Entrepreneurship & Small Business

Headhunters: Worth it or rip off?

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  • May 12th, 2006 3:30 am
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[OP]
Deal Fanatic
Mar 31, 2001
8451 posts
1432 upvotes
Toronto

Headhunters: Worth it or rip off?

So, those of you who had HR experience, do you find it is worth the 20-30% you have to pay headhunters to find people? Are the people they find better qualified than those you found through other channels?
9 replies
Deal Addict
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Sep 30, 2003
3908 posts
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Toronto
we use them for specalized science/engineering positions. they always come through better than other methods but then again, we're talking very specalized i.e. looking for PhDs or others with niche skills.
we also use them as a buffer to poach people working for the competitor.
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Deal Addict
Feb 12, 2004
1473 posts
121 upvotes
This is the very question I'm going to ask! I've been doing IT subcontracting for years and hate the 20% to 30% rip-off (some cases up to 60%!!!) Yes HR may get a relief through headhunters but does it really worth?
Deal Addict
Mar 22, 2005
2008 posts
2 upvotes
You have to remember if you hire the traditional way, you do incur a fairly large cost too. It can cost a couple thousand dollars to run a print ad in the newspaper. Then you're using labour to go through resumes and schedule a couple rounds of interviews.

Agencies tend to narrow down the field to people who are likely more qualified than if you simply "invite" anyone to apply for the job. The less specific the qualifications, the larger variety of resumes you'll receive.

They can also fill the position quicker. By the time you get your job posting created, submitted, printed and then the longer interview process, it's quite a bit longer than a phone call to the agency.
Sr. Member
Mar 11, 2004
670 posts
18 upvotes
I asked the same question of my HR dept several years ago. They told me that they posted a half-page ad in a major newspaper, cost them $20K to run it (cannot remember for how long). They received over 3000 resumes only one of which was appropriate. The person who was appropriate turned out to have a serious chip on their shoulder, so it turned out that the ad was a glorious waste of time and money. I don't know whether head hunters are worth it but the ad sure was not!
Deal Addict
Mar 20, 2004
1120 posts
1 upvote
Toronto
bigbug wrote:This is the very question I'm going to ask! I've been doing IT subcontracting for years and hate the 20% to 30% rip-off (some cases up to 60%!!!) Yes HR may get a relief through headhunters but does it really worth?
it's high, but a lot of the bigger agencies charge only a meager 10-15%. It really depends on your negotiation skills. I look at their commission as a marketing fee. Sometimes it's better not to know the true billing rate :lol:

As for the original question it really depends on the type of skill you're looking for. For a small business i'd say the headhunter fee is not worth it unless you're looking for a very specialize skillset you cannot find. Most agencies are just searching workopolis and monster daily and aren't really providing much value other than doing the searching and short listing the candidates for you. Whether you do this yourself or get the agency to do it, the talent pool is the pretty much the same.
Penalty Box
Aug 26, 2001
17113 posts
681 upvotes
Oak Ridges, ON
bigbug wrote:This is the very question I'm going to ask! I've been doing IT subcontracting for years and hate the 20% to 30% rip-off (some cases up to 60%!!!) Yes HR may get a relief through headhunters but does it really worth?
anyone know what the current billing rate to contractors pay rate ratio is nowdays in I.T.?

30% sounds too low... i'm hearing that contractors getting $40/hr usually have their agency charging the client $75/hr.
Deal Addict
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Sep 29, 2003
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konfusion666 wrote:anyone know what the current billing rate to contractors pay rate ratio is nowdays in I.T.?

30% sounds too low... i'm hearing that contractors getting $40/hr usually have their agency charging the client $75/hr.
probably true.. but ook at the agency expenses, rent, insurance, account exec, reception, recruiters, etc.. plus the companies usually only pay their bills once or twice a year while the contractor gets paid twice a month usually.
Deal Addict
Mar 20, 2004
1120 posts
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Toronto
ferkel wrote:probably true.. but ook at the agency expenses, rent, insurance, account exec, reception, recruiters, etc.. plus the companies usually only pay their bills once or twice a year while the contractor gets paid twice a month usually.
Have you seen some of the recruiters these days? They're a one man company working from home. How much office expense can they really have?
Jr. Member
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Feb 14, 2002
198 posts
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If the agency provides you with a good product, then it's worth every penny.

Place an ad on Monster, Workopolis, or in the paper for an IT person and watch the resumes roll in. (We got 3000 in 48 hrs). Never again. I'm always going to a recruiter.

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