Agency VS In-House Recruitment

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Agency vs In-House Recruitment: Which Solution to Go With?

Kathleen Dongo

The primary objective of numerous companies is to find and hire the right people for their organization, as it can significantly influence productivity, the company’s reputation, employee morale, and teamwork within the company.

Nevertheless, determining the best course of action for the hiring process can be challenging.

In most cases, two options are available: internal recruitment, also called in-house recruitment or engaging with an external agency that can significantly streamline the process by handling the recruitment function externally.

When considering your company’s needs, budget, and future objectives, it is essential to tailor your hiring approach accordingly. Talk to our expert to discuss which option is best for your business.

Key Takeaways

  1. Agency recruitment provides an external, specialized service focusing on efficiently filling positions across various clients, often on a commission basis.
  2. In-house recruitment emphasizes a deeper understanding of the company’s culture and long-term goals, with recruiters taking a more thorough approach to candidate evaluation.
  3. Choosing between agency and in-house recruitment depends on the company’s specific needs, such as the number of positions, hiring deadlines, and required specialization levels.
  4. Tribe offers fully embedded recruiters to manage the end-to-end recruitment process, adapting to the unique needs of each business.

What is a recruitment agency?

A recruitment agency is an external company responsible for overseeing all aspects of the recruitment process.

These outsourcing organizations typically specialize and dedicate their efforts to sourcing both passive and active candidates, building candidate databases, and aligning them with suitable positions at the companies they collaborate with.

Recruitment agencies often work with multiple clients concurrently but some must be fully embedded in the recruitment process. They may also specialize in specific fields such as technology, banking, operations, sales, or legal. 

This is where the term RPO comes from, also called outsourcing of the Recruitment Process, which is a term that refers to external agencies, but with some differences. RPOs are those agency recruiters who are fully embedded in your business.

Check out our other article to learn more about RPOs and how an RPO like Tribe can be a great fit for your business needs.

Agency vs in-house recruitment: similarities

Similarity #1 – The responsibilities of both roles

Responsibilities primarily involve creating and publishing job advertisements.

Additionally, they entail keeping the “client” (in the case of agencies) or employers informed about all aspects of the hiring process, making phone calls, scheduling and conducting interviews, and ensuring a positive candidate experience throughout the entire process.

Similarity #2 – Candidate search methodology

Agency and in-house recruiters employ a similar candidate search methodology to ensure high-quality results.

They utilize various channels, including social media, job search sites, and partnerships with other companies, to effectively search for and identify exceptional candidates.

Similarity #3 – Technologies used

Using technology plays a vital role in the recruitment process.

Both in-house recruiters and agency recruiters rely on technology to efficiently manage projects, maintain comprehensive candidate databases, track candidate status, facilitate seamless communication with clients and candidates, and conduct effective searches for highly qualified individuals.

Agency vs in-house recruitment: differences

Difference #1 – The main focus is based on selling

Agency recruiters must be top-notch professionals who specialize not only in recruiting but also in effective selling.

As an employee of a recruiting agency, your goal is to generate revenue for your company by successfully placing candidates, which is typically how salaries are earned, especially if they are commission-based.

This task requires employing various persuasive techniques at multiple levels.

In terms of agency sales strategies, they typically involve the following aspects:

  • Pitching and promoting your agency’s services to prospective clients.
  • Presenting and promoting available job positions to active and passive candidates.
  • Marketing (employer branding) and selling candidates to clients, showcasing their qualifications and suitability for specific roles.

It is worth mentioning that recruitment agencies often have a lower level of investment in a particular company since they work with multiple clients, even though they are fully embedded in the hiring process, there might be some areas where are not totally immersed.

Consequently, their emphasis should be more on finding a long-term fit and more on efficiently filling the vacant position.

Internal recruiters, due to their deeper knowledge of the company, may display a lesser inclination towards employing sales techniques in their responsibilities. They can take into account a wider range of considerations, including assessing candidate alignment with the company’s culture and long-term objectives.

This, in most cases, leads to more candid and transparent discussions with hiring managers and applicants.

Internal recruiters’ job performance is closely tied to the caliber and long-lasting impact of the candidates they bring in, fostering an environment conducive to open dialogue and ensuring a good candidate experience.

Difference #2 – Time and priorities

Some agency recruiters can earn more by filling more positions. Therefore, their motivation is more focused on attracting the ideal candidate in order to close the position as quickly as possible.

On the other hand, internal recruiters typically invest more time in sourcing, reviewing, and evaluating candidates, which can result in a longer recruitment process than desired.

However, they can have a higher level of commitment to the company and the success of new hires. Internal recruiters adopt a thorough approach to filling positions, which involves:

  • Engaging more often in meetings with hiring managers and relevant department members to thoroughly understand the role. 
  • Crafting a comprehensive job description and obtaining approval from the necessary stakeholders. 
  • Utilizing diverse channels to search for potential candidates (although this one can be also elaborated by agencies). 
  • Conducting selection calls to gather additional information about each candidate.

Difference #3 – Your budget 

Typically, using a recruiting agency for your hiring needs is less expensive than hiring a full-time in-house recruiter since you save the cost of pension, social security, and other benefits directed to dependent employers.

Many recruitment agencies charge clients a percentage of the new hire’s salary, or commission based on positions closed.

However, it is worth mentioning that in many cases you do not need to pay a recruitment agency until you have a position to fill! Which for some companies is a good strategy.

Engaging an in-house recruiter incurs similar costs to hiring a regular employee, which includes providing a salary and benefits package.

It’s important to note that internal recruiters must be compensated even during periods when there are no vacant positions to fill.

Agency vs in-house recruitment: how to decide?

Here’s a table summarizing the key points to help decide which recruitment option, agency or in-house, is best for your business.

AspectAgency RecruitmentIn-House Recruitment
FocusSpecializes in efficiently filling positions, with a focus on quick successful placements.Emphasizes alignment with the company’s culture and long-term goals, focusing on a thorough evaluation of candidates.
MethodologyUtilizes a broad range of channels and technologies to search for candidates, often working with multiple clients.Employs similar search methodologies but with a deeper focus on understanding the role and company culture.
Time and PrioritiesMotivated to fill positions quickly to earn commissions, focusing on attracting ideal candidates efficiently.Invests more time in sourcing, reviewing, and evaluating candidates, aiming for a thorough match with the company’s needs.
Budget ConsiderationsOften more cost-effective upfront, charging a percentage of the hire’s salary or a commission upon successful placement.Involves regular employee costs, including salary and benefits, regardless of recruitment activity levels.
SpecializationMay specialize in specific fields, offering a wide range of expertise and a large candidate database.Provides a deep understanding of the company’s specific needs and culture, potentially leading to more tailored candidate matches.
Decision FactorsSuitable for roles requiring specific skills or when needing to fill positions quickly and efficiently.Preferred for positions where company culture fit is crucial or when a detailed understanding of the role is necessary.

Final words

When choosing between using a recruitment agency or an internal recruiter, it is very important to see different aspects that may influence your decision.

For example, all the aforementioned aspects and above all see the needs that your company needs.

Please have in mind that different agencies have different ways of operating: some may charge a placement fee, while others might issue a monthly invoice. Some might just provide you with lists of candidates, while others, like RPOs, will completely be involved in the entire recruitment lifecycle.

When determining your requirements, it is crucial to consider the optimal strategy that suits your needs

This involves considering factors such as the number of positions you need to fill, any specific deadlines for hiring, and the level of specialization required for the positions.

For example, if you are looking for a Backend developer with very specific skills, I would suggest using an agency.

Instead, if you are looking for a Partnership Manager, I would suggest using an internal recruiter as they can better analyze the specific qualities needed to find that unicorn in the pool of applicants.

As an RPO, Tribe provides you with fully embedded recruiters and sources who manage your end-to-end recruitment process. Curious to learn more? Book a call with us.

Kathleen Dongo

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