5 key differences between an RPO provider and an MSP.

With rapid changes in the global workforce profile brought about by demographic shifts and newer models of talent acquisition and engagement, the traditional differences between managed services providers (MSP) and recruitment process outsourcing (RPO) providers are taking on different shades today. Organisations are looking differently at talent requirements and becoming innovative in their talent acquisition efforts. The imperatives to leverage flexible workers, nurture full-time employees, and enhance efficiency have blurred the rigid distinctions between MSPs and RPOs. Still, there exist at least five fundamental differences between MSPs and RPO providers.

1. A difference in value propositions

While the MSP primarily offers the values of reduced cost and risk the RPO provider’s advantage lies in their faster sourcing of quality talent (cost advantage is implicit in their minimal usage of agencies) through their expertise of the entire recruitment process. MSPs are thus more owned by procurement while human resources (HR) take primary responsibility for RPO providers.

2. A difference in requirements

Today’s RPO programs provide high-volume talent acquisition services in an end-to-end manner encompassing the demands of compliance, scalability, cost, quality and other specific business challenges. Deploying versatile models (on-demand, project-based, partial, full cycle and enterprise RPO), an efficient RPO partner takes accountability for the entire gamut of consultation, execution and management of the talent acquisition strategy. MSP programs, on the other hand, take accountability for scalable and end-to-end vendor management for high-volume users of flexible talent force. Theirs is an expertise in staffing and supplier management to fulfill an organisation’s business requirements.

3. A difference in pricing models

Market-driven pricing rules the MSP model, and this is applied as a percentage of the workers’ rates. On the other hand, the RPO provider charges organisations on the delivery costs for the skill sets in question. The actual billing could be either as a fixed management fee or a variable ‘per-candidate’ fee, or even a combination of the two.

4. A difference in technology deployment

Directly related to their end objectives, the technologies deployed differ between MSPs and RPO providers. The RPO provider looks to efficient applicant tracking systems (ATS) as their comprehensive database system to drive their workflows. Through the ATS, they manage requests, align candidate applications to the request, track interviews, and manage the onboarding requirements. RPO technology systems and tools also enable talent analytics to be applied for insights and future improvements. MSP providers, on the other hand, deploy vendor management system (VMS) technology. The workflow manages the recording, approval and billing of hours worked by the flexible workers contractors.

5. A difference in processes

RPO providers processes cover the A to Z of recruitment – sourcing, screening, interview scheduling, offer management, background checks, mobility, on-boarding, referrals and employer branding. They can offer one, more or all modules on an outsourced basis. As an extension of the procurement function MSPs’ processes cover tracking of resources, time reporting, approvals and payroll services.

Despite the differences, one common thread of purpose runs across MSPs and RPO providers - the commitment for the right people at the right time and place. A blended approach, incorporating the best of both models is already gaining maturity and popularity to provide the advantages of a total talent acquisition approach.