4 ways outsourcing recruitment can control costs and drive growth

Vaco Blog - Recruitment outsourcing to control costs and drive growth - graphic

The cost-saving benefits of outsourcing are fairly well-known. In fact, if you were to ask a business owner why they chose to utilize managed services or outsourcing for certain business tasks, there’s a good chance they would respond with something like, “to save money.”

Vaco Trends in Transformation 2022 eBook
Download the Trends in Transformation 2022 report.

Controlling costs remains a key motivator for pursuing outsourcing. In Vaco’s recent Trends in Transformation report—which surveyed 164 business leaders—31% of respondents said increasing outsourcing or shared services was a key focus for cutting costs within their organizations in 2022.

Financial savings aren’t the only benefit of outsourcing, however. Many organizations are at an inflection point in the aftermath of the COVID-19 pandemic; they’re adapting new digital capabilities, technology systems and processes. Some are redefining their service offerings, acquiring other companies, or launching new divisions. Others are on the cusp of massive growth opportunities.

In fact, 2021 saw record levels of venture capital being poured into startups; in Q3 of 2021 alone, global startups raised nearly $160 billion, an all-time high. From artificial intelligence to healthcare, data analytics and fintech, the number of “unicorns” in the startup field has grown from 43 in 2013 to nearly 1,000 in 2021. The majority of these unicorns are in technology or a tech-adjacent industry.

What does this have to do with outsourcing, you ask? 

Well, when thousands of companies are undergoing massive transitions and organizational change, learning new systems or altering decades-old processes, the need for new talent—often highly skilled, specialized talent—isn’t far behind. 

In the current labor market, recruitment process outsourcing can be a lifeline for companies that need effective, experienced recruiting but don’t have the internal headcount or expertise to do it on their own. 

Let’s explore how. 

Recruitment outsourcing: accelerating a long (and expensive) hiring journey

Let’s return to the conversation about start-ups. 

Imagine you’re a fintech startup that just received your first round of funding. You need to hire 25 new team members quickly—in software development, devops, quality assurance, data analytics, cybersecurity, and a host of other specialized roles. 

The problem? You don’t have a hiring department yet. You don’t have a single subject matter expert on your staff who can go into the recruiting space and find the candidates you desperately need. You also don’t have a framework or process for recruiting, hiring, or onboarding. You need talent sourcers, schedulerers, and coordinators to develop one—before you can even begin filling roles necessary to the growth of your core business. 

Essentially, you need to hire people to hire people, or else saddle your current team members with tasks and processes they aren’t familiar with, diverting their time from the revenue-generating work they were hired to do. 

It might take months to build even the foundation of an effective hiring department. To procure true subject-matter experts, especially in highly technical fields, you may need to take on three or four full-time salaries in the six-figure range. In the meantime, your most critical projects, those needed to advance your business goals, are not getting done because you don’t have the talent on staff to do the work. 

Many startups simply don’t have the time or the resources to weather these challenges, so they search for a recruitment outsourcing partner that can carry the load. 

An experienced recruitment outsourcing company can take on all or part of the recruiting process. If you’re hiring for in-demand tech roles, your outsourcing firm accelerates your hiring process by accessing their large existing network of candidates. Because your outsourcing partner brings seasoned subject matter experts, they already have highly technical knowledge of the roles you’re trying to fill, so they can communicate with candidates more effectively. 

Here are four key ways recruitment outsourcing can help your company control costs and drive growth:

1. Providing an effective hiring framework 

Even if you have great internal recruiters who are subject matter experts, it may be difficult to effectively recruit without a standardized and sustainable hiring process. This is especially true for companies that need to fill multiple roles at one time. 

A trusted outsourcing firm will bring an established hiring process to their partnership with you. Not only does the process help expedite hiring for vital positions, it can help you lay the framework for your own hiring department and establish effective practices for future recruiting and hiring needs. 

Here’s an example:

On a recent webinar, “Conquer the Digital Skills Gap,” I served as a panelist discussing the ways companies can address gaps in digital skills within their organizations. The conversation turned to managed services and outsourcing, and specifically how companies can determine whether or not recruitment outsourcing is a good fit for them.

To illustrate a circumstance where a managed services model might be beneficial, I spoke of a client that was trying to adapt their business model to the technology space. While this client had incredible in-house recruiters already on staff, those recruiters weren’t skilled in finding and hiring software engineers. 

What Vaco was able to do for this client was two-fold: we functioned as a retained recruiting arm for their engineering division, but we also helped their internal hiring team learn how to effectively recruit for in-demand, highly technical roles. 

This is an example of just one of the ways a great outsourcing partner can benefit a company beyond helping them cut recruiting costs. They provide industry expertise, established processes, and consultation, helping your company build out or improve the systems and processes that are missing or incomplete.

2. Allowing your current team members to focus on your core business

Another key reason for outsourcing recruitment is allowing your current internal team to focus on the goals of your core business—growth, innovation, and generating revenue, for instance. 

By outsourcing your recruiting function, the (many) time-consuming tasks of hiring disappear from your current team members’ already-full plates. They’re free to focus on the meaningful work they enjoy while your outsourcing partner builds out the teams you need to succeed.

3. Finding better candidates by understanding your organization

Any average recruiting outsourcer can fill open seats. A great outsourcing partner will take the time to truly understand your business, your vision for the future, and your company culture before pursuing candidates to join your team. 

Vaco - Outsourcing Stat from report 2

At Vaco, our understanding of a client’s business is the foundation of our recruiting efforts. We know—and respect—the central role a company’s workforce plays in getting them to the next level. So we evaluate candidates for more than skill set or experience. We also consider how well a candidate aligns with a client’s vision, workplace culture, and ideologies.

4. Providing critical insight on the current labor market and candidate expectations

Nearly all organizations, whether they’re a start-up or an established business, bring their own set of standards and expectations to the hiring process. 

They may mandate six or eight interview rounds, with two (or more) rounds of testing, for all software development roles. They may require in-person interviews for all positions or have strict policies governing on-site vs. remote work. They may have firm salary ranges for even the most in-demand and highly skilled positions. They may have inflexible requirements for certain certifications, years of experience, education levels or continuous employment. 

Oftentimes, these mandates are informed more by tradition or organizational precedent than by current labor market realities. And unfortunately, many companies that have these stringent expectations are seeing great candidates drop out of their interview process or get hired by their competitors. 

This is especially true in the post-2020 labor market. 

As a hiring expert in one of—if not the most—in-demand sector, I can say this: candidate expectations have changed. Tech candidates have so many options that they typically aren’t willing to invest time interviewing with companies that don’t meet their needs. And these market realities aren’t likely to reset for a long time.

In many ways, the tech labor market is an amalgamation of some of the overarching trends in the hiring world: 

  • Tech job openings hit a two-year high in October 2021
  • Through Q3 of 2021, employment in the tech sector rose 34% when compared to the same stretch of time in 2019
  • The unemployment rate for tech occupations in the U.S. is around 2%, less than half the national average
  • The projected job growth for software developers, quality assurance analysts, and testers through 2030 is 22%; the national average for all other occupations is around 8%

Despite the skyrocketing demand for tech candidates, there is a variety of factors impacting the number of candidates actually available on the job market. Work visas are difficult to acquire, COVID-19 delayed graduation for many students (thus delaying their entry into the job market), and the majority of qualified tech professionals are already employed. 

These are unique challenges and circumstances that many companies have never faced before. And they have to adjust their hiring policies to be successful in this type of labor market. 

A trusted recruitment outsourcing partner will bring deep labor market expertise to their relationship with your company. They can provide data and intel on hiring trends at both the local and national level. As experts, they can help your organization adjust hiring timelines, revisit salary ranges, improve interview strategies, and get a better overall understanding of the disruptions shaping the hiring landscape. 

Wrapping up

It’s important to note that like all good relationships, your company’s partnership with a recruitment outsourcing firm should be based on trust. Your outsourcing partner should do more than fill open roles in your organization; they should function as an advisor and expert on process, strategy, and trends. 

The business model for outsourcing with Vaco is built on helping businesses acquire the talent, resources, and know-how to become successful without us. We bring in the team members and key players that can sustain your system and continue to build it from within your company, long after your outsourcing partnership with Vaco has ended. By helping our clients build success from the inside, we help them in their journey to sustainable, effective hiring practices.

Want more information on outsourcing and managed IT services with Vaco? 

Contact us today. 


Lindsey Thorne - Managing Director - Vaco Seattle


Get Our Job Seeker Tool Kit

Fill out the form below to get our job seeker resource guides delivered directly to your inbox.