8 reasons tech CEOs shun tech recruitment agencies and is there a fix

Tech recruitment agencies have earned a somewhat dubious reputation. This is largely because it’s easy to enter the tech recruitment field, much like in business coaching or SEO/link building. Consequently, this often leads to dealing with many incompetent recruitment vendors. This, in turn, results in high competition and then unethical tactics, e.g. fake job descriptions.

Still, companies need recruitment agencies to establish high-level processes early on, accelerate growth, fill hard-to-find positions, and scale recruitment efforts as needed.

I want to break down common misconceptions about tech recruitment agencies and share my opinion after 7 years in recruiting and 10+ years running a business.

This article provides an overview of how to work with a tech recruitment agency productively. If you hesitate about engaging a recruitment agency, this is a must-read.

1. Claiming to be the best: the universal agency promise

It is so hard to spot the right recruitment vendor for your company. And obviously non-obvious: choosing the wrong recruitment vendor leads to the delivery of unsuitable candidates and a poor customer experience. Additionally, agencies that provide the highest ROI usually achieve this through long-term partnerships. Therefore, it’s crucial to find a vendor you can trust and work with over many years.

So, it is especially important that you take the time to select the right agency.

To help with this, here is what to pay attention to when choosing a recruitment agency:

• Requirements collection. Ask about the process they use to gather candidate requirements. The more thorough their approach, the more likely they’ll find an ideal match.
• Investment in your collaboration. Great agencies commit resources to your partnership, despite the risk that the job may eventually become unnecessary.
• Company values. Search for hiring vendors with similar values. Review their website, request case studies, and hop on a call to see if there’s a good match. It’ll make working together a breeze and speed up your candidate search.

2. Failing to secure ROI for small teams

Recruitment agencies might not be the most cost-effective solution for some tech hiring scenarios. At the same time, it is the most affordable solution for unstable hiring needs, and hard-to-fill and urgent positions.

However, the choice may seem counter-intuitive for someone unfamiliar with the recruiting field. So here is a bit of a context.

When choosing between hiring an in-house recruiter or a recruitment agency, you need to compare not hiring costs, but employee turnover. The longer a candidate works for your company the more you save per hire.

In-house recruiters are by default less motivated to find the best employees that will retain 1+ year at your company. The reason is that you pay them salaries regardless of their output. While, for example, Code2day charges the final payment only after 6 months post-hire. Recruiters have far fewer risks compared to a recruitment agency. So why put in extra effort if they’ll still get their salaries next month?

At the same time, yes, you can achieve great results with an internal recruitment team. But building a strong in-house recruitment team isn’t just about hiring talented recruiters. It’s also about putting time and effort into management, creating solid recruitment processes, and acquiring specialized knowledge.

This ends up being far more expensive than outsourcing tech recruitment to a professional agency. According to Zippia, an in-house HR team can increase a company’s hiring expenses by 50% or even higher.

So, you either grow your garden with flowers or buy a bouquet from a florist.

3. Being unsuitable for early-stage startups

I’ve seen multiple recommendations suggesting that a founder should hire their first employees themselves. The primary argument is that no one can sell your company better than you can. While this is undoubtedly true, there are some nuances to consider.

• At the early stage, it is especially important to choose the right employees. To make the best choice, you need to know how to identify the perfect fit. For example, how many interviews do you need, what questions to ask, and where actually to search for these specific roles? There should be a system and process in place, which you might not have at this stage if you aren’t a recruiter yourself.
• You are likely to spend a ton of time on recruiting things. For example, at Code2day we typically review 300 candidates to find one who meets a client’s criteria. Now, imagine handling this process on your own. As Mathilde Collin, Co-founder & CEO at Front shares, “Delegating recruiting freed up over a fourth of my time.”
• You might not be familiar with the candidate market and the profiles available. For instance, you could be looking for a skill set that doesn’t exist or seeking someone who isn’t interested in the type of projects you’re offering (e.g., wanting top talent at a lower price). This can significantly extend the time it takes to find the right candidate.
• You don’t have the technical expertise to interview for some positions. For example, you are a technical founder but don’t know how to make a good UI/UX Designer hire.

These points suggest that, if possible, it’s advisable to delegate hiring at an early-stage startup. With a recruitment agency, you just need to communicate current requirements and fragmentally visit interviews. This approach ensures you have a clear understanding of your needs and allows you to refine your requirements throughout the hiring process.

Note: At the early stage, it is even more important to find a recruitment agency with similar values. Paul English, serial entrepreneur and angel investor, explains that “hiring the right recruitment partner is your most important hire. You need someone you will trust and enjoy spending time with.”

4. Struggling to screen candidates for basic technical compatibility

Recruiters don’t have to be tech wizards. Let’s face it, if you’re a top-notch software developer, you’re probably out there coding, not hiring. At the same time, recruitment agencies/departments need to have processes to pre-filter candidates on their hard skills too.

For example, to pre-evaluate technical skills in Code2day we use:

• A sourcing matrix is a checklist that we customize for different roles and projects. We match each candidate against these criteria before proceeding with an interview. The standards may include specific education that evidences a certain level of technical knowledge; or 1.5+ years of experience at one of Ukraine’s top 10 tech companies (because they have quality code standards).
• Technical test assignment. Interviews with our recruiters are followed by a test assignment. Our clients can provide their own questions, or we use our standard test assignment that can be adjusted to a client’s requirements. Depends on the job role, but usually, it’s about five questions. If a developer doesn’t nail at least four out of those five questions, we don’t move forward with them.

5. Failing to match candidates with company culture

The CEO and the internal team definitely know the company culture better. However, a skilled recruitment agency is adept at using techniques to find and identify candidates who will fit well with that culture.
A recruitment firm learns a company culture starting from the very first chat with anyone on your team. Aside from that, they collect requirements on what your Tech Lead or Hiring Manager is looking for in a candidate. Using all this info, they craft the right questions to ask in interviews and access necessary soft skills.

6. Top software developers' hesitation to engage with agencies

Some agencies resort to unethical practices to provide you with a larger pool of candidates. For instance, they might provide false information about project terms and proceed with interviews, ultimately wasting a candidate’s time. They may also propose irrelevant job offers or inadequate compensation. This can certainly tarnish the reputation of recruitment agencies with top tech talent to some extent.

From our experience, quality outreach and relevant value proposition overcome the software developer’s skepticism toward recruitment agencies. Good recruitment agencies understand how to pitch a job opportunity and capture the attention of diverse candidates.

Skilled developers are drawn to the latest technologies. Offering them opportunities to work with trending tech or areas they’re actively learning increases the chance they’ll respond positively.

7. Risking your company's reputation

When a recruitment agency looks for candidates on your behalf, you might worry about your employer brand taking a hit due to a bad hiring experience.

But here’s the deal: trustworthy recruitment firms want to build and maintain positive relationships with all candidates. They have a strong incentive to ensure a professional experience. So, if you’re concerned that a certain recruitment agency might harm your reputation, it’s wise to explore other vendors.

8. Poaching candidates

Back to unethical behavior ー some agencies poach recently hired employees by offering them higher salaries at other companies.

Thorough agency choice will keep you away from such situations. However, you can still include a 2-year anti-poaching clause in your contract. It prevents the agency from recruiting employees from your company for 2 years. You can also specify that an agency cannot send offers to your ex-employees for 1 year after employment termination.

Wrapping up

You’ve probably noticed the trend: to steer clear of problems with tech recruitment agencies and maximize your ROI, you’ve got to be picky about which agency you team up with. If you spot any red flags, it’s best to make a quick exit.

At Code2day, we know how hard to identify a trustworthy recruitment agency before testing their services. That’s why our clients pay just a $1,000 upfront fee, with the remaining balance split into two payments due 3 and 6 months post-hire.