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recruitment agency vs software house

Recruitment Agency vs Software House – Pros & Cons of Cooperation Methods

When deciding to start a new IT project, you might be wondering which third parties could be involved in that task. In this article, we’re comparing the pros and cons of two popular cooperation methods – with a recruitment agency and a software house. 

Even though we’re writing from the IT recruitment agency viewpoint, we’ll do our best to not pat ourselves on the back and try to stay objective😉

Keep on reading to find out which model is more suitable for you!

Recruitment agency

A recruitment agency is an intermediary between a company that wants to hire someone and a job seeker who is looking for employment. The agencies screen the CVs and talk with the candidates who will make it through for the client’s review. Thanks to this, employers don’t have to spend time attracting candidates and going through tons of profiles and applications to find a few qualified ones. 

The employees of the agency create not only a tailor-made recruitment plan but also offer terms of cooperation that will take into account the specific expectations and needs based on the information obtained from the client. This, combined with access to a large talent pool, means that the agency can provide you with carefully assessed candidates, who identify with the culture of your organization.

It is worth remembering that the standard recruitment process in the IT industry, which consists of 1 stage on the agency’s side and 2 stages on the client’s side, ends on average with filling a vacancy within 2-3 weeks. Additionally, the notice period of the candidate also comes into play. It might happen that the new employee can join the team in 3 months at the earliest. Nevertheless, it doesn’t mean that the whole process can’t be done more efficiently – each case is different and its length depends on many factors, such as the size of the recruitment team, specialization of sought-after candidates or the nature and (often financial) attractiveness of the offer. 

The methods of negotiating and charging fees differ between recruitment agencies. It is estimated that standard recruiting costs range from 15% to 20% of a candidate’s first annual salary, but this can go up to 30% for hard-to-fill positions. 

Once the employer has managed to build the team, they must also maintain it. This, in turn, is associated with costs (training, work tools, remuneration etc.) and of course, requires greater involvement of internal employees. The costs of permanent recruitment are usually returned after about a year. However, it’s worth keeping in mind that there is always a risk whether the employee is going to actually work for over a year or decide to change the company just after a few months. To keep the stress level lower, it is recommended to choose a staffing agency that works with a replacement guarantee, which means that it has to recruit a replacement candidate at its own cost.

Are you wondering what makes a good recruitment agency? Check out here.

Software house

Most agencies have internal databases with already pre-screened and pre-referenced potential employees, but a very big advantage of software houses are IT specialists who are at your fingertips. You can either commission the project to be fully completed by the software house or hire employees to join your team. They work “on a bench”, meaning that they are fully employed there, but are at the client’s disposal for a specific task (important note: there are also recruitment agencies that hire employees who work “on a bench”). This solution significantly accelerates the time needed to find the right person, as the elements such as the CV screening, candidate verification process or notice period, don’t have to be concerned.

It’s good to keep in mind that even though this cooperation model is usually much faster than working with a recruitment agency, it might happen that the expert that the client is seeking is currently busy with another ongoing project, so the customer might have to wait for their availability.

When working with a specialist from the software house, you can’t really know whether this person is going to get along well with the other members of your existing team. This potential mismatch can cause communication problems.

Consultants from a trustworthy IT recruitment agency are aware of the specific hard and soft skills that a candidate should have and know how to test those skills. Usually, they also have in-depth knowledge of the IT industry. This also applies to the employees from a software house; for everything to function properly and projects to be implemented comprehensively, the software house team must consist of experts from many fields – testers, analysts, developers, administrators, graphic designers, etc. This diversification means that their joint technical knowledge can far exceed the one that recruiters have.

Undoubtedly, if you’re not interested in scaling up your current team, but are strictly focused on building a product from scratch, then a software development company might be a better choice. It will help you not only to create the highest-quality software, but also provide you with consulting and advice on the proposed solutions.

How much does cooperation with a software house cost? It can vary dramatically and depends on which part of the world you outsource to, whether you already have your own in-house team and only need to outsource part of the project or whether you want to delegate the whole development process, and last but not least, the seniority level of experts that will be involved in your project. When you work with a software house, you only pay for the number of hours each specialist actually worked. This model is definitely more cost-effective short-term.

To sum up, the recruitment method has to be aligned with your needs. It should focus on the priorities and consider multiple factors, such as the time available for the recruitment, the budget that you operate with, the number of candidates that you’re searching for, and how long you would like the collaboration to last for. Based on this you can choose which option is the most suitable for you.

Are you convinced about working with an IT recruitment agency? Contact us. We will be more than happy to talk about your needs.