Contingency Fees charged by Recruitment Agencies are going to be a thing of the past by 2015.
The argument goes that recruitment agencies are overpriced, do very little for their money, and are little more than a sales operation when they charge contingency fees https://www.launchrecruitment.com.au/.
For example, in the legal profession, solicitors firms pay ridiculous sums of money to agencies to find them staff. Most recruitment agencies charge around 19-25% to recruit a solicitor, so if you consider a salary of £30,000 for a 3 year PQE litigation solicitor in Leeds, the firm would need to find a fee of £7,500 plus VAT, payable within 21 days when recruiting.
Companies should easily be able to avoid this cost, either by advertising themselves on job boards or by using an integrated recruitment service, job board and CV bank. With the advent of integrated services including one recently launched for just £60 a month to recruit as many candidates as an employer likes, the future for recruitment agencies charging £000s is not looking very rosy.
Is there still a place for recruitment agencies in the global marketplace? The industry is still worth a small fortune and makes up a considerable percentage of many Western countries industrial base. However, it is a fact that employers, particularly at the smaller end, are starting to wake up to the fact that there are many alternative opportunities out there to recruit staff, and paying a one-off hit for an employee who may not in fact stay around for very long, is not particularly conducive to good business practice.
Agencies would argue about the ease of their service – it is very straightforward to call someone else and let them do the leg work on finding a new member of staff. However it is not rocket science to do recruitment and hardly a profession requiring particular specialisation.
Recruitment agencies may refute the claims above, the reality is that very little work is put into the actual recruitment process and the cost involved per hour is probably more than the clients themselves earn.
More and more larger businesses are in any event tying up deals with managed service providers, who take away the entire outsourcing process across a range of different types of service including recruitment, and control the spend. Agencies are starting to find margins tightening as these huge plcs take over large swathes of recruitment work and reduce the spend available dramatically. It may be in future that these MSPs are similarly put out of business by more companies going directly to candidates through job boards, but as these companies expand their operations it will get harder to stay profitable in recruitment in any event.
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