In-House or Rec-Con – what does the future hold?

Written by: James Dunne
Published on: 5 Oct 2017

    When the world economy came close to falling into the abyss in 2009, virtually every firm looked to reduce hiring costs by reducing its reliance on recruitment consultants and their fees. One obvious way to do this was to bring recruitment in-house.  Since then, a veritable industry has developed, bringing with it conferences, events, gurus and no end of suppliers all intent on persuading the in-house “community” that success is only a new piece of software away.

    There is no doubt that the growth of in-house recruitment has resulted in recruitment consultancies losing some business. The vast majority of in-house recruiters come from a rec-con background, but, or rather because of this, the really good in-house teams know they still have to use recruitment consultancies for some jobs.  A judicious mix of recruitment marketing know-how, recruitment consultancy expertise and the best available recruitment technology is the recipe for in-house success.

    Despite that, recruitment consultancy has, once it got over the first few years of recession, generally thrived.  The fact that, unlike in previous recessions, firms tried to retain staff, even if that depressed wages (I remember, painfully, our board all taking a 10% pay-cut!) has led to the situation we have today, of almost full employment but low productivity.  More seriously, for recruiters it has meant severe skill shortages in some vital areas across the country.

    And this leads me to the main point of this blog: what does the future hold for in-house and rec-cons in a world where skill shortages are currently the norm, and what will happen when things change? Will in-house grow and recruitment consultancies wither, or vice versa, or can both power ahead? 

    When the recession hit, lots of rec-cons went to the wall and thousands were made redundant.  At the same time, the long-term decline of the recruitment advertising agencies, at least in terms of their ability to influence the market through their media buying, continued, leaving in-house and rec-con to vie for supremacy.  At a recent, major in-house event I attended in London, there were no rec-cons exhibiting, only one former ad agency, but lots of recruitment software suppliers and job-boards.

    Yet, if I could put money on who will be the last man standing when the next recession has come and gone, it would be the recruitment consultancies. That doesn’t mean I think that in-house will disappear, far from it, but when you think about it, rec-cons have a number of advantages.

    Recruitment, it almost goes without saying is about people, yet it’s difficult to form relationships in-house. Once an in-house person has recruited someone, at best they can only be promoted and as a candidate they are, effectively, lost. Yet you can be sure that some headhunter is keeping in touch, developing a relationship and looking to move them on when they want a career change.  And the headhunter will be able to offer them lots of different companies to take their career forward, whereas the in-house team has nothing to offer other than that in-house career development.  Put bluntly, in-house recruiters only have one company to promote and sell to candidates: recruitment consultants have dozens if not hundreds. 

    And there is one more reason why I do wonder about the in-house world retaining quite the same level of importance in the future. As I mentioned, we’re experiencing almost full employment and there are lots of skill shortages.  At some time in the next few years, the economy will be in a more parlous state, the recruitment market will loosen up and it will be far easier to recruit.  At that point, firms will look to cut costs, and the in-house world, or at least the inefficient parts of it, will be identified as a possible saving.  Recruitment consultancies, so long as they invest and stay ahead of the curve technologically, will be a more attractive option in many instances.

    James Dunne, exec-appointments