RPO Business Challenges: Speed AND, not OR, Quality

The Daily Competition for Business Success

Running XL Infotech for last 10 years has taught me many important lessons about recruitment business. Every morning, I check my email with nervousness, hoping to see new job requirements from clients. But reality is harsh - each job requirement we receive is also sent to 2-3 other RPO firms, and client's internal recruitment team is also working on same position.

Our business handles approximately 50-75 job requisitions yearly with a 10 recruiter team. This may sound small to some people, but in RPO business, every single requisition matters for survival. When clients send same job to multiple agencies, only the first agency to send good candidate gets the business. This is our daily challenge.

Understanding RPO Market Dynamics

Market has changed greatly since I started XL Infotech in 2014. In beginning, clients would give us exclusive rights to fill positions. Now the scenario is very different:

• Clients send same job to multiple agencies

• Internal recruitment teams also work on same positions

• Average client works with 4-6 RPO providers

• Success fees only paid for actual placements

• No guarantee of minimum business volume

• Constant pressure to reduce fees

For example, last quarter we worked on 21 positions but only got fees for 4 placements. Other positions were either filled by other agencies, internal teams, were cancelled, or remained unfilled. But we spent same amount of time and resources on all positions.

The Performance Metrics

Let me share real statistics from our business:

• Average time to fill position: 45 days

• Success rate in placing candidates: 23%

• Loss of business to competitors: 45%

• Quality issues leading to candidate rejection: 21%

• Revenue loss due to slow response: $285,000 last year

• Average cost per hire: $3,200

• Resource utilization rate: 65%

• Candidate drop-out rate: 31%

These numbers tell the story of intense competition. When client sends job requirements, internal hiring team starts working immediately. Other RPO firms also start their search. If we are not fast enough, we lose business. If we are too fast but quality is not good, we lose client's trust.

Real Examples of Business Challenges

The Speed vs Quality Dilemma

Last month, we received requirement for Senior Java Developer position. Our team took 4 days to send first candidate profile. By that time, another agency had already submitted 3 candidates the day before. Client hired one of their candidates. We lost not just that business, but client also reduced new job requisitions to us because we were "too slow."

But speed creates other problems. In hurry to submit candidates quickly, sometimes our recruiters make mistakes. Three months ago, we submitted candidate for Data Scientist position very quickly. But recruiter did not notice candidate's machine learning experience was only in training projects, not real work. Client was very unhappy when they found this in interview.

Resource Allocation Challenges

Another big problem is resource allocation. Example from last week: We had 4 recruiters working on urgent Senior Developer role for important client. Then another good client sent requirement for similar position. We had to choose - move some recruiters to new requirement or keep all focused on first client. We chose to split team. Result? We were too slow for both requirements and lost both opportunities.

Technical Understanding Gap

Our recruiters face daily challenge of understanding technical requirements. Recently, client needed "Kubernetes expert with service mesh experience." Our recruiter didn't understand difference between service mesh and microservices. Sent wrong candidates, wasted everyone's time. These situations happen too often.

Current Market Competition Scenario

Competition in RPO market is becoming more difficult:

Large RPO Firms

• Have teams of specialized recruiters

• Can afford expensive tools and databases

• Maintain dedicated teams for each client

• Offer lower prices due to scale

• Have strong brand recognition

Internal Recruitment Teams

• Have direct access to hiring managers

• Know company culture better

• Can move faster in selection process

• Don't have cost pressures

• Have better understanding of requirements

Boutique Agencies

• Focus on specific technology areas

• Have deep technical knowledge

• Maintain specialized candidate databases

• Can offer personalized service

• Often have lower overhead costs

Problems with Current Tools and Methods

We have tried many solutions to improve our performance:

1. Expensive ATS System

• Spent $25,000 on new system last year

• System is complicated, recruiters spend more time learning than recruiting

• Many good candidates are rejected by system filters

• Integration problems with other tools

• High maintenance and support costs

2. Multiple Job Boards

• Subscribed to 5 different job boards

• Pay $3,000 monthly for all subscriptions

• Still missing many qualified candidates

• Same candidates are available to all agencies

• Different interfaces create confusion

• Time wasted in duplicate searches

3. Training Programs

• Invested in recruiter training

• But recruiters still struggle with technical requirements

• Cannot afford to hire specialized technical recruiters

• High turnover means constant retraining

• Training content becomes outdated quickly

The Human Element Challenge

Biggest challenge is human element in recruitment. Our recruiters are hardworking, but they face many difficulties:

Daily Pressures

• Must understand many different technical skills

• Have to work very fast but also be accurate

• Need to check candidate background properly

• Must maintain good relationships with clients

• Have to compete with other agencies every day

Skill Gap Issues

• Technical requirements becoming more complex

• New technologies emerging constantly

• Difficult to understand client-specific needs

• Challenge in evaluating candidate capabilities

• Need to learn new tools and systems regularly

This creates much stress. Last year, we lost 4 good recruiters because of work pressure. New recruiters take 3-4 months to become productive. During this time, our performance suffers.

Impact on Business Performance

These challenges affect our business performance significantly:

Financial Impact

• Lost opportunities cost approximately $300,000 yearly

• Training and retraining costs exceed $50,000 annually

• Tool and subscription costs increasing every year

• Profit margins reducing due to competition

• Investment in new technologies straining resources

Client Relationships

• Losing long-term clients to competitors

• Difficulty in acquiring new clients

• Reduced job requisitions from existing clients

• Pressure to reduce fees

• Quality issues affecting reputation

The Need for Better Solutions

We have searched for better tools for many years. Tried different software, different processes, different training methods. But nothing has solved our main problems:

Current Needs

• How to screen resumes quickly but accurately

• How to identify right candidates faster than competitors

• How to maintain quality while working under time pressure

• How to compete with larger firms who have more resources

• How to retain good recruiters

Technology Requirements

• Need affordable AI solutions

• Better candidate matching systems

• Automated screening tools

• Technical skill assessment capabilities

• Integration with multiple platforms

Traditional methods are not working anymore. Our industry needs new solutions, particularly in artificial intelligence and automation. But current AI tools we have tested are either too expensive for small RPO like us or not accurate enough for our needs.

Looking to Future

As owner of small RPO firm, I see many challenges ahead:

Market Trends

• Market becoming more competitive every year

• Clients expecting faster results

• Quality requirements increasing

• Price pressure from larger competitors

• Need to invest in new technologies

Opportunities

• AI technology becoming more accessible

• New tools for candidate assessment

• Possibilities for automation

• Better data analytics capabilities

• Improved candidate matching systems

But I also see opportunity. If we can find right technology solutions, particularly in AI and automation, small RPO firms like ours can compete more effectively. We need tools that can:

• Screen resumes accurately and quickly

• Help recruiters understand technical requirements better

• Reduce manual work in recruitment process

• Improve quality of candidate selection

• Cost less than hiring more recruiters

Final Thoughts

Running RPO business in today's market is very challenging. We compete not just with other agencies but also with client's internal teams. Speed and quality both are critical for success. Current tools and methods are not sufficient for these challenges.

We need new solutions, particularly in AI technology. But these solutions must be affordable for small RPO firms and must actually solve our real problems. Until then, we continue to struggle with daily challenges of staying competitive in this difficult market.

Santosh Reddy is CEO of XL Infotech, an RPO firm serving technology clients for the last 16 years. Based in New Jersey, he leads a team of dedicated recruiters serving software, IT services, and technology consulting firms across the United States. After moving from Hyderabad in 2003, he founded XL Infotech in 2008, growing it from a one-person operation to its current size. When not working on growing his business, Santosh enjoys spending time with his wife Priya and their two children and mentoring other first generation entrepreneurs in the New Jersey area.