Should Your Business Outsource Staffing Services?

Benefits and drawbacks of outsourced staffing, and how to know if you need it

Are you considering outsourcing your recruiting efforts to a staffing service? In that case, you’re not alone: 44% of businesses use staffing and other service providers because they don’t have the bandwidth to handle it in-house—even if they have the internal expertise. If your company is like many others, your HR staff may find the demands associated with managing staffing overwhelming. Identifying candidates, vetting them, conducting interviews, and onboarding can easily eclipse other business-critical tasks.

This article describes the benefits of outsourced staffing, its disadvantages, how to know if you need it, and what to look for in a staffing agency.

What does it mean to outsource staffing?

Outsourcing your staffing involves using an external service provider to recruit and hire some or all of your personnel. Some businesses look into outsourcing because they need candidates with a specific skill set. Others pursue staffing solutions to offload the burden of acquiring new staff so HR can focus on other responsibilities, such as training and performance management.

For small-to-midsize businesses (SMBs), a staffing agency can also provide temporary staff to meet an increase in demand. Smaller companies may not have enough staff on hand to handle a sudden spike in business. For instance, an accounting firm may need more staff in the months leading up to tax season, or a manufacturer may need a few more employees to produce an abnormally large order.

Benefits of outsourcing staffing services

The benefits of HR outsourcing some or all of your employees range from saving you money to getting more qualified employees more easily—all while reducing hiring risk.

Cost savings

Outsourced staffing can save you considerable money, especially when it comes to the cost of finding new talent. For example, you can offset some or all of the following expenses:

• Advertising positions

• Posting jobs

• Performing background checks

• Paying in-house recruiting teams

• Training in-house recruiters

In addition, you may be able to use less office space because you don’t have to provide cubicles for an in-house recruiting, interviewing, and training team.

Increased efficiency

One of the most compelling reasons to use a staffing services company is the efficiency boost you get in the hiring and training process. It’s easy to lose several hours a day combing through resumes and cover letters as you narrow down which candidates have the expertise you need. A staffing company can take this workload off your shoulders, presenting you with qualified and handpicked candidates.

Also, instead of spending several hours explaining benefits and company policies, you can let your staffing services take care of it. This increases the speed and ease with which you can acquire and ramp up top talent.

Access to a wider talent pool

Outsourcing staffing services can help you cover some very important bases in the hiring game, and this is particularly helpful now. Since the pandemic, the volume of applications has been down by 41%. And when recruiters do manage to find a qualified candidate, they often have to deal with ghosting or rejected offers.^[1]

With an outsourced staffing service, you’re insulated from the challenges of finding, interviewing, and hiring the best talent.

This is because staffing agencies already have talent funnels in place. With their own databases of qualified professionals, as well as in-house teams of recruiters, a staffing company may have access to the kind of deep talent pool you need.

Reduced risk

The hiring process is fraught with risks. At the top of the list is hiring the wrong person. With a staffing agency, you can sidestep this pitfall because the company can put all candidates through a stringent fitness filter. You can also determine exactly what you’re looking for and calibrate with the staffing company before their recruiters start their search.

Another risk you can avoid is hiring the right people but not being able to give them the training they need. A staffing agency that provides training services can educate new hires regarding how to be successful in your company. In this way, you can avoid the risk of not having a training program that positions new hires for success.

One of the biggest concerns for employers is the hiring process simply taking too long and consuming too many resources. For example, even with AI-powered resume readers, it can take 10 minutes to read and annotate a resume and cover letter. Now, imagine you have 150 resumes to assess. Finding an extra 1,500 minutes may be impossible. But a staffing agency can bear the burden.

Disadvantages of using a staffing agency

Despite the benefits, there are some drawbacks to using a staffing agency that you may want to consider before signing on the dotted line.

Competition with other candidates

This may seem like a plus because it can help the best talent rise to the top. But this isn’t always the case.

For example, let’s say a staffing agency has access to 500 software developers. Each time the agency sends out a job posting, about 40% send in resumes and cover letters. That means each candidate has only a 0.5% chance of getting hired. Those who are out of work may be the most motivated and apply again and again. In the face of this competition, a stronger developer, such as one that is already gainfully employed, may stop submitting applications after a while.

Also, the best developer may not craft an excellent resume. A relatively incompetent professional could be an excellent resume writer. If you use a staffing agency, you have to trust that the company understands these nuances and reads applications with a mindful eye. Otherwise, you may end up with subpar talent.

Lack of employer branding

Your branding plays a powerful role in the recruitment, hiring, and onboarding process. However, when you use a staffing agency, its branding may overshadow yours.

To illustrate, many companies incorporate a human-first, kind, empathetic communication style into their brand. Therefore, when a business handles its recruiting and interviewing, these organizations can reflect that tone—and see how candidates respond to it.

But if they outsource their staffing, the communication style of the staffing company may taint candidates’ first impressions. This could result in lost branding opportunities.

Company culture gaps

Even if you think you’ve communicated everything that makes your company tick, there still may be some culture gaps that a staffing agency can’t bridge.

For example, some companies encourage a healthy work-life balance, while others encourage and reward employees for coming in on the weekends or during holidays. Unless a staffing agency deeply understands the work-life balance element of your culture, they may fail to convey it to prospects. As a result, someone may come in ready to chill out every weekend, only to find out that the rest of the team plans on showing up on Saturday.

This is only one example; culture gaps relating to teamwork, leadership styles, professional development, and more can result from outsourcing your hiring process.

Signs your business should outsource staffing

If those involved in the hiring process often feel overwhelmed with their workloads, it’s a telltale sign you should consider outsourcing your staffing. Also, in some cases, you may be able to mitigate some of the drawbacks.

To make the decision easier, here are some questions you can ask your HR department and other decision-makers:

• Do those involved in the hiring process often feel their workloads are a lot to handle, or are their tasks relatively manageable?

• Have your last few hiring rounds produced effective, talented individuals who added genuine value to your company, or were there several disappointments?

• Are there elements of your company culture you need candidates to experience as early as the recruitment process, or can company culture education wait?

• Are there elements of your onboarding process that eat up a lot of time, or is your in-house staff able to manage to get new hires on their feet in a timely fashion?

What to look for in a staffing agency

When shopping for a staffing agency, you want to make sure they have the kinds of systems and practices that make them a good fit for your organization. You can use the following as a checklist to compare one option with the next:

• Areas of expertise or specialization. Some agencies cater more to IT roles, while others may focus more on healthcare, sales, or administrative support. Ideally, you want maximum alignment with your needs.

• Quality of the company’s talent pool. A large network of candidates doesn’t always translate to highly qualified hires. To determine the quality of the agency’s talent, ask questions about the average length of time their candidates stay with companies and the reasons they end up leaving.

• Diversity of services offered. You may need training and onboarding services in addition to recruiting and hiring. Some organizations may also need payroll management services. You’ll want to see what each option offers before moving forward.

• Geographic factors. If you only have an office in one area of the country, you may be more comfortable with hiring people close to that location. That way, you save on relocation expenses and may see a bump in your retention stats.

• Flexibility in the role you play. For some organizations, having the freedom to be either fully hands-off, totally hands-on, or something in between is an important factor to consider. For instance, you may be able to adjust the interview questions in the middle of the hiring process. You could also participate in interviews via videoconference or choose whether you want to join in person.

Start improving your staffing process today

A staffing agency can reduce hiring risk and streamline your onboarding process. At the same time, you may have to weigh the impact of gargantuan talent pools and miscommunications regarding company culture.