Why do companies use placement firms to find IT contractors instead of using internal recruiters?

Who better to answer that question that a recruiter who has been in the business for many years and now has his own small placement firm (and explains why using a small placement firm has many benefits over the big guys):

Internal recruiters cost money and are a fixed cost regardless of how they produce.  Staffing firms only get paid when they deliver – basically risk free, especially to those small to mid-size companies that don’t have staffing needs on a regular basis.  Also, staffing firms are much more aggressive for the reason I mentioned – we don’t get paid unless we deliver.  Internal recruiters (generally) aren’t as motivated.  I’ve had a number for clients drop their internal recruiter(s) after seeing how hard I work (sitting in on interviews, prepping candidates, generally saving people time).

Also the cash flow issue – a staffing firm typically floats the first 6-8 weeks of a candidate’s pay until the firm’s first invoice is due.  This is big for smaller tech companies working on projects.

They pre-qualify the candidates, saving time for the client; Not having to do the dirty work of getting rid of a person who is not working out (calling the placement company and having them do it); Less chance of getting in trouble with the IRS by having the contractors being considered employees.

Good staffing firms specialize in certain skill sets and bring decades of experience with solid pipelines.  I love nothing more than when my client tries to staff a position first.  After a week of reading a ton of garbage resumes they give up and tell me to figure it out.  I’ve even had clients come to networking events with me and want to leave after 30 minutes.  It isn’t rocket science but it is hard work.  Wading through the garbage to get to the diamonds in the rough, it takes a lot of time.

My basic selling points (as the “little guy”) –

(1) My staffing firm is risk free.  We don’t cost anything unless we deliver

(2) We are small, so clients have one throat to choke.  We are not a billion dollar giant with tons of bureaucracy (and overhead cost for that matter)

(3) We are flexible, responsive.  You never work harder than when you work for yourself.  Personally, my name is in the company name for a reason – accountability

(4) We are easy to work with.  I’m very proud of the fact that not one of my clients have changed a word of my MSA.  It means my contracts are fair/clear/reasonable

(5) We bring 20 years of IT staffing experience – You have seen the difference between veteran recruiters and rookies: One saves you time, the other wastes it

(6) I’m frank/honest with what we can deliver and what is over our head (a reference to volume, not skill set – we don’t pretend to be able to deliver 50 Java developers)

(7) I generally close by asking for a “chance” – no strings attached.  Talk only goes so far, your actions have to speak louder than words

The first few years of my company’s existence, I was in full-on sales mode.  Now that I have over a dozen clients, I’m more focused on keeping them happy than I am trying to land new clients.  But don’t get me wrong, I’ll talk to anyone on any day about my company.  I also get more referrals now, just having been around for 4 years – I think people realize that you’re going to stick and not be a flash in the pan.  With more positive interactions come more opportunities to be referred.  I literally got two calls last week from people asking if they could introduce me to a new client.  I couldn’t be more proud of that.

More info:

A brief note on recruiters and recruitment