With the increase in online recruitment solutions over the past decade, and a drive to reduce recruitment costs, there has been an increase in companies building their own talent sourcing teams, particularly within larger corporations. However, with recruitment volumes being so unpredictable, and in-house teams very often still requiring the services of external recruiters, is this a sensible approach?
Let’s start by looking at the Pros and Cons of each:
In-House Recruitment
Pros
- Better Fit – Internal recruiters understand the company culture which helps them identify talent that better aligns with their companies’ values.
- Employer Branding – Internal recruiters promote the company’s brand in a consistent and authentic way.
- Communication – By communicating directly with prospective candidates’ in-house recruiters should be able to manage candidates’ expectations better and provide quicker feedback.
- Data – in-House teams control the recruitment data enabling them to build a talent pool and review metrics.
- Long-Term Focus – Internal teams are more invested into the business and the retention of hires.
Cons
- Fixed Costs – Maintaining an in-house team includes salaries, online job boards and licenses, training, and overheads, regardless of recruitment volume.
- Capabilities – An in-house team might not have the level of skills, advanced recruitment tools and network that a recruitment business has.
- Flexibility – It is difficult for in-house teams to quickly adjust to high-growth or slow recruiting periods.
- Managing Resource – recruiting is time consuming and it requires a lot of skill and effort to identify, source, and attract talent into a business, particularly if you are building and managing an in-house recruitment team.
Outsourced Recruitment
Pros
- Talent Pool – Recruitment agencies generally have better access to passive candidates and talent that can be difficult for employers to directly source
- Flexibility – Employers do not have any direct financial commitments and therefore do not need to worry about recruitment volumes.
- Speed to Hire – Agencies can often fill roles faster due to their resources and the size of their database / networks.
- Specialized Expertise – Recruitment agencies will generally have more industry knowledge, advanced sourcing tools, and experienced recruiters.
Cons
- Cultural Insight – External recruiters may not fully grasp your company’s values and USP’s, leading to missed talent and mismatched hires.
- Brand – Employers can’t control how their brand is presented to candidates which could mis-lead or damage the perception of their business.
- Cost – Agencies typically charge 10–30% of a hire’s annual salary, which can be costly.
- Confidentiality – Sharing sensitive hiring plans or candidate data with third parties is a potential risk.
- Short-Term Focus – Recruiters may prioritize speed or volume over long-term fit and retention.
In summary, each business needs to look carefully at their specific recruitment volumes, objectives, and budget to come up with the best approach. As a general rule, however, the following applies:
Scenario Best Option
Rapid scaling or high-volume hiring Outsource
Specialized, Key, or hard-to-fill roles Outsource
Long-term strategic talent building In-house
Strong employer branding needed In-house
Limited resources Outsource
Ultimately, making the wrong hire(s) is expensive, time-consuming and de-motivating so the overall objective for any employer must be to source the right person. Therefore, it is advisable for employers to avoid putting all their recruitment processes into a ‘straight jacket’ by selecting only one option and potentially blocking talent through restricting supply. This is why the majority of employers tend to operate a hybrid model whereby they will have a relatively sophisticated direct hiring process (relative to their size) which is then supported by a selection of preferred recruitment agencies. This, however, needs to be well managed as the costs can run up. Employers therefore need to continually review the recruitment tools and agency suppliers to ensure that they are both cost-effective and delivering the talent their business needs.