How do you compare costs of outsourcing vs. in-house recruiting?

Here is the metric I use: If a task (here it's recruiting) is taking up more than 20% of your time, meaning: in a 40-hour work week, one day.... It's time to get help internally and externally. From there, you need to look at your next 6-12 month hiring plan. Look at the cost of each hire and consider your timeline to hire: *estimate 25% of the first year salary, especially if in an engineering role, and 20% if in another role *ask how long can you go without each hire Once you have those answers, you'll have a more clear idea as to whether you have the work for an internal recruiter, or if you need to hire an external firm.

An internal recruitment team is always cheaper and best in terms of finding resources that will fit into the organisation culture. One must never underestimate the accountability and ownership of the internal recruitment team towards the organization. The recruitment team is also the face of your company and acts as a salesman of the organization. The branding that an internal recruitment team does should not be underestimated.

I've been external and internal, and can totally see it from both sides. External partners are able to take a business-critical role and run with it 100% with all their resources at their disposal while internal teams still focus on the countless other roles still open. I don't think you lose any control and visibility over candidates .... it depends on the relationships and partnerships you build with the other side! It can be very fruitful and successful for all, but it takes very strong communication and teamwork!

Interestingly when outsourcing, I think time to ramp/effectiveness should, but is often not, be quicker than expanding your in-house team. This should be the case when considering freelancers to scale your in-house ops. When outsourcing be sure to ask about ramp time, and set some KPIs for this period.

I disagree with most of the drawbacks listed here, you may get this if you select the wrong partner - so maybe that's the lesson here, the criticality of parent selection. One of the stongest advantages of an embedded RPO model is that the outsource becomes an extension of your business and saves a lot of time by meaning you are not briefing external partners and many will have specialist Sourcers or recruiters that mean most roles can be hired as part of the service. The recent advances in technology mean that areas such as scheduling should be largely automated and the right partner will be able to bring this to your business.

Where possible get a fixed cost rather than a variable here. This will allow you to plan better. Also consider how exiting works, if you need to give 3 months' notice to get out of an outsourced project but only have 6 months of work, be sure to make that clear upfront so you can all plan effectively. Outsourcing will be more expensive on paper but might provide more value and should provide you with a more total solution than scaling your team, ramping and training them, tools, and benefits all add up.

The financial considerations in the outsourcing vs. in-house debate are nuanced. Outsourcing's advantages in terms of flexibility can shine in certain situations but may not stand up to consistent hiring demands. Outsourcing is also looked at as a service & the performance per recruiter could be significantly better. On the other hand, in-house recruiting's might yield lasting benefits in terms of relationship building with HM and HR, employer brand, etc. To make the right choice, it's crucial to assess your hiring patterns, long-term goals, & financial strategy. Remember, there's no one-size-fits-all solution; it's all about finding the right balance for your organization's unique needs. ?? #TalentAcquisition #RecruitmentInsights

The cost conversation 100% depends on the business and types of hiring - it could be more expensive on paper, but the quality of hire is better so less attrition or speed of hire is faster so you can start that new client project faster. Business should look at it holistically aligned to what they are trying to achieve - there are times building your own team makes sense, times when outsourcing does, but in a lot of cases a blended service may produce the best result overall. Cost per hire is only one metric and stand alone it's actually pretty useless.

Metrics should be the key to successful management of RPO. Client and vendor both need to agree to the data points and KPi/SLA as per contractual agreements. Depends on the contract what the delivery should look like and encompassing client employer branding should/could be included in that contract negation. Further, upon exit at contract end including the correct exit strategy should mitigate the talent pipeline or branding issues. It’s a partnership and success depends on very open agreements on what success looks like.

To play devils advocate on this line of thinking, quality of hire shouldn't depend on who finds them! External recruiters that are doing their job well are presenting candidates who have been vetted and qualified at the beginning level then they go through the internal process of interviewing with the same stakeholders and going through the same reference checks and background checks. There is minimal difference between how a candidate is identified, and I stand my ground on that from personal experience on both sides of the fence!

I disagree with the statement that outsourcing can mean reduced retention. I'm not sure where this comes from. If you have nailed a great partner your metrics should improve not remain the same. Otherwise scale your in-house operation.

Outsourcing recruitment offers clear benefits. If you have selected a good agency, they will provide access to wide talent networks saving time and ensuring quality, you don’t bring on an agency to provide low quality I disagree with that statement. They’d be working closely to find out the culture and fit, which would ultimately affect attrition. There are many variables to consider, main one here being job role and seniority, and identifying the pattern.

Retention of people has more to do with the employee rather than the TA function which is the attraction of people into the org. Most vendors and therefore the teams delivering the service are more often that not have the feeling of working for more than one company. It’s a mindset that RPO recruiters have to be successful in that environment. Knowledge transfer of client to vendor is key to success backed up with training and robust comms plan. And of course buy in from all of HR.

If you have done thorough enough planning then outsourcing should be simple and predictable, removing some of the burden on you and your team. If you have long term need always scale your in-house team and coach in the long run it will pay off.

Building a dedicated team within the company not only allows for a deeper understanding of the organization's values and culture but also provides the opportunity to nurture a consistent employer brand image. Time efficiency and immediate talent access advocate outsourcing. Yet, the genuineness of in-house recruitment forges alignment between candidates' hopes and our reality. This enhances retention and builds authentic employee relationships. I do acknowledge the value of quick partnerships in certain situations. When time is of the essence and specific skill sets are urgently needed, an external partner with an established talent pool can be a valuable asset. It's a balancing act between immediate needs and long-term strategic growth.

The article does not take into account in-house talent acquisition consulting, which does not have many of the cons listed here. Sure - expenses are higher than hiring an employee, but that's the cost of flexibility and expertise you get from the consulting firm. It's important to have the ownership of talent acquisition in the organization, but outsourcing comes in many different forms and can be a great solution when considering the cost-effectiveness and overall impact.

Two things from me. 1. Selecting the right partner is key. Not only a business that can support the size, scale and hiring that you need to make, but also one that fits with your culture and purpose. It's never going to be plain sailing, so you need the right group of people to be working with you to solve the challenges as they appear. 2. From experience, know your data may be wrong. I have sold and implemented a large RPO where the data gathered was completely wrong and that only became apparent through go-live. This means you may need to rework the problem live and potentially change the solution. Choosing the right team on both sides to get things done and accepting no data is perfect are key here.

A blended approach must be key. Some roles are strategic and therefore an internal team will much more likely to have partnership with the business and HR already versus the RPO team. Ultimately vendor or in-house. The ideal situation is that the internal client and the external talent should not be able to tell the difference. Continuous improvement and an agile attitude to correcting delivery failures and an open dialogue and attitude is needed by all parties to achieve success, regardless who is delivering the solution.