Procurement RPO Negotiations in a Stagflation Market

"Anyone that tells you RPO negotiations are just about price hasn't thought it through from procurement's perspective!" says Mike Lander, CEO of Piscari.

These days we have supply chain disruptions, escalating input costs in a high inflation economy, and consumer price challenges. So how do you navigate growing your business? How do you manage talent acquisition, and how do you navigate the RPO negotiations? 

Fortunately, Mike Lander shares with us the triggers for a buyer who seeks out RPO (Recruitment Process Outsourcing). We also learn what to look out for once buyers make a decision and take the leap.

Lander, CEO of Piscari, helps businesses negotiate better commercial deals with their clients. He's bona fide and has the expertise, having been a procurement director and negotiated hundreds of contracts with a total value of over £450m. 

"Based on my experience, I consider at least 30 or 40 variables when negotiating an RPO contract. So, I balance many variables such as commercial risk, competitive advantage, pricing, scope, quality/reliability, SLAs, and innovation. All of that I discuss and negotiate as we go through a strategic sourcing process," says Lander.

What reasons might an employer have for implementing an RPO strategy?

Lander explains that once a company's internal recruitment function is stretched, finding external market talent is more difficult because you’re only working inside one brand. Also, relying on agencies for sourcing gets pricey. That quickly becomes unaffordable as you scale.

• Cost: Relying on traditional recruitment agencies gets pricey since they can take up to 25% of a first-year salary
• Efficiency: As you scale up quickly, key metrics like Time to Hire, Time to Fill, and Candidate Experience, can decline dramatically
• Flexibility: Market conditions can change rapidly, so you need to respond at the same speed. Internal Recruitment functions often find this incredibly challenging

"In today's market, I need flexibility, cost efficiency, quality/certainty and low barriers to exiting a contract if I had to”, says Lander. 

Olly Harris, the Global Managing Director of Page Outsourcing, is supportive of these drivers and believes mutually beneficial outcomes can be achieved for both parties by putting the RPO requests also on the table. For example, the simple relationship between volume and price. “The more volume a client can give us, the better unit price. Add expectations around a guaranteed lead time then I’d happily have a sensible pricing discussion.”

In a stagflation market, buyers face unique challenges when negotiating procurement RPO contracts. Inflationary pressures drive costs, while stagnant or declining demand can lead to lower market prices. Therefore, it’s critical to understand that flexibility is one of the essential foundations of successful RPO negotiations in the current economic situation. 

Ultimately, if it's becoming clear that relying solely on internal recruitment is not enough, and you are looking to speed up the hiring process while keeping costs down, then you should consider RPO.

Do you want to speak about tailor-made and flexible talent acquisition solutions for your organisation's recruitment needs? Speak to our experts