What Is a Recruitment Agency? Basics and What They Do

Attracting qualified talent in today’s competitive labor market can be challenging and the recruitment and hiring process is often time-consuming. To engage skilled workers and make hiring more efficient, many organizations are turning to recruitment agencies and other alternative staffing solutions. 

Engaging a recruitment agency can help your organization streamline hiring and quickly access the most qualified candidates, among other benefits.

If you’re considering partnering with a recruitment agency, here’s a high-level overview of what to know before you get started: 

• What is a recruitment agency?
• How a recruitment agency works
• Typical recruitment agency responsibilities
• Types of recruitment agencies
• How to choose a recruitment agency
• FAQ about recruitment agencies

What is a recruitment agency?

A recruitment agency is an external partner that works on behalf of an organization to help fill open positions with qualified candidates, including sourcing and vetting individuals and presenting top talent to hiring managers. For example, a software company may enlist the support of an executive search firm, which is a specialized recruitment agency focused on leadership positions, to help recruit a qualified chief technology officer. 

Benefits of partnering with a recruitment agency include:

• Access to a broader talent pool 
• Time and cost savings compared to allocating internal resources to recruitment
• A streamlined hiring process 
• Specialized expertise from industry-specific recruitment agencies
• Reduced hiring risks, as many agencies offer guarantees or replacement services if a new hire isn’t the right fit 
• Hiring flexibility, including opportunities to engage temporary, part-time, or contract workers

How a recruitment agency works

The right recruitment agency can help your company source skilled workers by streamlining the recruitment process. As is the case with initiating any business partnership, understanding how the engagement works and preparing for productive discussions with prospective agencies ahead of time is important. 
Common steps involved in working with a recruitment agency include:

1. Defining business and recruitment needs
2. Evaluating and selecting an agency
3. Agreeing to terms and signing a contract
4. Receiving and reviewing top candidate profiles
5. Making final hiring decisions 

1. Defining business and recruitment needs 

Before partnering with an agency, understanding your specific business goals and recruitment needs can help you choose the right recruitment agency. Think about the skills gaps and roles you need to fill to achieve broader strategic business objectives. 

During this step, identify the hard and soft skills required to succeed on your team and whether full-time, in-house workers or independent professionals are the best fit for each role. Consider both immediate and future hiring needs so you can find a recruitment agency that aligns with your long-term workforce planning strategy. 

Based on this information, prepare job descriptions to share with prospective agencies. While some agencies will help write job descriptions or job profiles, being proactive and approaching agencies with as much information as possible is helpful. 

2. Evaluating and selecting an agency 

Based on the requirements you outlined, search for an agency that can best support your recruitment needs. Some criteria to take into consideration as you vet agencies include industry expertise, success rate, recruitment process, pricing, and customer reviews. Also ask agencies if they have a guaranteed timeline for filling roles, as engaging qualified talent quickly can help your organization avoid lost productivity due to skills gaps or talent shortages.    

3. Agreeing to terms and signing a contract

A key step in partnering with a recruitment agency is ensuring the payment and contract terms align with your budget, legal requirements, and expectations. The pricing structure for some recruitment agencies is retainer-based, while others charge a fixed percentage of the worker’s salary. Additionally, some agencies offer a guarantee period, during which they will search for a new candidate if the initial hire isn’t the right fit within a set window of accepting an offer.  

4. Receiving and reviewing top candidate profiles 

Once expectations are set, the recruitment agency will source and screen workers, saving your internal talent acquisition and recruiting team time that can be reallocated to other strategic business priorities and responsibilities. The most qualified profiles will be shared with your team for review and consideration. 

5. Making final hiring decisions 

One of the drawbacks of working with a recruitment agency is that it can depersonalize the process. While the recruiters at agencies do their best to match talent with the skills and qualities needed to succeed on your team, asking your internal team to interview top prospective team members and make final hiring decisions is a key step in creating a successful partnership. 

Typical recruitment agency services

Depending on your organization’s specific staffing needs and the recruitment agency you choose, services can vary. With some contracts, the agency oversees the entire recruitment and hiring process, while with others the company that engages the agency takes more of a hands-on approach and retains more ownership over the process.

Below are some examples of common recruitment agency services.

Posting opportunities on job platforms

Once your selected agency has an understanding of your recruitment needs and a job description is approved, the agency can begin promoting your open roles. Established recruitment agencies maintain a list of top candidate sourcing channels where they post open jobs or projects. 

Candidate sourcing channels may include:

• The agency’s jobs page
• Agency newsletters
• Social networks
• Networking groups
• Traditional job boards
• Industry-specific job boards

If you have a specific employee sourcing channel or job platform in mind, consider requesting that the agency include the channel in their sourcing process. 

Building relationships with talent

In addition to attracting new prospective applicants using traditional sourcing channels, experienced recruitment professionals often have strong existing networks of qualified talent. By building relationships with skilled professionals over time, the recruitment agency may already have an ideal individual in mind when they begin the search, which can help decrease the total time to hire.   

Here are some ways recruitment agencies build relationships with talent:

• Meeting with qualified candidates to learn more about their skills and experience
• Sharing relevant job opportunities with talent in their network on a regular basis 
• Offering early access to new open positions 
• Providing resume or job application advice and best practices
• Hosting or sponsoring networking events or job fairs
• Following up with feedback after interviews 

Interviewing and evaluating talent

When recruitment agencies receive applications, they conduct one or more interviews to filter out individuals who aren’t a fit and determine top talent with whom your team should meet directly. Some recruitment agencies may also include other evaluation steps in the hiring process to screen candidates and ensure they’re the right fit before presenting to clients.

Evaluation steps may include:

• Administering talent assessments 
• Requesting work samples or portfolios
• Reaching out to candidate references
• Conducting background checks 

Facilitating final interviews with hiring managers

After evaluating candidates, the agency shares a shortlist of top talent and schedules final interviews with internal teams.This process helps eliminate the back and forth often required between prospective team members and hiring managers to confirm availability. The recruitment agency may also include a few notes about why each candidate is a potential fit for the open role. 

Once candidates are shared with hiring managers, the team may also decide to conduct other internal interviews, such as peer interviews with potential team members, before making a final hiring decision. 

Extending offers and handling negotiation

Once a decision is made, the recruitment agency reaches out to the individual with the company’s job offer. Typically, the job offer process involves scheduling a call or video meeting to verbally extend the offer and share additional details, followed by sending a formal written job offer. 

During the job offer stage, recruitment agencies also serve as intermediaries for any negotiation discussions, which can save your team time and support an engaging experience, as candidates will have one point of contact throughout the entire process. 

Overseeing onboarding and administrative paperwork

While some agencies are exclusively recruitment-focused and only involved until a worker is hired, others offer full-service staffing services. Full-service agencies manage onboarding and related paperwork, including payroll and benefits, for the duration of worker’s time with a company. 

Onboarding steps may include:

• Completing administrative paperwork
• Shipping necessary equipment for each individual’s role
• Conducting training sessions
• Sharing relevant resources such as the employee handbook 

Types of recruitment agencies

Selecting a recruitment agency isn’t a one-size-fits-all approach and several options are available to support your organization’s short- and long-term hiring objectives.

Types of recruitment agencies include, but are not limited to:

• Traditional recruitment agencies. The primary role of a traditional recruitment agency is to match workers with companies. Organizations of all industries and sizes engage this type of agency. Depending on specific service offerings, traditional recruitment agencies often have options for companies to fill different types of roles, including temporary, contract, contract-to-hire, and permanent positions.  
• Temp agencies. As the name suggests, a temp agency connects businesses with talent for temporary, short-term, and project-based work. Companies often turn to temp agencies for additional help on specific projects or during busy periods. For example, an accounting firm may engage a temp agency for administrative support during tax season or a retailer may bring on temp workers during the holidays.   
• Contingency recruitment agencies. Organizations typically partner with contingency agencies or independent contingency recruiters to fill a specific position. The agency or recruiter is only paid if a successful match is made and the role is filled, often referred to as “no win, no fee.” 
• Staff augmentation agencies. This type of agency helps organizations bring in qualified, temporary workers who possess in-demand skills. In the past, staff augmentation was most often used to fill technology-specific skills gaps, but organizations now partner with staff augmentation agencies to find talent with a wide range of skills. 
• Specialized agencies. When companies are looking to engage talent in a specific industry or focus area, they often turn to a specialized agency. These agencies have expertise in specialized industries (such as technology, marketing, or design) or roles (including leadership and executive positions). 
• Recruitment process outsourcing (RPO) agencies. An RPO agency acts as an in-house recruiting team for a business. Companies may enlist an RPO agency during times of high-volume hiring that the existing recruitment team can’t support given their bandwidth, or when the business doesn’t have a dedicated recruiting or HR team. Unlike other agencies, in some cases an RPO agency may use the company’s existing recruitment processes and technology, rather than their own. 

How to choose a recruitment agency

The people on your team are the heart of your business and central to long-term success, so if you plan on engaging a recruitment agency, selecting the right one requires thoughtful consideration.

Look for an agency that understands your industry and focus area, fits with your budget, and will make your overall recruitment process more efficient.

As you evaluate different recruitment agencies to select the right one, ask the following questions about each:

• What is the agency’s focus area? 
• Which specific services does the agency offer? 
• How skilled and diverse is the agency’s talent pool? 
• How much experience does the agency have with filling roles in your industry or that align with your skill requirements? 
• What is the agency’s pricing structure and does it fit with your budget? 
• Can the agency customize its service offerings or pricing based on your organization’s specific needs? 
• What does the agency’s step-by-step sourcing and recruitment process look like?
• What is the agency’s estimated or promised timeline for filling open roles? 
• Does the agency have a positive reputation based on client and worker reviews or industry awards?
• How does the agency handle placements that end up not being the right fit?  
• How will the agency improve or add value to your current recruitment process? 

FAQ about recruitment agencies

Engaging the right recruitment agency for your specific business needs requires careful thought and consideration. Here are some answers to common questions you may have when evaluating recruitment agencies. 

What is the difference between a staffing agency and a recruitment agency?

While some may use the terms staffing agency and recruitment agency interchangeably, the two terms have distinct meanings. Both types of agencies match workers with companies based on a candidates’ skills and the organization’s requirements. 

A key difference between the two is that beyond recruitment, staffing agencies often act as employer of record for workers they engage, while most traditional employment agencies handle the process until a candidate is selected and hired.

Why would someone use a recruitment agency?

Companies partner with employment agencies for a several reasons, such as:

• Supplementing the internal recruitment and talent acquisition team’s resources and bandwidth 
• Accessing recruitment resources when the company doesn’t have a dedicated HR or talent acquisition team
• Driving efficiencies in the recruitment and hiring process 
• Expanding their talent pool, especially for highly specialized or hard-to-fill positions
• Bringing in talent for short-term or project-based work
• Focusing internal resources on the most qualified talent, rather than manually reviewing all candidates

How do recruitment agencies get paid?

While agency pricing structures vary depending on their area of expertise and the scope of your recruitment needs, most charge retainer-based fees. Some agencies also offer a guarantee period, during which the agency will search for a replacement if the candidate you hire isn’t the right fit soon after they accept an offer.

When you consider different recruitment agencies, ask for specific details about pay structures, including any added or hidden fees. 

Do recruitment agencies take a cut of salary?

In addition to retainer-based fees, some recruitment agencies charge clients a fixed percentage of the workers’s salary once a candidate is selected or hired. In most cases, the hiring company will pay this fee and the fee doesn’t directly impact the candidate’s salary. 

What are the disadvantages of using a recruitment agency?

While using a recruitment agency offers many benefits, taking potential disadvantages into consideration is also important. Disadvantages may include:

• Depersonalized hiring compared to using an internal recruitment team to find talent
• Variable quality of service, as some recruitment agencies are more experienced and skilled than others
• Security and intellectual property risks by trusting your recruitment efforts to an external party 
• Increased hiring costs as retainer fees or cuts of new hire salaries add up 

Recruit great talent on Upwork 

While recruitment agencies can help with some of your hiring needs, they can be costly and leave your team with limited control over the staffing process—which can increase the risk of bringing on workers who aren’t quite the right fit for your team.

To more efficiently and cost-effectively fill skills gaps and meet your talent objectives, consider partnering with an independent recruitment expert on Upwork. Recruitment professionals have extensive experience sourcing and attracting talent and overseeing hiring processes. The right independent recruitment expert can help you find the best-fit talent to meet evolving business needs.

Another option to fill your team’s skills gaps is by searching for talent through Project Catalog™. Browse a selection of fixed-price consultations and projects across a variety of categories and more than 10,000 skills. Simply book a consultation or select a project that aligns with what you’re looking for and begin working with an expert right away. Get started today—sign up for an Upwork account. 

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Upwork is not affiliated with and does not sponsor or endorse any of the tools or services discussed in this article. These tools and services are provided only as potential options, and each reader and company should take the time needed to adequately analyze and determine the tools or services that would best fit their specific needs and situation.