For years, companies have relied on recruitment agencies to fill roles quickly. But as hiring costs rise and efficiency becomes more critical, the question isn’t just how to hire—it’s who should be doing it.
Many enterprise talent acquisition teams and fast-growing scale-ups are realising that outsourcing recruitment isn’t always the silver bullet it once seemed. While agencies offer expertise and speed in certain scenarios, over-reliance on them can be expensive and transactional, sometimes creating a disconnect between the hiring team and the long-term success of employees.
So, how does agency hiring stack up against in-house recruitment? Let’s break it down.
The Cost Comparison: How Much Are You Really Spending?
Recruitment agency fees are well-known but rarely quantified in full. Let’s put some hard numbers to it.
Agency Hiring Costs
- Recruitment agencies typically charge 15-30% of a candidate’s first-year salary.
- Hiring 50 mid-level employees at $100,000 each? Expect to pay between $750,000 to $1.5 million in fees alone.
- A single senior hire at $200,000 can cost $40,000 to $60,000 in recruiter fees.
- Need 200 hires in a year? Agency costs could exceed $6 million—before salaries, onboarding, or training.
- And what happens when a hire doesn’t work out? Most agencies offer a 60-90 day replacement guarantee, but after that, you’re back to square one—paying full price for a new search.
In-House Hiring Costs
Now, let’s compare that with the in-house approach.
- A fully loaded in-house recruiter (including salary, benefits, and tools) typically costs $120,000 - $150,000 per year.
- A well-run internal TA team can handle 20-30 hires per recruiter annually.
- Hiring 200 employees per year with an internal team would cost around $1.2 million - $1.8 million, including salaries, sourcing tools, and technology.
Bottom line?
Even with a robust in-house TA function, bringing hiring in-house can reduce costs by 30-50% compared to agency-heavy recruitment models.
The Efficiency Breakdown: Speed, Quality & Retention
Cost aside, the bigger question is efficiency. Can an in-house team really move as fast as an external agency?
Agency Speed & Efficiency
Agencies excel at speed and market reach—especially for hard-to-fill roles.
- If they already have pre-vetted candidates, they can make quick placements.
- But if they don’t? They’re starting from scratch—just like your in-house team.
- The average time to fill a position using an agency is 45-60 days (LinkedIn Talent Solutions).
- Agencies focus on placement, not retention. 46% of new hires leave within 18 months when sourced through agencies (Harvard Business Review).
In-House Hiring Speed & Efficiency
- Companies that invest in employer branding, sourcing, and referrals consistently hire 30% faster than those that rely on agencies.
- In-house recruiters can focus on long-term retention—hiring for culture fit and growth potential, not just for placement.
- Referral hires are the fastest to close, often cutting time-to-fill in half compared to traditional sourcing methods.
- The Society for Human Resource Management (SHRM) reports that employees hired through internal recruitment efforts stay 41% longer than those placed by external recruiters.
When Recruitment Agencies Are a Strategic Advantage
While agencies aren’t always the most cost-effective option, there are specific situations where they add real value:
1. Niche & Executive Hiring
For highly specialised or executive roles, agencies bring deep market knowledge, extensive networks, and access to passive candidates. Internal teams may struggle to source these roles effectively without industry-specific expertise.
2. Rapid Scaling & Hiring Surges
If your company is in hypergrowth mode, agencies can help bridge the gap when in-house teams don’t have the capacity to keep up with demand. This allows internal teams to focus on core roles while agencies handle volume hiring.
3. New Market Expansion
When entering new geographies or industries, agencies provide on-the-ground expertise—helping navigate local talent pools, salary expectations, and hiring regulations.
4. Confidential & Discreet Searches
For sensitive hires—like replacing an underperforming executive—agencies can conduct searches discreetly, preventing internal disruptions.
In these cases, using an agency isn’t just an expense—it’s a strategic investment. The key is using them selectively and intentionally, rather than defaulting to agency hiring across the board.
The Hidden Costs of Over-Reliance on Agencies
Beyond upfront fees, heavy reliance on agencies comes with hidden costs that can impact long-term hiring success.
1. Brand Dilution
Agencies represent multiple clients at once, often treating candidates as transactions. This means your employer brand is at the mercy of a third party—which can lead to rushed pitches, inconsistent messaging, and poor candidate experiences.
2. Lack of Candidate Ownership
When agencies control the candidate pipeline, your business loses the ability to build long-term relationships. Candidates who aren’t the right fit today might be perfect in six months—but if an agency owns that relationship, they’re being marketed to your competitors instead.
3. Turnover & Rehiring Costs
Because agency hires are often less engaged, turnover rates tend to be higher.
- The Work Institute estimates that replacing an employee costs 33% of their salary.
- If agency hires leave more frequently, companies aren’t just paying for recruitment once—they’re stuck in a cycle of re-hiring, re-training, and re-spending.
The Future of Hiring: Smarter, Not More Expensive
Companies scaling fast can’t afford inefficient, high-cost hiring models. And yet, recruitment spending continues to balloon.
What leading enterprise TA teams and scale-ups are doing instead:
✅ Building strong internal TA teams that scale with hiring needs
✅ Investing in sourcing tools, automation, and employer branding to attract talent organically
✅ Prioritising employee referrals to reduce reliance on external recruiters
✅ Shifting from reactive hiring to proactive talent pipelining
At Popp, we help companies reduce their hiring costs and increase efficiency—without sacrificing the benefits of agency expertise. By automating workflows, optimising sourcing, and strengthening internal hiring teams, we make sure you’re hiring the right people—faster, and for less.
The Final Takeaway
Recruitment agencies will always have their place, but they shouldn’t be your default hiring strategy.
- If you’re hiring at scale, in-house hiring can cut costs by 30-50%.
- Internal teams often fill roles 30% faster than agencies.
- Retention improves by 41% when hiring is done in-house.
That said, for niche, executive, and rapid-scaling hiring needs, agencies provide unmatched expertise—when used strategically.
Looking to optimise your hiring strategy? Let’s talk.
Book a quick demo and see how Popp can help you build a faster, smarter, and more cost-effective hiring process—without sacrificing the value agencies bring when you need them most.
