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5 Types of Recruiting Companies

Human resources departments, hiring managers, and administrative staff may each have roles in recruiting, but when a company experiences a sudden or seasonal hiring need, it can overwhelm existing resources. That’s where recruiting companies come into the picture. There are different recruiting services available to companies who need to source, hire, and develop their staff and can’t do it economically with internal resources or aren’t prepared to make a big investment in recruiting technology or full-time recruiting staff.

The different types of recruiting companies available to provide external recruiting services include retained search, contingency search, full-scale RPO, on-demand RPO, and staff augmentation/placing consultants.

Some recruiting companies, such as recruitment process outsourcing vendors, take the place of internal recruiting staff to perform recruiting, while others, like contingency search, enhance or work with existing recruiters, HR staff, or hiring managers to fulfill recruiting needs.

Retained Search Firms

Retained search recruiting companies, also known as executive search firms, provide search services for senior, executive, or other highly compensated positions. Retained search firms find qualified candidates and present them to their clients many times in confidence, and may also investigate whether the candidates are open to new opportunities and conduct job offers and salary negotiations. Retained search firms work exclusively with clients, require an upfront retainer, and typically charge 30 to 35 percent of the salary of the position. Payments are made according to milestones in the recruitment process, so at least some fees will be paid regardless of whether a hire is actually made.

Contingency Search Firms

Recruiting companies that search for candidates for their clients and get paid when a candidate they present is hired are called contingency search firms. Their search fees are typically 20 percent of the candidate salary when hired. Contingency search firms don’t work exclusively with clients as in retained search, and may handle a higher volume of recruiting activity than retained search.

Full-Scale RPO

Full-scale recruitment process outsourcing is a part of business process outsourcing that transfers recruitment activities to an outside service provider. The Recruitment Process Outsourcing Association defines it as “when a provider acts as a company’s internal recruitment function for a portion or all of its jobs.” In RPO, versus other types of staffing assistance like temporary agencies, the RPO service provider controls the process for the client company. RPO is utilized when a company experiences high volume staffing needs that internal HR can’t cost-effectively handle along with their core responsibilities, or when there is no HR function in the company. It provides economies of scale at an economical cost when implemented properly along with corporate strategy.

On-Demand RPO

On-demand recruitment process outsourcing provides recruiting, sourcing, and coordination on an as-requested basis rather than with long-term contracts. Companies use on-demand RPO for full-cycle recruiting or just the aspects that they need, such as sourcing or recruitment coordination of interviews, candidate management and communications, reference and background checking, and on-boarding. On-demand RPO improves recruiting quality while saving money because companies get the benefits of experienced recruiting service providers but only pay for services they need. They’re not locked into contracts or contract payments, and they can add or drop services at any time.

Staff Augmentation

Staff augmentation is an outsourcing strategy that is used to staff a project or high-demand business objective with consultants rather than permanent employees. It is used in the IT industry to place temporary IT professionals on a consulting basis in projects such as web development, software development, and network engineering.

There are many reasons to work with recruiting companies, including improving the quality of candidates and hires, recruiting cost control, supporting rapid business growth without overwhelming existing recruiting or HR staff, and taking advantage of recruiting technology and experience lacking in internal recruiters. Recruiting companies provide recruiting support at crucial times in the business cycle, such as at initial startup, during periods of rapid growth, and during important business activities such as important projects.

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