Recruitment Process Outsourcing vs Staffing Agency – Choosing The Right Hiring Solution

March 7, 2025 –

By Ethan Sympson

Beyond your company’s internal hiring efforts, there are several external solutions to help meet your recruitment goals. Two of the most effective options are Recruitment Process Outsourcing (RPO) and partnering with a staffing agency—but what sets them apart? Understanding the differences is key to choosing the right approach for your business. In this article, we’ll break down how RPO and staffing agencies compare, their unique advantages, and which option might be the best fit for your hiring strategy.

What is Recruitment Process Outsourcing (RPO)?

Recruitment Process Outsourcing (RPO) is a strategic partnership where a company transfers all or part of its recruitment processes to an external provider. RPO providers function as extensions of a company’s HR department, aiming to enhance efficiency, scalability, and overall talent acquisition outcomes. An RPO provider manages various recruitment tasks, including sourcing, screening, and onboarding candidates, while also offering data-driven insights to optimize hiring processes.

Types of Recruitment Process Outsourcing

Depending on your company’s hiring needs, different RPO models exist:

End-to-End RPO: The provider assumes full responsibility for the recruitment process, from sourcing to onboarding.
Project-Based RPO: Suitable for short-term hiring needs, such as seasonal surges or large expansion efforts.
Selective RPO: Focuses on outsourcing specific recruitment functions, like candidate sourcing or background checks.
On-Demand RPO: A flexible, pay-as-you-go model that provides recruitment support when needed.

RPO Stats

RPO services have seen increased adoption due to their potential to improve hiring efficiency. Notable statistics include:

The global RPO market was valued at $7.33 billion in 2022 and is projected to reach $24.32 billion by 2030, growing at a CAGR of 16.1%.
RPO programs can reduce cost-per-hire by more than 20% and cut time-to-hire by up to 55%.

What Is A Staffing Agency?

A staffing agency is an external firm that assists businesses in filling open positions by providing pre-screened candidates. Unlike RPO providers, staffing agencies often focus on immediate hiring needs, offering flexibility for companies requiring temporary, temp-to-hire, or direct-hire employees. Staffing agencies collaborate closely with internal recruiting teams to ensure that both the employer’s and employee’s needs are met, facilitating a seamless integration process.

Types of Staffing Agencies

Staffing agencies come in various forms, depending on their area of expertise:

Temporary Staffing Agencies: Provide short-term workers to cover seasonal demand, special projects, or employee absences.
Temp-to-Hire Agencies: Allow businesses to evaluate a candidate’s performance before making a permanent hiring decision.
Direct-Hire Agencies: Specialize in placing candidates in full-time roles within client companies.
Industry-Specific Staffing Agencies: Focus on specific sectors such as IT, healthcare, logistics, or manufacturing.

Staffing Agency Stats

Staffing agencies play a crucial role in the workforce landscape. Key statistics include:

U.S. staffing companies employ an average of 2.5 million temporary and contract workers per week, with annual staffing employment reaching nearly 13 million.
The U.S. staffing and recruiting industry generates ~$186 billion in sales annually.

Comparing RPOs vs. Staffing Agencies

When evaluating external recruitment solutions, it’s crucial to understand the differences between Recruitment Process Outsourcing and staffing agencies. Each offers distinct advantages tailored to specific organizational needs. Here’s an expanded comparison to guide your decision-making:

Cost & Pricing Models

RPO: RPO providers typically offer flexible pricing structures, including management fees, cost-per-hire, or hybrid models. These models are often customized based on the client’s hiring volume, the complexity of roles, and the level of service required. For instance, a management fee model provides budget predictability, covering the entire recruitment process, while a cost-per-hire model aligns costs directly with hiring outcomes. This adaptability ensures that organizations can select a pricing strategy that aligns with their financial planning and recruitment needs.

Staffing Agencies: Staffing agencies generally operate on a contingency or markup-based pricing model. In a contingency model, the agency receives payment only upon successfully placing a candidate, often calculated as a percentage of the candidate’s first-year salary. Alternatively, a markup model involves adding a predetermined percentage to the candidate’s hourly wage, which the client company pays. These straightforward models offers clarity and are particularly beneficial for organizations with immediate or short-term hiring needs, as costs are incurred only when a placement is made.

Sourcing of Candidates

RPO: RPO providers integrate deeply with an organization’s culture and strategic goals, enabling them to proactively build and manage talent pipelines. They employ advanced sourcing techniques, leveraging data analytics, employer branding, and targeted recruitment marketing to attract both active and passive candidates. This strategic approach ensures a continuous flow of qualified talent aligned with the company’s long-term objectives.

Staffing Agencies: Staffing agencies excel in rapidly sourcing candidates to meet immediate hiring demands. They maintain extensive databases of pre-screened candidates and utilize their networks to quickly identify suitable individuals. This reactive approach is particularly effective for filling temporary, temp-to-hire, or urgent permanent positions, providing organizations with the agility to respond to fluctuating workforce needs.

Involvement with Your Team

RPO: An RPO provider functions as a seamless extension of your internal HR department. They collaborate closely with hiring managers, aligning recruitment strategies with organizational goals and culture. This partnership fosters a cohesive hiring process, enhances employer branding, and ensures that recruitment efforts are tailored to the company’s specific needs.

Staffing Agencies: Staffing agencies typically operate alongside your internal team, focusing on swiftly filling open positions based on predefined criteria. While they may not engage deeply with your company’s culture or long-term strategies, their expertise in rapid placement is invaluable for addressing immediate staffing shortages or project-based needs.

What Option Makes the Most Sense for My Business?

Deciding between Recruitment Process Outsourcing (RPO) and a staffing agency depends on your company’s hiring needs, internal resources, and long-term strategic goals. Both solutions offer unique advantages, but their effectiveness varies based on factors such as hiring volume, budget, workforce flexibility, and integration with your HR team.

When to Choose RPO

An RPO provider is the right choice for companies looking for a long-term, strategic recruitment partner to optimize their hiring process, reduce costs, and enhance talent acquisition. This approach works best for:

Large-scale, ongoing hiring needs: If your company consistently hires high volumes of employees across different departments, an RPO provider can help manage and streamline recruitment efforts.
Employer branding & talent pipeline development: RPOs focus on enhancing your brand as an employer to attract top talent, using proactive sourcing techniques to build a pipeline of qualified candidates.
Data-driven hiring optimization: Companies that want to integrate recruitment analytics, automation, and AI-driven hiring processes can benefit from RPO solutions that offer technology-driven insights.
Full recruitment process integration: RPOs act as extensions of your HR team, taking over key hiring functions such as sourcing, screening, interviewing, onboarding, and compliance.

However, while RPO solutions provide long-term cost savings and efficiencies, they often require significant commitment, customization, and an extended ramp-up period before delivering measurable results.

When to Choose a Staffing Agency

A staffing agency is the best solution for businesses that need immediate hiring support for temporary, temp-to-hire, or permanent roles, with an emphasis on speed and flexibility. A staffing agency is ideal if:

You need to fill positions quickly: Staffing agencies maintain pre-screened talent pools, allowing them to place candidates in roles within days or even hours. This is particularly beneficial for industries with high turnover rates or seasonal workforce fluctuations.
You require workforce flexibility: If your company experiences fluctuating demand, a staffing agency provides on-demand talent without long-term hiring commitments. This is ideal for businesses with project-based work, peak seasons, or unexpected staff shortages.
You want to reduce hiring risks: With temp-to-hire solutions, staffing agencies allow businesses to evaluate candidates before making a permanent hiring decision, ensuring a better fit for both employer and employee.
You need industry-specific expertise: Many staffing agencies specialize in certain fields—like light industrial, logistics, IT, healthcare, or administrative roles—providing access to skilled workers who fit industry requirements.

You want a close partnership with your recruiting team: Unlike RPOs, which may operate more independently, staffing agencies can work as a direct extension of your HR team to ensure alignment with your company culture, hiring goals, and workforce planning.

Consider A Hybrid Approach: Combining RPO & Staffing Agencies

For some businesses, a hybrid hiring strategy offers the best of both worlds. RPO providers can be used for long-term workforce planning, employer branding, and optimizing recruitment efficiency, while staffing agencies can support short-term, project-based, or urgent hiring needs.

For example:

A large-scale fulfillment center may use an RPO to build a long-term recruitment strategy but partner with a staffing agency during peak seasons to fill warehouse roles quickly.
A manufacturing company may rely on a staffing agency to fill temporary and temp-to-hire roles, while using an RPO provider to develop leadership pipelines for full-time management positions.

Ultimately, choosing the right hiring solution depends on your company’s workforce needs, hiring urgency, and the level of control and flexibility you require in your recruitment process.

Work with Staffing By Starboard – Your Specialized Staffing Partner

At Staffing By Starboard, we offer the best of both worlds—combining the strategic, high-touch approach of an RPO with the flexibility and efficiency of a traditional staffing agency. We go beyond simply filling positions; we take the time to understand your business, workforce needs, and company culture to ensure every placement is the right fit. Our people-centered approach allows us to deliver high-quality candidates who drive long-term success, whether you need scalable hiring solutions or targeted talent acquisition. With Starboard, you get a true talent partner—one that helps you build strong, engaged teams that support your operational goals and fuel your company’s growth.