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The Economics of Internal vs. External Recruiting Resources

The trade-offs on internal vs. external recruiting efforts, and how to chose.
Blake Egan
March 27, 2023
3 min
The Economics of Internal vs. External Recruiting Resources

Internal vs. External?

Internal recruiting teams have long been a staple of many companies' talent acquisition strategies. The idea is simple: instead of outsourcing hiring to external agencies or recruiters, companies build their own internal team dedicated to finding and hiring the best talent.

But, are internal recruiting teams actually economical in the long run? That's a question many companies are beginning to ask as they evaluate the costs and benefits of their current talent strategies in the wake of astronomical growth over the past few years to now sudden layoffs.

Benefits of Internal

On one hand, internal recruiting teams have some clear advantages. They have an intimate understanding of the company's culture, values, and needs. They're able to develop strong relationships with hiring managers and other stakeholders. And they can often move more quickly and nimbly than external recruiters who are less familiar with the company's processes.

Costs of Internal

But, there are also some significant costs to consider. First and foremost, building and maintaining an internal recruiting team can be expensive. You need to hire and train recruiters, invest in technology and tools, and cover the overhead costs of maintaining a recruiting function within your organization. All of these expenses can add up quickly, especially for smaller companies with limited resources.

In addition to the direct costs, there are also indirect costs to consider. Internal recruiters may not have the same level of expertise and industry knowledge as external recruiters who specialize in specific fields or roles. They may also suffer from a lack of objectivity or bias towards internal candidates, which can lead to missed opportunities to hire top talent from outside the organization.

It Depends on Business Needs

So, are internal recruiting teams actually economical in the long run? The answer, as with many things, is that it depends. Companies that have a strong culture of talent development and retention may find that investing in an internal recruiting team pays off in the long run, as they're able to identify and develop talent from within the organization.

On the other hand, companies that are more focused on rapid growth or need to fill specific roles quickly may find that working with external recruiters is more cost-effective and efficient. 

Ultimately, the decision of whether or not to build an internal recruiting team comes down to a company's unique needs, resources, and goals.

Blake Egan