At what point does it make sense to outsource staffing to a recruiting firm?

At what point does it make sense to outsource staffing to a recruiting firm?

June 20, 2019 8:32 pm

The hiring process can be pretty intensive, draining time and resources from your staff. Is it time to hand the process over to a professional recruiting firm? Will they find better applicants? Will they expedite the process faster than you can? And though they charge a fee, will it be worth it in the end? We asked business leaders to offer their opinions on if and when to delegate hiring to the professionals.

Alan Santillan

Alan Santillan

Community Outreach and SEO at G2 Crowd.

Outsourcing is necessary when you are gearing a company for rapid growth and you’re not at the stage where an HR team or a full-time recruiter is necessary.

Staffing firms offer the advantage of pre-existing relationships and channels of communication with professionals across a wide array of industries. The trade-off for finding a potential hire is the obvious cost that staffing firms charge when providing a candidate that gets hired.

At what point does it make sense to outsource staffing to a recruiting firm?

Rich Franklin

Founder/President of KBC Staffing

In some ways, the answer to this question is straightforward. You should outsource your hiring to a staffing firm when the cost of doing it internally is greater than the cost of outsourcing. Of course, figuring out those costs is not always easy, and there are some that can readily be missed. Here are a few to consider.

  • Salary of your search team – How much are you paying the person or people who are searching for your new employee(s)? How many hours are they spending each week on the job search?
  • Opportunity costs – What else are your internal people not able to do because they are engaged in a job search? What is the cost of those missed opportunities?
  • Candidate quality cost – Given that most companies don’t hire that often, what cost in terms of candidate quality are you paying by not having a particularly deep insight into the candidate market? For example, is it possible that the odds that you hire someone who needs to be quickly replaced are greater because you don’t have as deep of a talent pool to choose from?

Of course, recruiters come with their own costs but those are typically easier to measure. Most recruiters charge 20%-25% of the employee’s first year salary so you know where you stand when you are comparing the two sets of costs.

Candie Fisher

Candie Fisher

Candie Fisher specializes in working with companies of all sizes to attract, hire and engage talent. A marketer at heart, she applies the fundamentals of marketing to amplify the recruiting and hiring process. She helps companies going through growth, change or transformation with their people strategy, process and development.

Here are a few thoughts on when outsourcing staffing makes sense:

Times of high growth

In rapidly growing organizations, the internal resources often cannot keep up with the demand for talent. Often smaller, early stage companies do not have an internal recruiting team and rely on the personal and professional networks of founders to fill roles. This can be effective in early stages, where early employees tend to be passionate generalists wearing many hats. However, as the organization starts to substantially scale, more specialized talent is needed to accelerate growth, and external recruiting resources become more efficient and effective in identifying and attracting this level of expertise.

Hard to fill roles

Even when a company has an internal recruiting team, there are certain roles that can be harder to fill than others due to market demand, company location, specialized expertise or other factors. In this case, it can be useful to partner with a third party that has a more extensive network and can dedicate substantial resources to finding the right talent for these hard to fill positions.

Backfilling internal resources

Recruiting and/or staffing firms can be a useful resource when an internal recruiter leaves the organization or goes on temporary leave. Even if a full executive search isn’t needed, contract recruiters or boutique firms can fill the gap during a temporary leave or keep forward momentum in filling open roles until a new full time recruiter is hired.