Published on May 30, 2024
Read time 8 min read
Blog / Solutions

8 reasons tech CEOs shun 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 encounters with numerous incompetent recruitment vendors. This, in turn, results in high competition and then unethical tactics, e.g. fake job descriptions.

Still, tech companies badly need recruitment agencies ー to have high-level recruitment processes early on, scale faster in later growth stages, hire hard-to-fill positions, and occasionally scale recruitment efforts. I want to break down common conceptions against tech recruitment agencies and share my opinion after 7 years in recruiting and 10+ years running a business.

This article provides a brief deep dive into how to productively work with a tech recruitment agency. If you’re uncertain about engaging a recruitment agency, it’s definitely 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 results in the delivery of the wrong candidates and a poor customer experience for you. Additionally, agencies bring the most ROI in long-term partnerships so you need someone you can trust and work with over the years.Therefore, it is especially important that you take the time to select the right agency.

Here is what to pay attention to when choosing a recruitment agency:

Here is what to pay attention to when choosing a recruitment agency. Recruiting agency Maslow’s pyramid:

 

  • 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.
  • Requirements collection. Ask about the process they use to gather candidate requirements. The more thorough their approach, the more likely you’ll find an ideal match.
  • Investment in your collaboration. Adequate agencies commit resources to your partnership, despite the risk that the job may eventually become unnecessary.

2. Failing to secure ROI for small teams

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

However, even in these cases, the choice may seem non-obvious for someone not familiar with the recruiting field.

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.

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 far more expensive than outsourcing 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 that a founder should hire their first employees themselves. The major argument listed is that nobody sells your company better than you can. While I cannot dispute this point, 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 that you won’t have at the 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 know the market and available candidate profiles. For example, you are searching for a non-existent skill set or require someone who isn’t interested in such projects (need a superstar at a lower price). This can significantly prolong the search time.
  • 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. However, at your current growth stage, it’s crucial to be closely involved in the recruitment process. However, with a recruitment agency, you just need to communicate current requirements and fragmentally visit interviews. This ensures you understand precisely who you need and allows for refining your requirements during hiring.

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.

Unlock the secrets to successful tech hiring and build your dream team hassle-free.

5. Failing to match candidates with company culture

The CEO and the internal team definitely know the company culture better. But a good recruitment agency knows techniques on how to find and identify candidates who’ll jive 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.

 

Recruitment partnerships work best when the agency has similar values, so they need less time to grasp your culture.

6. Top software developers' hesitation to engage with agencies

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.

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 pass on the resumes of employees you’ve recently hired to other companies, luring them with promises of higher salaries.

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 $1000 commitment fee, with the remaining amount recruiting fee due after 3 and 6 months, respectively, post-hire.

Test our low-risk software engineer employment solution

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If you feel there might be a fit, let’s discuss your needs.

Fill out the form or contact us right away via:

Thank you!

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