content Team

The Hudson RPO Content Team is made up of experts within the Talent Acquisition industry across the Americas, EMEA and APAC regions. They provide educational and critical business insights in the form of research reports, articles, news, videos, podcasts, and more. The team ensures high-quality content that helps all readers make talent decisions with confidence.