RPO vs Contingency Recruiting: Choosing the Right Model

When companies decide to outsource part or all of their recruitment, they typically face a fundamental choice: Recruitment Process Outsourcing (RPO) or contingency recruiting. Both involve external partners filling your open positions, but the similarities end there. The engagement model, cost structure, accountability, and strategic value differ enormously. Choosing the wrong model wastes money and delivers suboptimal hires. This guide breaks down both models so you can make an informed decision.

What Is Contingency Recruiting?

Contingency recruiting is the traditional agency model. You engage one or more recruitment agencies to fill a specific role. The agency sources candidates, screens them, and presents a shortlist. You pay a fee — typically 8.33% to 20% of the candidate's annual CTC — only if you hire one of their candidates.

How it works: 1. You share the job description with one or more agencies 2. Agencies race to submit candidates (often prioritising speed over fit) 3. You interview their candidates alongside your own sourcing efforts 4. If you hire an agency's candidate, you pay the contingency fee 5. If you fill the role through your own efforts, you pay nothing

The contingency model's strengths: - No upfront cost or commitment — you only pay for results - Access to the agency's candidate database and sourcing capability - Works well for individual roles or small-volume hiring - Easy to engage multiple agencies in parallel for broader reach

The contingency model's weaknesses: - Agencies prioritise easy-to-fill roles over difficult ones (they earn the same fee faster) - Quality can suffer when agencies focus on volume and speed - No accountability for process improvement or employer branding - High per-hire cost when scaled across many positions - Agencies work on your roles alongside dozens of other clients

What Is Recruitment Process Outsourcing (RPO)?

RPO is a strategic partnership where an external provider takes ownership of some or all of your recruitment process. Unlike contingency, RPO is a managed service — the provider embeds recruiters into your organisation, uses your employer brand, and is accountable for defined hiring outcomes.

How it works: 1. You define the scope: full RPO (all hiring), selective RPO (specific departments or roles), or project RPO (time-bound hiring initiatives) 2. The RPO provider deploys dedicated recruiters who work exclusively on your positions 3. They manage the end-to-end process: sourcing, screening, interview coordination, offer management, and onboarding support 4. Pricing is typically a monthly management fee plus a reduced per-hire fee, or a fully blended cost-per-hire 5. Performance is measured against agreed SLAs: time-to-fill, quality-of-hire, candidate satisfaction

The RPO model's strengths: - Dedicated resources focused solely on your hiring needs - Process improvement and standardisation across all hiring - Employer branding management — RPO recruiters represent your brand, not theirs - Data-driven insights: detailed reporting on pipeline, conversion rates, and market intelligence - Cost efficiency at scale — per-hire cost decreases as volume increases - Accountability through SLAs and performance metrics

The RPO model's weaknesses: - Requires a minimum commitment (typically 6-12 months) - Higher upfront investment than contingency - Takes 4-8 weeks to ramp up and start delivering - Less effective for very low hiring volumes (under 10-15 hires per year)

Cost Comparison: The Real Math

Let us compare the numbers for a company hiring 50 IT professionals in a year:

Contingency model (at 12.5% average fee, 15 LPA average CTC): - Cost per hire: 1,87,500 INR - Total cost for 50 hires: 93,75,000 INR - No process improvement, no dedicated support, no data

RPO model (monthly fee + reduced per-hire cost): - Monthly management fee: 2,00,000-4,00,000 INR (covers 2-3 dedicated recruiters) - Per-hire fee: 50,000-75,000 INR - Total cost for 50 hires: 49,00,000-61,50,000 INR - Includes: dedicated team, process standardisation, reporting, employer branding

At 50+ hires per year, RPO typically delivers 30-45% cost savings compared to contingency recruiting. The break-even point is usually around 20-25 hires per year.

When to Choose Contingency Recruiting

Contingency is the right model when:

• Hiring volume is low (under 15-20 positions per year). The economics of RPO do not justify the management fee at low volumes.
• Positions are sporadic and unpredictable. If you hire in bursts with quiet periods in between, the ongoing cost of RPO during quiet months is wasteful.
• Roles are straightforward and easy to fill. For positions where the market has abundant qualified candidates, agencies can fill them quickly without the need for a managed process.
• You need a quick tactical solution. If you have 2-3 urgent positions and no time to set up an RPO engagement, contingency agencies can start immediately.

When to Choose RPO

RPO is the right model when:

• Hiring volume is moderate to high (20+ positions per year). The per-hire cost advantage kicks in at scale.
• You need process consistency. If you are hiring across multiple teams, locations, or business units, RPO ensures every candidate has a consistent experience.
• Employer branding matters. RPO recruiters engage candidates as representatives of your company, not as third-party agencies. This matters for candidate experience and market positioning.
• You lack internal recruitment infrastructure. If your HR team is small and does not have dedicated recruiters, RPO provides the capability without building an in-house team.
• You want data and accountability. RPO engagements include detailed reporting, market benchmarking, and continuous process improvement.
• You are in a hyper-growth phase. Scaling from 50 to 200 employees in a year requires a recruitment engine, not ad-hoc agency calls.

The Hybrid Approach

Many companies find that neither pure contingency nor full RPO fits their needs perfectly. The hybrid model combines both:

• Core hiring through RPO: High-volume, recurring roles (software engineers, QA, support) are handled by the RPO provider for cost efficiency and process consistency
• Niche/senior roles through contingency or retained search: Specialised positions (security architects, VP Engineering, AI leads) are filled through [executive search](/services/executive-search) or [niche recruitment](/services/niche-recruitment) agencies with deep domain expertise
• Surge capacity through staffing partners: For project-based hiring spikes, [contract hiring](/services/contract-hiring) or [staff augmentation](/services/staff-augmentation) provides the flexibility to scale up without permanent commitments

This hybrid model gives you the cost efficiency of RPO for volume hiring, the specialised expertise of agencies for difficult roles, and the flexibility of staffing for variable demand.

How to Evaluate an RPO Provider

If you are considering RPO, here is what to assess:

1. Industry expertise: Do they understand IT hiring specifically? Generic RPO providers struggle with technical evaluation and candidate engagement in the tech sector.
2. Technology stack: What ATS and recruitment tools do they use? Can they integrate with your existing systems?
3. Flexibility: Can they scale up and down with your hiring needs? What is the notice period for adjustments?
4. Client references: Talk to their current clients — not just the references they provide, but clients in similar industries and at similar scale.
5. Transition plan: How do they handle the ramp-up? What happens if the engagement ends — is there a knowledge transfer plan?

Making the Decision

The choice between RPO and contingency is not about which model is inherently better — it is about which model fits your current hiring reality. A 20-person startup with sporadic hiring needs should not invest in RPO. A 500-person company hiring 80 engineers per year should not be managing 10 different contingency agencies.

At StakTeck, we offer both models because we understand that different clients need different solutions. Whether you need a single permanent hire filled through targeted search or a full recruitment partnership, the right model is the one that matches your volume, budget, and strategic hiring goals.

Start by honestly assessing your annual hiring volume, the predictability of your hiring needs, and your internal recruitment capability. The model that fits those three variables is the model that will deliver the best results.