Use an agency when you need reach into a market you cannot access, when the hiring is a short burst rather than a steady load, when confidentiality matters, or when internal capacity is genuinely full. Build in-house when hiring is continuous and predictable, since a permanent recruiter usually costs less per hire once volume is steady.
Three things: reach, speed of mobilisation and specialist knowledge of a market. A good agency has already spoken to the people you want to meet, knows what they earn and what would move them, and can start immediately without a hiring cycle of its own. That combination is worth paying for when you are entering an unfamiliar market, hiring a scarce skill, or replacing a leader confidentially. What an agency does not give you is ownership of your process, your employer story or your bar, and expecting it to compensate for weaknesses in those areas is where most disappointing engagements start. The agency can only present the role you gave them.
When hiring is continuous. Agency fees are usually a percentage of first-year salary per placement, so cost scales directly with volume while an in-house recruiter's cost is largely fixed. Run the arithmetic with your own numbers: estimate the fees for the hires you expect over the next year and compare with the fully loaded cost of a recruiter plus [talent acquisition software](/talent-acquisition-software). The crossover point arrives sooner than most small companies expect. An in-house team also accumulates things an agency cannot hold for you: a talent pool, knowledge of your managers, and a candidate database in your own [applicant tracking system](/ats) that keeps producing value after each search closes. Include the cost of recruiter turnover in that comparison, since an in-house team is only cheaper if it stays.
Several, and using both is normal rather than a failure. Confidential searches, where a replacement is being sought before an incumbent knows. Genuine bursts, such as opening a new location, where hiring permanent recruiting capacity for a temporary peak makes no sense. Highly specialised roles where a search firm's network is the entire product. Markets where you have no presence, particularly a first hire in a new country. And overflow, when your team is at capacity and a role matters more than waiting. The decision is per role rather than per company, and the honest question is what specifically the agency provides that you cannot. In each case, decide deliberately rather than reaching for an agency once a search has already drifted.
Ask four questions. Can we reach these people ourselves, based on evidence from an actual attempt rather than an assumption. Do we have the capacity to run this search properly alongside everything else. Is this a repeating role or a one-off, since repeating roles justify building the capability. And what does delay cost, because a fee is often smaller than a quarter of missing output. Then decide before starting rather than defaulting to an agency after eight weeks of drift. If you go external, brief them properly, and be aware that an agency cannot fix an underpaid role or a manager who will not decide. Those failures follow you into any engagement.
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