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Pros and Cons of Working with a Recruitment Agency

The talent shortage is becoming a serious issue around the world. According to ManpowerGroup, 45% of companies say they can’t find the skills they need, and for large organizations (250+ employees) it’s even higher, with 67% reporting talent shortages. As reported by the source, in a new Korn Ferry study that includes a sweeping country-by-country analysis, the biggest issue isn’t that robots are taking all the jobs – it’s that there aren’t enough qualified humans to take them. Indeed, the study finds that by 2030, there will be a global human talent shortage of more than 85 million people, or roughly equivalent to the population of Germany, and getting a recruitment agency may be a part of the solution.

Left unchecked, in 2030 that talent shortage could result in about €7.5 billion in unrealized annual revenues.

Nonetheless, the available talent is starting to experiment with remote working arrangements, traveling the globe and working in different time zones. As a result, more companies are turning to external hiring methods and recruitment agencies in order to grow their team. While this includes some benefits, sometimes it can damage companies in the long-run.

58% of candidates who had a negative experience with a company’s recruitment process said they would not apply again in the future. (IBM, The Far-Reaching Impact of Candidate Experience, 2017).

Thankfully, newer methods such as outstaffing are emerging on the market, enabling companies to effectively grow and manage their team. Here are several important pros and cons of working with recruitment agencies and their comparison to newer recruitment structures:

Recruitment Agencies – Faster hiring with cultural problems

Using a recruitment agency will shorten the time needed to fill your open job positions and find suitable candidates. Since the agency will hire candidates for you, you will not have to spend time analyzing different profiles and applications to find a few qualified individuals. In the end, you will just have to review the shortlisted candidates and make the final decisions.

The problem here is that recruitment agencies do not understand your company culture and they will only be able to grade candidates based on general hiring criteria and not the cultural or other fits. Furthermore, if you are hiring remote candidates, which will soon become a standard due to all the aforementioned reasons, you will often face different management and communication problems.

Companies are often turning to outstaffing to quickly find the right development partners that will join their existing culture under the present management structure and help them scale their productive units.

Existing network of candidates that might be working on multiple projects

Sure, recruitment agencies do have an established network of candidates and they will allow you to tap into a specialist knowledge and expertise that your in-house recruiters might not possess. While this carries value and sounds great, there are numerous issues involved such as:

  1. The recruitment agency might not adequately represent your brand on the market,
  2. Great candidates might get frustrated by restricted recruitment guidelines, and
  3. Outside recruiters do not know anything about your other employees so hiring the wrong character might bring havoc into your office.

Nonetheless, companies sometimes use outsourcing or hire remote employees that are cheap, but committed to different entities. This means that they might work on multiple projects and do not want to fit a specific culture. Outstaffing agencies on the other hand usually work with established partners in various industries bringing major development experience to the table. Some of these partners have worked on the establishment of leading technological infrastructures on the market. The primary benefits are:

  1. There is no public exposure or wasting time on exploring collaboration opportunities.
  2. Once you establish a relevant partnership, your new team members will work solely on your project.
  3. Our partner will work directly with your existing management team to prevent any potential problems.

DID YOU KNOW? Unlike outsourcing and other short-term solutions, outstaffing is often much cheaper and efficient than other full-time or part-time solutions. You can reduce expenses for personnel while the value of your company can be increased by increasing the index of income per one staff employee of your company.

Quick results with unpredicted costs

As explained in the previous section, recruiters already have a database of candidates so they often do not have to spend time searching for the right candidate and can offer you instant hiring solutions. The problem here again is the lack of cultural and other assessments. In this case, hiring recruitment agencies might also sound cheaper, but in reality it can cost you a lot of money. In general, recruitment agencies’ fees are around 20 to 30% of the employee’s annual salary. On top of it, if the cultural fit is not right, you will have to hire them again to find new candidates or they might require additional funds to continue their search in case that you are not satisfied with offered results.

With outstaffing, you get access to a talent pool of vetted candidates, enabling you to easily scale up or down your team and directly manage them. You can always find a quick replacement or add more people to your unit, without any hidden or unpredicted costs.

Another thing that you need to be careful about when selecting your recruitment partners is their hiring process. Yes, recruitment agencies will utilize a personalized approach to every client, but the process they use is outmoded and ineffective (e.g. using simple job boards that have little guarantee of success). Additionally, they might require you to sign a long-term contract with them so they can be sure that their efforts will not be wasted, but the reality is that you might not need them in the future. The recruitment industry will change a lot in the upcoming years. The shift towards decentralized economies will push both companies and recruiters to explore new hiring methods.

A study from the Aberdeen Group revealed that millennials are changing social recruitment practices: 73% of millennials (18-34 age group) found their last position through a social media platform (CareerProfiles). 91% of employers are using social media to hire talent, today (CareerArc).

While it may sound unbelievable, talent shortage is a no joke. Talentnow shared some interesting facts:

  • 42% of employers are worried they won’t be able to find the talent they need.
  • Approximately three quarters (72.8%) are struggling to find relevant candidates.
  • 86% of the most qualified candidates for your open positions are already employed and not actively seeking a new job.
  • 40 percent of employees surveyed in 2018 said they plan on changing jobs.

As more people start working remotely and new companies start hiring professionals, there is no doubt that better hiring methods like outstaffing will lead the market forward.

Outstaffing enables companies of all sizes in different industries to quickly find experienced and vetted development partners that will join their company and fit their working culture. Furthermore, companies can directly manage their new team members, easily scale the number of new employees solely dedicated to their project, and reduce their costs while increasing the value of their company. There are no hidden costs, management problems, time zone issues or lack of cultural and other fits. SHORE teams is working with a large number of companies, helping them identify ideal near-shore and off-shore partners. As a result, our clients can accelerate their development, save time and money and grow their team with top-tier talent. This is an ideal way to push your brand to the next level and gain an advantage in the market.

If you are interested in growing your team and accelerating your development, make sure to schedule a free consultation call with one of our experts.

Whatever you are striving for in the market or within your company, finding the right candidates is crucial. Even in marriage, the right partners can only raise successful families. Once you do find them, make sure to build a thriving relationship with them. As a famous businesswoman and Apple executive, Angela Ahrendts, explained, “Everyone talks about building a relationship with your customer. I think you build one with your employees first.”

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