Pros and Cons of In-House Vs. Recruitment Process Outsourcing (RPO)

Every company faces the challenge of sourcing new talent as efficiently and cost-effectively as possible. This question usually comes down to using in-house and outsourced recruiting. That is, whether to handle recruiting internally or utilize a staffing agency or recruitment process outsourcing (RPO) provider to handle processing applications and interviewing talent. 

“Honestly, a hybrid approach can sometimes work best,” said Brittany Acosta, senior corporate recruiter for SelectLeaders and Bisnow.

In-house recruiters and RPOs generally have the same responsibilities:

1. Generating job descriptions
2. Sharing job postings across job boards and social media
3. Tracking and screening applications
4. Coordinating interviews

Your initial reaction may be to handle the process in-house to ensure that talent meets your firm’s specific requirements. But if a CRE development firm, for example, has taken on a resource-intensive construction process, your HR may be focused on processing contractors and won’t have the resources for recruitment. 

Of course, there are pros and cons of handling recruitment in-house or through an RPO. This article helps you understand both recruitment methods to help you make an informed decision on how to onboard new talent. 

In-House Recruiting Defined

In-house recruiting is familiar to larger firms. Typically, the human resources department handles recruitment; even larger organizations may employ talent scouts. In-house recruitment may be the most effective option — in-house staff knows your company best. But in terms of resources, it’s important to keep in mind everything that goes into in-house recruiting. This includes:

1. Your in-house recruiter is an FTE, and FTEs can be the highest expense for some companies
2. Time spent searching and sorting through the talent pool
3. Expenses related to the hiring process
4. Training for recruiting

While some of these costs, like salary and benefits, are fixed, we can start to piece together how in-house recruiting can get very resource-intensive. However, in-house recruiters have direct input from your staff and managers. They have experience with your firm and can speak more to the culture of your company. 

Pros of keeping recruitment in-house

1. Fixed costs (salaried employees usually handle in-house recruitment)
2. Deeper commitment to the success of the company
3. Understanding of company culture and values
4. Ideal for long-term recruitment
5. Closer understanding of the role’s specific requirements

Cons of in-house recruitment

1. Higher costs for low-volume hiring
2. Difficulty scaling hiring (up or down)
3. Time spent training recruiters or HR for hiring
4. Less urgency to hire, and more time spent sorting through applicants

Recruitment Outsourcing Defined

Outsourcing recruiting, involves leveraging an RPO or similar third-party services to handle finding and attracting talent. The external agency will specialize in finding talent and may have networks of applicants and talent from which they can source. The best RPOs usually specialize in a certain industry, so it’s entirely possible to find a CRE-specific staffing agency, for example. Some types of outsourced recruitment:

1. Staffing companies: They may handle hiring only new staff, which is ideal for smaller businesses. A staffing agency may focus on finding temporary and contract workers. For example, if a small private equity firm is looking for a contract property manager for a property they own, a staffing agency may help immediately fill this role.
2. Recruiting agency: Similar to staffing companies, recruiting agencies only handle sourcing talent. However, a recruiting agency typically specializes in filling full-time roles at the management levels and higher, as well as highly specialized roles. For example, a CRE investment firm looking for a permanent associate analyst to handle a new account may use a recruiting agency.
3. Recruitment process outsourcing (RPO) provider: The RPO handles most or all parts of recruitment including strategy, job postings, reviewing applications through applicant tracking systems (ATS), onboarding, and more. A larger enterprise-level CRE that’s expanding may use an RPO provider to help hire more staff.

For context, resource process outsourcing is similar to business process outsourcing (BPO), which outsources vital functions like accounting and IT management. Similar to RPO providers, a BPO is usually used by enterprise-level businesses. 

RPOs handle all the responsibilities we listed above related to sourcing new talent. In terms of cost, third-party recruiters structure their cost in a few ways. They may charge:

1. A percentage of the hired employee’s first-year salary
2. A retainer fee paid upfront
3. A contract where the hired employee is on the RPO’s payroll and their salary is billed to the company with a small extra cost

The payment structure will depend on the needs and expectations of the company. If a CRE firm is expanding and is expecting to hire a lot of staff, it may be more cost-effective to pay an RPO a retainer for sourcing new talent. Otherwise, for filling a few roles, a percentage fee may be the better option. 

Pros of RPO

1. Industry-specific experience with hiring candidates
2. Access to a larger, higher-quality pool of applicants
3. Variable costs and scalability to hiring needs of the company
4. Experience with ATS and other recruiting software
5. Firms were 80% more likely to say hiring is consistent/predictable (RPOA 2023 Value and Insights)

Cons of RPO

1. Potentially higher costs with long-term hiring
2. Less knowledge of company culture
3. Less direct control of hiring

How do RPOs differ from other agencies?

RPOs have deeper integration with businesses to fill positions with long-term talent. An RPO handles more than just sourcing talent — hey also assist with applicant tracking, planning recruitment, and the end-to-end process of hiring talent. RPOs are more scalable than other agencies and even in-house recruiting, depending on the needs of your firm. RPOs have deeper integration with businesses to fill positions with long-term talent. An RPO handles more than just sourcing talent  — hey also assist with applicant tracking, planning recruitment, and the end-to-end process of hiring talent. RPOs are more scalable than other agencies and even in-house recruiting, depending on the needs of your firm. 

What to Expect From an RPO Firm

The arrangement that you make with an RPO firm will depend on the needs of your business. You can expect the arrangement with an RPO to change over time, based on the needs of your company. This, in fact, is one of the strengths of using an RPO versus in-house recruiting. Some arrangements you may have with RPO are:

1. Full RPO: An RPO firm completely replaces internal recruitment and handles all the employee recruitment process. This includes sourcing, interviewing, and even onboarding. A full RPO arrangement may even integrate with your business to work on-site.
2. Hybrid or blended RPO: The RPO takes on some responsibilities of recruitment, such as sourcing talent. This plan is usually for firms looking to fill gaps in their recruitment function or want to handle certain processes (such as onboarding) in-house.
3. Contingent RPO: This arrangement has the RPO fill a role similar to a staffing agency. The RPO instead sources temporary and contract employees for a company.
4. On-demand RPO: A shorter-term arrangement where the RPO agrees to fill a certain number of roles at your business within a specific time. This is a limited, shorter arrangement that may be used by small businesses.

How SelectLeaders Fits Into the In-House/Outsource Landscape 

“RPOs are great when you need to hire quickly or in large numbers, but keeping some hiring in-house helps with things like company culture and long-term planning,” Brittany said. “It’s really about finding a balance that works for your business and the roles you’re trying to fill.” 

SelectLeaders can assist with connecting your company directly with real estate talent. Whether you already have an in-house HR or recruiting team, are working with an RPO, or even both, our platform is an excellent tool for finding specialized talent.

Our platform is a highly flexible tool, able to be built into your existing recruitment pipeline or integrate with an RPO for finding great candidates more efficiently. SelectLeaders also offers scalable solutions depending on the needs and size of your business. 

If you’re planning on utilizing an RPO, we recommend initially taking on a hybrid approach to ensure that certain parts of the recruitment process are still handled internally. It can be essential for candidates to match the company culture and long-term goals of your firm. You should also evaluate the specific needs of your business. How many roles do you need to fill? Are these full-time or temporary positions? Most RPOs have highly flexible hybrid plans for a cost-effective solution. 

Sources consulted:

1. ^{RPOA, 2023 PRO TRENDS: A BUYER’S GUIDE, accessed 2024-12-18}
2. ^{QX Global Group, In-house vs Outsource Recruiting Model: 4 Factors to Help You Reach a Decision, 2024-09-20, accessed 2024-12-18}
3. ^{Eddy, HR Encyclopedia: Recruitment Fees, accessed 2024-12-18}
4. ^{Forbes, Recruitment Process Outsourcing: The Ultimate Guide, 2024-05-28, accessed 2024-12-18}
5. ^{RPOA, What is Recruitment Process Outsourcing (RPO)? 2013-02-12, accessed 2024-12-18}