Pros And Cons Of Internal And External Recruitment

Recruitment is an ongoing process in all businesses that never ends. Employees quit, get fired, and sometimes get promoted, leaving a vacancy that needs to be filled. Filling these positions becomes vital as the vacancy oftentimes translates to the rest of the team picking up the slack.

The added workload may lower morale and a whole slew of problems can arise. Luckily, a proper recruitment team can solve this issue. Whether you elect to use an internal recruitment team or an external one is up to you, as they both come with their own pros and cons.

Internal recruitment is a team of recruiters directly employed by your company. These are employees you hire directly and do the recruiting in-house for you. They are usually part of or under the umbrella of your HR department.

External recruitment would consist of third-party recruiters who recruit on behalf of your company. These recruiters either augment your internal recruitment efforts or can completely replace the need for an internal recruitment team.

Internal Pro: Control

An internal recruitment team means having more control. You can decide what processes are implemented and how the recruitment flow should go.

The benefit to this amount of control is the ability to fine-tune your recruitment process on the fly. If you find out that many candidates are dropping out or ghosting you during a specific step, you can make modifications to rectify the situation.

Internal recruitment team communicating in an in-person team meeting.

Internal Pro: Communication

Faster communication with your internal recruitment team is strictly between you and them, it doesn’t include recruiter to applicant/candidate communication as that is dependent on a variable not within your control.

Even if the company is big and the recruitment department is housed in a different location, any changes or messages from you to them will still be faster than that of a third-party recruitment center as you are at the mercy of their response time.

Internal Pro: Speed

The speed at which you can fill rank and file roles is faster with an internal recruitment team. This is due to the fact that you don’t have to undergo the waiting period that happens in between candidate endorsements.

Rank and file positions that have a high attrition rate can easily be filled continuously by an internal team at no extra cost per hire. Positions such as customer service or technical support, where the average employee only stays for a year, are some of the most common positions that need to be filled continuously.

Internal Con: Recurring Expense

Internal recruitment teams have the drawback of being a constant expense. Unlike third-party recruitment teams who are paid in one big lump sum after someone has successfully been hired through them, an internal team must be paid no matter the situation. This becomes detrimental during periods of time where there are no requisitions. While this means the company is doing well, it also means that your recruiters aren’t productive.

Another expense tied to internal recruiters is the tool subscriptions. Applicant tracking systems and recruitment platforms all cost money. Depending on your company’s tools, you could be spending a large amount of money on recruitment.

Internal Con: Limited Talent Pool

A talent pool is generally limited to your home country. International recruitment comes with its own set of rules and regulations, many of which are complex and require in-depth knowledge to do without any penalties.

While the talent pool may seem big for countries like the US, having access to several other locations allows for an even bigger candidate pool and comes with the benefit of a different salary range.

Internal Con: Time/Resource Consuming Process

From the initial creation to the constant management of the team, internal recruitment takes time and effort that some people may not have. Aside from having to take time out of your schedule to create the whole recruitment process or simply hiring a recruitment head, building a team takes time and resources you may not have.

As mentioned before, control is a pro as you have the ability to tweak your team as you see fit, the con to this is that it takes time to get everything running in a way that fits your company.

External Pro: Single Fee

Unlike its in-house counterpart, third-party recruitment teams are paid in one big lump sum after a candidate has successfully been hired. While there are different pay structures, the best part is that you don’t pay until a candidate is hired.

If a third-party passes you candidates that do not make your cut, you won’t have to pay the fee. Do note that there is a flat rate charged in some cases, so it’s recommended to ask your third-party provider of choice what their policy is.

Recruitment team panel interview with candidates all over the globe.

External Pro: Larger Pool Of Talent

It would make sense that hiring an external recruitment team with the access and know-how to hire abroad would expand your talent pool. The diversity offered is also a benefit in most cases.

For example, if you have a team of designers all from the same place, chances are the core concepts of their designs are the same. If you hire from a different country, with a completely different culture, you have a higher chance of finding different ideas. This goes for any job but even more so for anything labeled as “creative” or any job that benefits from different viewpoints.

External Pro: Quicker Candidate Searches

If you have your own recruitment team, augmenting them with a third-party recruitment team will expedite the candidate searching process. Building a shortlist of the best candidates will take a fraction of the time it usually takes, especially for those more technical hires, such as developers.

In the event that you outsource all of your recruitment to an external recruitment company, it benefits them to close requisitions fast as they’re still paid based on successful hires and not hours worked.

External recruitment has one big fee after a candidate is hired.

External Con: Big Fee

It’s stated above that there is a single fee for external recruitment companies. You don’t have to pay for the work in between finding candidates, only the successful hiring of staff merits the fee.

The most common fee is around 10% of the hired staff’s yearly salary. If a developer was hired at $100,000 a year, then the fee would be $10,000. Weighing this cost versus having a full-time internal recruitment team might be something you want to sit down and actually plan out with the rest of your team.

External Con: No Real Oversight

Unlike an internal recruitment team, you cannot see everything happening. You can’t check the pipeline of candidates, meaning you can’t go through those who were dropped to see exactly why they were dropped from the pipeline. This also means you can’t see how many people are actually being screened compared to how many are being sent to you.

When your external recruitment efforts are slow, you have to set up a meeting with their manager in order to get to the bottom of things. This can depend on the availability of both managers, and meeting and is harder to pull off than simply calling a meeting with an internal team.

External Con: Conflict Of Interest

If you have both an internal recruitment team and an external or third-party recruitment team, their recruitment efforts could possibly intersect. What this means is if both teams are looking for developers, one or more of those developers might apply on different platforms.

Your in-house recruiters might be searching on platforms “A” and “B” while the third-party team is searching on “X” and “Y.” Candidates can be on all of these platforms as they aren’t restricted, as applying to jobs is free.

This situation might end up costing you more money than you initially wanted if the third-party brings you a candidate that you could have got yourself. This brings in the con of pricing, as the third party gets one big chunk.

In line with the intersecting candidates, the way the job is “sold” to each applicant may be different. Third-party recruiters are incentivized to sell the position as a hire means getting paid, while an in-house recruiter will be paid whether or not the position is filled.

The Wrap Up

Deciding on whether to outsource your recruitment efforts is a choice you can’t take lightly. While there are pros and cons to both an internal team and an external recruitment team, the choice should revolve around your needs and resources.

If you foresee a constant need to hire, having your own internal recruitment team will be cheaper in the long run. However, if you’re planning on hiring in a rigorous manner where the employees are incentivized to stay long term, it might be cheaper to pay that one big lump sum to a third-party recruitment team like an RPO.