In-house recruiter vs. agency (with key factors and tips)

By Indeed Editorial Team

Published 18 July 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Hiring staff may be a complicated process, as employees are some of the most dynamic parts of the way a company works. The recruitment process involves job listings, processing applications and completing interviews, often trusting hiring experts as an ideal method of getting the best staff. This is where knowing the difference between in-house recruiter vs. agency recruitment is beneficial. In this article, we discuss what in-house and agency recruitment are, explore the differences between the two and list tips for using each method of recruitment more effectively.

In-house recruiter vs. agency

Learn more about the difference between an in-house recruiter vs. agency recruitment below:

Definitions

Agency recruitment is using a third-party organisation when recruiting new members of staff. This means requesting a certain number of members of staff from an agency of a certain standard and receiving the new recruits after the agency completes its process. The company itself has minimal influence in the process aside from setting the initial person specification that the agency uses.

In-house recruitment means that the company itself completes its recruitment processes. This entails a range of steps, from sending out the original job posting to assessing each of the different applications and finally completing interviews before deciding. Many companies have their own staff responsible for the recruitment process and prefer autonomy over the recruitment process and the selection of staff the company hires.

Related: Guide: how do recruitment agencies work? (Plus benefits)

Tasks

The tasks of an in-house recruiter may include:

  • Posting jobs: Writing and creating a job listing that makes people aware of the vacancy.

  • Assessing applications: Reading through all of the applications and documentation relating to the role.

  • Short-listing Creating a shortlist of the most appropriate candidates from the field and inviting them for an interview.

  • Interviewing: Conducting an interview with the remaining candidates for the position, establishing their suitability for the position.

  • Hiring: Making the final decision as to which applicant is ideal for becoming a member of staff at the company.

Agencies complete the same jobs as an in-house recruiter. The major difference between the two processes is that the company recruiting the staff has a distinct set of tasks. The hiring company in an agency system sets the job description for the agency and, depending on the agency's policy, makes a final decision on whether a member of staff is appropriate. Whilst the tasks between the two processes are identical, the responsibility for completing those tasks varies between an in-house model and an agency model.

Related: 6 stages of an effective recruitment process

Technical knowledge

Some industries have a significant focus on technical competence and specialised machinery. Having staff members with a high level of expertise can be crucial for safety or operations. Industries such as manufacturing, computing and engineering benefit from in-house recruiting, as in-house recruiters know the specific requirements for various staff positions. In-house recruiters have the benefit of experience, leading to an understanding of the most important qualifications and experience in candidates. In-house recruiters use this information to hire the most appropriate members of staff and limit training time for new hires.

Recruitment agencies work in a variety of different industries. Where some specialise in specific areas, others work broadly, servicing any company that requires new recruits. This means that a recruiting agency has less specific knowledge of certain industries. Recruiters working for agencies complete research into these specialist-heavy industries and learn the most beneficial qualifications and experience to the best of their abilities. Agencies in these instances have less of an ingrained knowledge of the field, whilst in-house recruitment has the benefit of years of experience.

Cost

Using a specific in-house recruiter in a company has a relatively high cost. This is because the company hires a recruiter themselves, paying for the recruitment costs, training costs and salary of the recruiter themselves before engaging in any recruitment activities. In-house recruiters also require a budget for advertising the job role and a selection of administrative tasks. This cost continues when the company isn't recruiting. One way of making in-house recruitment cheaper is by using an existing staff member in the completion of in-house recruitment tasks by increasing their portfolio of responsibilities.

Using a recruiting agency has less of an associated cost. Depending on the recruiting agency, some agencies charge a flat fee for recruitment services while others charge a percentage of the salary of the new hire. You pay recruitment agencies when you have specific roles in need of quality candidates rather than paying for a recruitment agency year-round. This is ideal for companies that hire members of staff relatively rarely, as it restricts the costs that companies pay for their recruitment processes.

Applicant sources

In-house recruiters use a range of different sources for recruiting potential applicants. This includes a database of previous applicants that are suitable for other roles in the company that differ from the role they applied for, professional social media sites and other companies working in the industry. In-house recruiters also receive applications from people that see an advertisement for the role, whether online on a job search site or through physical adverts such as billboards or posters on company premises.

Agencies use similar sources to in-house recruiters when building a pool of potential candidates, using traditional means such as advertising the vacancy and social media sites. There's an advantage to using an agency when filling a vacancy, and this is the membership of the agency. Some agencies keep a list of candidates that have a high level of skills in the industry, contacting candidates when appropriate vacancies arise and recommending that they apply. This is an advantage over an in-house recruiter, as the agency builds an extensive database of strong candidates over a range of prior vacancies.

Related: Guide: using Indeed job search

Focus

The focus of the two recruitment methods differs. An in-house recruiter has a good idea of what the company requires, the character of the ideal member of staff in the organisation and what the ethos of the business is. In-house recruiters have the needs of the company at heart from the very start, keeping the right candidates for the company's specific needs in the process throughout and eliminating those that are inappropriate for the character of the company. The organisation has full control with an in-house recruiter.

An agency recruitment service has a different focus from an internal recruiter working for the company. Agency recruiters have less personal investment in the outcomes for the company. Recruiters that work for an agency focus on the outcomes for the agency itself. This means that any philosophy that the hiring company has in its recruitment strategy is less present when using a recruitment agency. This isn't always the case, but for a company with a strong hiring philosophy, it's an important factor.

Tips for choosing a recruitment model

Learn more about things to consider when choosing a recruitment model:

Industry

If a company works in a specialised industry, having in-house recruitment is a beneficial route. This means that you have more control over identifying specific technical expertise in the hiring process and focus on the right qualifications for the position. Some specialised industries have agencies that cater to their needs. Complete thorough research into these companies when considering agency recruitment to ensure high standards from applicants.

Related: What is skills mapping? (With benefits for HR professionals)

Company hiring frequency

The frequency at which a company goes through the hiring process is another factor to consider. When a company rarely hires new members of staff, the best financial decision is an agency, as agencies charge a rate per employee. A company hiring several people every month rather than one employee per year benefits from using an in-house recruiter, as a single employee on a salary costs less than the recruitment costs for each individual new employee.

Related: How to manage a budget: techniques and a step-by-step guide

Company strategy

If a company has no specific strategy for new employees and looks for competence above all else, a recruiting agency is an ideal option. Recruiting agencies are ideal for finding competent staff members in roles without specific requirements. When companies have specific hiring policies, such as hiring equal amounts for each gender or hiring members of staff with an investment in the workplace's future, it may be beneficial to hire internally. This ensures that you achieve the organisation's hiring goals without the chance of an agency not being aware.

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