IT recruitment company vs In-house recruiter: Which model will suit your software project?

Anna Kulesh

Strategic Partnership Manager – EUREKA Bespoke IT Solutions

Reading time: 15 min

Current challenges of IT recruitment

In all businesses, creating high-performing teams, staffing, and maintaining them is a recurring problem, particularly for highly qualified technical development resources who have proven capability in high-demand, niche skillsets. Beyond technical capability; fit, location, salary, and availability also have to be taken into account before the interview and any offers are even considered. Traditional “Search and Selection” approaches can often deliver no or poor results.

Many individuals capable of undertaking these roles avoid the traditional channels, preferring word-of-mouth, niche forums or alternative social media. Trust is a big factor in reaching these candidates and this needs to be earned through prior relationships.

Most HR departments contain a recruitment function, but this is often staffed by HR generalists. These teams will need support to locate, select and recruit high-demand niche skillsets. Often they will need to solicit technical input from elsewhere within the company to validate and screen applicants.

Internal HR functions are frequently used very effectively as internal recruiters, retaining valuable talent within the business by managing internal moves and career paths. However, often these internal teams are required to undertake external recruitment for hard-to-find technical resources. These demands are often time critical, due to either attrition or new project demands. For these reasons, the identification and selection of the correct recruitment approach is essential.

Faced with an urgent requirement, there are different ways of approaching this task:

  • Internal Only: The internal team (HR) could undertake the entire search and selection task completely independently.
  • Externally Led: The task could be fully outsourced as a project to an external recruiter who is a specialist in the sector with an internal liaison from an HR partner.
  • Hybrid: A deeper level of collaboration is established between internal and external recruitment functions. The internal team are included in most of the activities undertaken by the external agency.

The choice of model adopted may depend upon many factors such as:

  • Company circumstances
  • The urgency of the requirement
  • Scarcity of the skillset
  • Size of the company
  • Budget availability

All of these will have a bearing. One overarching consideration remains – in all circumstances the new hire must be both a good technical fit for the company and a good personal fit with their new team.

These are the roles which an employer should look for a recruitment and sourcing agency to support. There may be  some variability from agency to agency, but the key functions are clear:

  • Initial consultation
  • Market appraisal and CV sourcing
  • Initial screening and shortlist preparation
  • Short-listed candidate presentation
  • Support with arranging and, if required, hosting the interview
  • Interview and selection
  • Offer and negotiation
  • Onboarding support

There are strengths and weaknesses associated with these recruitment strategies. Let’s take a closer look at each and drill into some of the details.

In-house Recruitment

In-house recruitment is handled entirely by the company’s employees, occasionally diverting technical or management efforts from the recruiting team undertaking screening tasks. Dedicated staff from the HR team act as in-house recruiters. They are full-time permanent employees, and the company is responsible for providing them with salary and other employee benefits. They will not (normally) be specialists in the technical skillset being sought, but are experienced HR professionals.

Firstly, let us look at the potential advantages of using the in-house team (HR) exclusively to locate and recruit this resource:

  • Cultural fit: The HR team will have a deep understanding of the company’s culture, values, and mission, helping them identify candidates who would be a good cultural fit for the organisation.
  • Business needs: HR are also familiar with the company’s high-level business needs and can normally tailor the recruitment process to identify candidates with the skills and experience required to meet those needs.
  • Internal relationships: The HR team will have pre-established internal relationships with hiring managers and can work closely with them to understand their specific requirements.
  • Process awareness: Using internal HR teams for recruitment can also help to streamline the process, as they are already familiar with the company’s systems and procedures. This can help to speed up the recruitment process and minimize delays.

In many cases, these benefits make HR the natural search and selection choice for many roles. However, when recruiting for niche and/or hard-to-find technical skills there can also be drawbacks. Lets consider some of these.

The main drawbacks of in-house IT recruitment

  • Limited reach: Many of the best resources are already over-subscribed or simply not looking for work. They will not be visiting traditional job sites and therefore must be identified and approached via the forums in which they participate (As one example Stack Overflow). Non-specialist teams may not have the same access to external networks and resources as specialised recruitment agencies or headhunters. As a result, they may struggle to identify and attract top talent with niche skill sets.
  • Limited expertise: There are many skillsets, each with their own terminologies and communities. Many HR generalisits will not have the same level of expertise in identifying and evaluating candidates with niche skill sets as specialized recruitment agencies. This can lead to a higher risk of making poor hiring decisions.
  • Time constraints: Internal HR teams may be stretched thin and have limited time to devote to the recruitment process for hard-to-find technical resources. This can delay the hiring process and result in missed opportunities to secure top talent.
  • Cost: Using internal resource to locate and recruit external technical resources with niche skill sets can be more expensive than using specialised recruitment agencies. This is because internal HR may not have the same economies of scale, a network of contacts and access to cost-effective recruitment tools and processes.
  • Brand perception: Relying on internal HR functions to locate and recruit technical resources with niche skill sets may not be perceived as a proactive or strategic approach by potential candidates. This can damage the company’s reputation as an employer of choice and make it harder to attract top talent.

When should you choose in-house IT recruitment?

We have considered above, some of the pros and cons of internal vs external recruitment practices. Let’s summarise:

  • Cost: If external cost is a major concern, it may be tempting to use internal resources, as these are sunk costs and do not charge a fee for their services. However, they will need to leverage the technical oversight of the internal technical team leads to assure the selection process. This diversion of attention has ramifications for the BAU performance of the business – their time is better spent on the day job.
  • Expertise: If the company is looking for candidates with skills and expertise that are in plentiful supply and easily identified, it may be more effective to use an internal HR function.
  • Time constraint: If the requirement is non-time critical, and HR has the time and resources to devote to the recruitment process, then this may be a more cost-effective approach.
  • Company culture: Internal recruiters can be a good way to ensure that new hires fit with the company’s culture and values. They will be familiar with the company and can help identify at an early stage candidates who will be a good fit.
  • Size of the company: For smaller companies, internally led approaches may be more practical and cost-effective for non-technical recruitment. The complexities and criticality of niche technical recruitment, however, when taken alongside the internal impacts of recruitment assurance oversight often flip the business case for these key resources.

What circumstances indicate that an external recruitment consultancy is a correct decision

Conversely to the above list, specialist external recruitment professionals services are worth using when the following factors are considered:

  • Cost: Consider the business case. Specialist external recruiters charge fees for their services but they often deliver better and faster outcomes resulting in a net saving for the company. It is also common to find the following beneficial agency charging models:
    • No find, no fee: No fee is payable if no suitable candidates are found
    • Split payment: Only a portion of the fee is payable when the chosen candidate accepts the offer. Final payment after a successful trial period.
    • Free replacement: If a candidate leaves after a certain time, the search and selection of the replacement are not chargeable.
  • Expertise: Niche skills or expertise may be difficult to find. It may be more effective to use an external recruitment agency with a track record of successfully locating similar skill sets.
  • Time constraint: If the company is under a tight deadline to fill a position, it may be quicker to use an external recruitment agency that can leverage its network and resources to identify and place top talent quickly.
  • Passive candidate location: Some ideal candidates may not be looking for roles or do not engage via common channels used by the HR team. In these circumstances, the use of a specialist recruitment agency can deliver a better result through increased reach.
  • Onboarding support: Provision of support after offer acceptance. Ensuring that the candidates are motivated to join, and providing support in the event of any counter-offers from their current employer.

What is the Hybrid Model

Of course, between the fully outsourced and the fully in-house recruitment models, there is a middle ground. In this hybrid model, internal and external recruitment functions collaborate closely to execute the recruitment project.

In most cases of hybrid recruitment model, the internal HR function will lead on the non-specialist roles associated with the activity and the agency team will lead on specialist activities, however, they will all be joint activities. During the project, they may be co-located with the agency (or vice-versa) ensuring that communication channels between the internal and external teams are wide-open.

Adopting these approaches can deliver many benefits – some less obvious:

  • Upskilling: The internal HR team gains valuable experience through working with the recruiter. They may experience new search and selection techniques, best practices in screening and filtering and the approaches to background checking that deliver the best results. Furthermore, they will gain insight into the mindset and behaviours of the technical communities. The skills and capabilities of the internal team are increased, leading to future benefits and efficiencies.
  • Strategic focus: Recruiting can be transactional and labour-intensive. Many HR functions need to operate more strategically, supporting the management team, ensuring the company is operating efficiently and is a pleasant and supportive environment for the staff. Outsourcing the transactional activity of recruitment can ensure that these more strategic roles are fulfilled.
  • New ways of working: The experience of working in close hybrid collaboration with a specialist recruiter may bring the internal team to realise that this is a more efficient way of working in general.
  • Reduction in internal disruption: As the agency brings its specialist technical team, there is less need to draw on internal technical team members to support the recruitment. This means that they can continue to work at full capacity in their day jobs

The External Agency Model

How does an IT recruitment agency work?

Recruitment agencies exist to manage complex recruitment processes on behalf of their client. For example, companies who need to hire IT specialists, particularly those specialists with skills which are in high demand or that are hard to locate. This is a highly skilled and specialist area, requiring in-depth knowledge of:

  • The market and current demands. It is often the case that salaries and candidate expectations are not well-known for niche skill sets; neither is this data available in reports or articles. This information is highly time-critical and dynamic.
  • The relevant channels of communication with potential candidates.
  • The formation and maintenance of trusted relationships with potential candidates, their capabilities, preferences and experience – even before any requirement is placed.

The process followed by agencies is also complex and needs skills and experience to operate efficiently for the best outcomes for the client.

On receipt of a brief and agreement of commercial terms, the agency will assign a pursuit lead who will manage the engagement from end to end. The lead will be the primary point of contact and communications between the customer and the agency – they will liaise with their back-office teams and manage the search and selection process.

Typical stages of a recruitment companies process.

Whereas recruitment is one of the roles of an HR department, for a recruitment consultancy, search, selection and placement are the primary functions of their business, as such, they will have a formalised, very well-structured, templated process for their team to follow through. This approach facilitates reporting across their business, allows them to assign staff flexibly across the various stages of the process and is designed to deliver the best, fastest results. When a recruitment consultant is engaged, their goals are aligned with the client. Find and place the best resource in the minimum time.

Initial consultation. The agency will meet with the company to discuss the specific technical needs and requirements of the role, any critical timescales, as well as the company’s culture and values. This will typically involve a review of the job description, required experience and any relevant documents. The agency should be open and up-front with the customer concerning current market trends, demand and remuneration expectations of candidates in the current market.

The outcome of this meeting (or a series of meetings) will be an agreement on:

  • A comprehensive role and person description.
  • The work process to be followed
  • Division of work responsibilities
  • Clear and defined communication channels
  • Defined interview stages

Candidate sourcing. The agencies search teams will use a variety of methods to identify potential candidates including:

  • Checks within the agency’s internal database of candidates which contains both CVs sent speculatively, as well as those previously screened for similar positions.
  • Checks within the network of recruitment industry partners.
  • Reaching out to our candidate contact network for any referrals they may be able to make.

This comprehensive process usually takes 3-5 working days.

As there is no guarantee that a client’s perfect candidate will be in the database, the search team should simultaneously launch customised market research and sourcing for suitable candidates. This might take from one to a few weeks.

Candidate screening. Depending upon the outcomes of the above parallel activities, the agency will review the resumes and other materials provided by potential candidates and select those who appear to be the best fit for the agreed role description. This may involve conducting preliminary interviews, completing screening questionnaires agreed upon with the client or other assessments to further evaluate the candidates.

Candidate presentation. The agency will meet with the client, HR and preferably hiring managers to present a shortlist of carefully selected candidates to the company for further consideration.

Interviews & Selection. The company will conduct interviews with the short-listed candidates to determine which one is the best fit for the role. At the client’s preference, the agency may be involved in hosting, scheduling, coordinating & documenting the interviews.

The company will make a final selection. Also at their preference, they may directly make an offer the role to the chosen candidate and negotiate the package. Alternatively, the agency may be involved in negotiating the terms of the offer.

Onboarding. Once accepted, the agency lead will provide support with onboarding the new hire, particularly managing through any counter-offer disruption, but also by helping with paperwork and orientation.

Recruitment ends when people with specific qualifications and skills are found and hired, however, a good agency will still keep in touch with the candidate for a period to identify, flag and help mitigate any early issues which may mature.

Closure (And Invoicing). Following the successful onboarding of the recruit, the agency will prepare a comprehensive report of all activity undertaken as part of the recruitment. This documentation pack will be presented alongside the invoice.

Top benefits of cooperating with an IT recruitment agency

  • Access to a large pool of qualified candidates: The agency should have access to a large pool of candidates with a variety of skills and experience levels, plus extended reach via partners and contact networks. As well as speeding the search process, this can be especially helpful if clients are looking for niche skillsets or skillsets in high demand.
  • Expertise in the recruitment process: Recruitment agencies have expertise in the recruitment process and are resourced to handle the time-consuming tasks associated with finding and hiring technical staff, such as reviewing CVs, conducting initial interviews, and checking references.
  • Improved efficiency: Working with a recruitment agency can save clients time and effort in the recruitment process, avoiding the distraction of internal technical staff and meeting critical deadlines without disruption or allowing them to focus on other tasks.
  • Flexibility: Recruitment agencies can provide short-term temporary, temp-to-perm, or permanent staffing solutions, depending on customer needs. This can be helpful if clients need to accommodate a temporary increase in workload or are not sure if they have the long-term budget for a permanent hire.
  • Cost savings: In some cases, working with a recruitment agency can be more cost-effective than recruiting staff using either the technical team manager or internal HR functions. This is because the agency absorbs many of the upfront costs associated with finding and hiring candidates.

The key drawbacks of IT recruitment companies

Based on the above, it may seem that the use of an IT recruitment agency is an obvious choice in most situations. There are a few caveats that customers need to be aware of:

  • First and most obviously, agencies charge for their services. If the resource type is in plentiful supply or easy to find, it can also be more expensive than recruiting staff using in-house resources.
  • When working with a recruitment agency, it is important to realise that a task is being outsourced. The client relies on the agency to find and screen candidates on their behalf based on the agreed specification agreed at the start of the search. This is why it is key to put significant effort into documenting and agreeing on the job search parameters at the outset of the process. This need not be complicated, clear and concise usually works best.
  • Communication is key and a plan should be created to ensure regular communication to mitigate the potential for any miscommunications.
  • Sometime the right resource may simply not exist. While recruitment agencies can provide access to a large pool of qualified candidates, there is no guarantee that the candidates they present will be the best fit for the organisation.
  • Dependence on the agency: if a business becomes too dependent upon the agency, it can denude internal capability and therefore be difficult to recruit staff independently if the need arises. To avoid this, pre-planning for knowledge transfer could be built into the recruitment plan

When should you turn to an IT recruitment agency?

So, using IT recruitment agencies has pros and cons. They are not the right decision for all companies and also not right in every situation. What are the key learnings from the above analysis?

It’s not an exact science, however, there are a distinguishable set of guidelines or tests that can be used to determine if a role has a strong case to be placed with an external recruiter. Ask the following questions :

  • Is the vacancy time-critical?
  • The criticality of the role can be evaluated by its impact on the the day-to-day operation of a key business function or department, or does its absence create an immediate risk to the operation of that department?
  • Can the time criticality be mitigated by backfilling from other internal functions or by “spreading the role temporarily amongst other team members?
  • Are the technical skills required in a high-demand or niche sector where resource is not easily located?
  • Does the company need to rapidly scale up or build an entirely new team?
  • In these circumstances, the “tempo” of the recruitment is likely to stress any internal HR function. There will be a need to operate efficiently, at speed and scale. An agency-based approach – either hybrid or dedicated is likely the only rational approach to this demand circumstance.
  • Has the internal HR team already attempted to recruit using traditional means but has had little response or has not found the right candidates
  • The likelihood is that the skillset being sought was not identified at an early stage as niche and high demand. Alternative approaches are needed, particularly if time-criticality is also a factor. Support from a specialist agency is defiantly required.
  • The internal HR recruitment team already has many recruitment activities underway and needs to outsource some tasks for extra capacity.
  • This is a very common situation, particularly in the startup tech sector. It is in these circumstances that the Hybrid model of operation is most appropriate, creating flexible, on-demand recruitment capacity for the hard-to-find technical resources that are needed.

Also worth considering is the situation where an internal HR recruitment function does not have experience in recruitment for some specific new roles. In these circumstances, a hybrid collaboration with the IT recruitment agency can be used to provide valuable experience for the HR staff, sharing useful skills, expertise and insight with the in-house team. Enhancing their capability whilst also fulfilling some of the recruitment demands.

Summing it up

As we have seen, there are many approaches to the challenge of recruiting externally for niche skillsets. The Interal, Hybrid and External models each have their advantages and disadvantages. A business does not have to be constrained to only one of they approaches and can adopt a flexible posture dependign upon the requirement or other factors affecting the business.

The “hybrid model” is not fixed in scope and Eureka will always try to accommodate the needs of their customers engagement criteria. We always endeavour to leave the customer better placed after every engagement. Knowledge transfer is core to our approach and when adopting a hybrid approach, unexpected benefits can accrue, such as understanding of new recruitment techniques, search strategies or structured approaches to interviewing. These learnings build the capability of a customers internal teams.

At Eureka Recruitment we pride ourselves on our ability to quickly mobilise to support our clients. We are often able to deliver our first candidates within 3-5 days. This is thanks to our extensive network of contacts, direct search methods and consistency. The depth of customer relationship is a matter of pride for us. Our recruiters often become like internal team members for the client whilst working on assignments, and for long after that. Our clients often return to us after experiencing our service once. We always act with professionalism and integrity, doing the right thing in all circumstances. We can thoroughly vet all candidates, before presentation and carefully select them to deliver only the most promising resumes.

In addition, to ensure the right fit and loyalty of the prospective employee, we always provide them with accurate and detailed information about the vacancy and verify that their attitude matches the needs and goals of the company.

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