Recruitment Co-Sourcing – a disruptive recruitment model for disruptive firms

Hiring the right people is usually cited by CEOs as their number one challenge. Traditional recruitment channels often don’t deliver quality and value for scaling financial services firms. This negatively impacts business growth, diversity and innovation.

Scaling firms are now seeking innovative ways to improve this vital process in their business. Bypassing the traditional blended approach and high costs of in-sourcing recruitment, many scaling firms are turning to the flexibility of a co-sourcing arrangement to help their CEOs sleep better!


Most startup firms use a traditional blended approach to recruitment. This approach marries recruitment agency partnerships to the referral network of your team.

This approach has some benefit:

  • You build a team of tried and trusted former colleagues hired from extended networks
  • Potential cost reduction by focusing mainly on network referrals
  • Develop good recruiter relationships to support your growth

However, it does have a shelf life and in the long term this approach consistently fails scaling businesses.

It falls short on a number of levels:

  • Impact to productivity as internal managers sift and screen applicants and co-ordinate their own interviews
  • Risk is created through inconsistent recruiting agreements and non-uniform fee structures which leads to overspend and re-spend
  • Network referral recruitment finds like for like hires damaging diversity in the talent pool
  • Non-standard brand representation across your recruitment partners and the need to continue adding new recruitment suppliers to help fill the breadth of roles further dilutes brand representation
  • Inconsistent job descriptions and a lack of accurate salary benchmarking

Evolution – Building the internal model

A desire to control performance and reduce the cost of recruitment usually leads to the scale-up of creating an Internal Recruitment team.

The Internal Model solves many problems:

  • Costs are relatively fixed reducing recruitment spend
  • Consistency across the process from fee structures to job descriptions from salaries to branding
  • Internal managers are more productive as low leverage activity is significantly reduced
  • Personal network recruitment is strengthened, diversified and benchmarked with the wider talent pool sourced by your internal team
However, this approach has drawbacks for the scaling business:
  • No flexibility. Fixed overheads for recruitment spend are efficient in busy times but create a large cost base to carry through quieter periods
  • Internal teams are usually more generalist in approach. Therefore, recruitment agency support is still required for specialist hires which leads to unbudgeted and unexpected costs
  • Time to fill can be longer than anticipated as team capacity is limited. Internal Recruitment teams often operate at maximum capacity focusing on open roles and have no time to build a warm pipeline for those vital future growth hires


Taking inspiration from on-demand trends, some scaling firms have leveraged and incentivised their recruitment partners with a dynamic and collaborative solution. Enter Recruitment co-sourcing, using a recruitment partner as your in-house team.

The benefits are many:

  • Meaningful savings on recruitment spend. In return for guaranteed commitment and the scale of hires, the recruitment partner should deliver cost savings of around 40-50%
  • Total flexibility. Firms can turn the agreement on or off or up or down to suit company need
  • Firms can forecast and control their recruitment spend more effectively. The dynamic fee structure is pre-agreed and fixed every quarter based on volume and role type
  • Firms leverage the firm-wide recruitment expertise of their partner. They have access to up to date, rich and diverse talent networks who are exclusive to the hiring firm whilst in process
  • Service Level Agreements, incentives and penalties create a supplier tension ensuring timely delivery
  • Payment terms are spread across the project duration allowing firms to conserve cashflow even in busy recruitment periods
  • Being directly plugged into the external market for up- to-date role and salary data
  • The co-sourcing model can be used as a live test environment before in-sourcing recruitment

The pricing, control, flexibility and exclusive access to broad talent networks generates a significant pull factor for scaling firms.

It’s easy to see why many are eschewing traditional and in-sourced recruitment approaches to develop deep relationships with one or two providers.

In fact, the flexibility of these arrangements is such that they can be applied for a single project, for a departmental build or for the majority of annual recruitment.

It’s the on-demand, highly flexible approach required for a highly demanding, flexible market.

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Topics: Featured, Technology Media and Telecoms, Flexible, Talent Solutions

February 9, 2021
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Daniel Waltham
Written by Daniel Waltham

Responsible for leading client relationships and new business sales. Dan takes a lead role in customer engagement, identifying, creating and designing solutions to help our customers with risk and regulatory challenges. Ten years of experience working with financial services businesses across risk, compliance, data protection and regulatory change.