Outstaffing vs IT Recruiting Agency vs In-House Team of Recruiters — What to Choose

Nikolaj Klestov23.03.2023

The whole world highly values the contribution of Steve Jobs, Mark Zuckerberg, and Tim Cook to the tech industry. However, all of these entrepreneurs have a strong development team behind them. IT experts determine the future of the company and its products. Every professional contributes to the common project with their own vision, experience, knowledge, and skills.

Search for software engineers often turns into a big challenge that consumes the budget for hiring and onboarding new employees, as well as leads to failures in product development.

There are numerous approaches to hiring, and each has its own pros and cons. Nickolay Kliestov, the co-founder and CTO at ITExpert, shares insights on how to choose the perfect method of finding developers. He has over six years of experience in recruiting for top product and outsourcing companies in Ukraine.

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Outstaffing vs In-House Team vs Recruiting Agency

According to ManpowerGroup Global, in 2021, the workforce shortage reached its highest level in the last 16 years. However, the recruiting process remains as complicated as before despite new know-how and innovative automation tools. Candidates realize they own the market. Indeed’s research showed that offers don’t mean successfully closed positions. Recruiters say that one out of five candidates doesn’t show up for their first work day without explanation.

The Difference Between Outsourcing and Outstaffing

Creating an in-house recruiting department or delegating hiring tasks to outsourced/outstaffed companies is an evolutionary stage for every company. Let’s understand the difference between each method mentioned.

In-house recruiters actively collaborate with the team and hiring managers, know the vacancy requirements, and understand who the ideal candidate is. Such high awareness is the key advantage of in-house recruiters. Unfortunately, hiring experienced specialists is expensive. In case the hired people are insufficiently qualified, they have to be retrained, which means lower productivity of new employees and higher costs for the company.

Outsourced recruiting means the entire transfer of the hiring process to a recruiting agency or freelancers. This method is beneficial when a business wants to delegate recruiting tasks to professionals outside the company or when there is no need to build an internal recruitment team from scratch. Agency recruiters can find tech specialists shortly. They quickly get involved in work thanks to relevant experience and access to specialized tools. However, they are not as aware of the project and requirements as in-house employees, because they can’t work side by side with the team.

Outstaffing works literally like ‘renting’ several additional recruiters for your team. This approach is somewhere in the middle between the in-house recruitment department and the agency. Business owners can ‘rent’ high-class professionals who quickly get involved in the work or even connect them to the team so that they closely interact with the company employees and learn more details about the project. Nickolay Kliestov, CTO at ITExpert

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Which Approach Will Fit Your Business?

Having a full-time recruiter for closing a couple of vacancies per year is totally inefficient for a startup. Business owners need to find a specialist, pay them and wait long weeks until they finally headhunt cool candidates.

That’s why startup founders prefer outsourcing or outstaffing to hire professionals while the ideas are actual and competitors haven’t released similar products. However, such a strategy has its own nuances you should keep in mind.

So, what options would work better for a startup of up to 15 people, a medium-sized company, or a corporation with a staff of more than 100 employees?

The choice of hiring method depends on the company’s plans and goals. Addressing an IT recruiting agency seems to be the most expensive option while hiring an in-house recruitment team may seem the cheapest. In fact, it depends on whether you’re running a sprint or a marathon.

Organizing a team of in-house recruiters is beneficial for companies of medium or large size with stable hiring plans. I mean companies that have a certain staff turnover rate or businesses that grow gradually.

If there is an urgent need to find a highly-skilled employee, creating an in-house team of recruiters is not the best solution. Better use outstaffed recruiting or address to an IT recruiting agency. The latter often have ready-to-use databases of experienced specialists who can start working within a few days.

Hiring in-house recruiters is recommended for businesses that are ready to play a ‘long game’. There’s no sense in hiring people and laying them off in a couple of months. If you’re not ready to hire full-time specialists for more than half a year, better choose alternatives.

Startups naturally have periods of sharp growth and ones when hiring is suspended for 6-12 months. So, ordering recruiting services from an agency (outsourced hiring) works best for such companies. Also, IT recruiting companies provide a replacement candidate for an employee who failed to pass the probation period or quit during the first months of work. This is one more guarantee for the client. For example, ITExpert offers a free replacement candidate, if an employee has not completed a probation period in three months.

Outstaffed recruiting is suitable for mature companies with fine-tuned processes if they need to temporarily intensify hiring.

Before choosing a recruiting method, I recommend considering the following:

How many people do you need to hire?
How urgent is this need?
How often will you need to hire new people?

If you need to hire several IT professionals asap and then just fill the turnover, the ‘combined method’ will be a perfect match for you. Contact a recruiting agency and look for an in-house recruiter in parallel.

Also, keep in mind that outstaffed recruiters work based on the T&M (Time and Material) or ‘‎pay for the work done’ models‎. IT recruiting agencies charge ‘success fees’ for successful hiring. As you can see, agencies are focused on filling the vacancy with a high-quality candidate as soon as possible while outstaffed recruiters might be interested in slowing the process down. Nickolay Kliestov, CTO at ITExpert

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Regardless of the chosen approach, candidates must share the company values and fit into the corporate culture. Every tech specialist must believe in the project, be proactive and generate fresh ideas.

If you are eager to find such motivated and energetic employees, share your plans with the people you’re interviewing. If a candidate starts building hypotheses and offers ideas, this is certainly the person you can rely on. How else can you test one’s initiative? Ask the candidate about their achievements. If the person has won the first prize in a competition in any industry (even not related to future work), this proves that they are ready to take new heights. That is a decent quality for any company.