Recruitment is the top pain point for SMEs when it comes to employment and HR processes, according to survey findings published this year by HR technology business Employment Hero. The research also revealed that the average SME uses three or four systems to manage employment, costing up to £33,000 per year – and that’s before factoring in recruiter fees.
Meanwhile, LinkedIn data published in 2024 highlights that in-house recruitment has the potential to cut hiring costs by up to 50%. The Workplace Research Institute indicates that internal teams could halve the time to hire, and improve new hire retention by around 50%. Could this shift be the answer to cutting recruitment costs?
At Remote Recruitment, one client saw the benefits of building an internal talent acquisition team first-hand, says the agency’s founder Emily van Eyssen: “They cut hiring costs by 42% and reduced time to hire by 35%. Hiring manager satisfaction rose by 50%, showing that taking ownership of the recruitment process not only saves money but leads to stronger hires too.”
Similarly, Employment Hero took recruitment in-house in 2022. Its UK MD Kevin Fitzgerald hasn’t looked back.
Read more: Recruitment lessons from the Papal conclave
Speaking to HR magazine, he said: “No one understands our business like our own people. Our hiring is more aligned, more efficient and our talent team works hand-in-hand with our HR function and tech. It’s a tight, connected system that just works.”
At Anglo-Indian restaurant chain Dishoom, the vacancy rate rarely goes above 1%. People director Andrew O’Callaghan credits the hiring style – “Having people in-house means they’re closer to when we’re likely to have higher recruitment needs, and they can more readily get ahead” – and the fact they can shape how applicants experience the employer brand.
O’Callaghan says: “It’s a real opportunity to deepen, not dilute, the experience for a potential team member. That’s a powerful thing to be able to do, especially in the current market. You need to intentionally map out how people discover you, apply for a role, and go through the process, so they leave as a brand advocate, whether they get a role with you or not.”
Getting started
Full business buy-in is essential, explains O’Callaghan: “People have to genuinely believe it can be done better, whether that’s a leap of faith at the start as they back the idea, or with confidence from experience. It’s not just about the people team willing it to work; it’s about making sure everyone believes it can.”
Next, determine what the organisation needs, in the long term as well as the short term. “Bringing recruitment in-house shouldn’t be an all-or-nothing decision based solely on cutting costs,” urges Natasha Johnson, director of HR consultancy Organic P&O Solutions.
“It’s all about knowing your intended outcomes and working out how to measure success at each stage. Take your time and you can avoid the costly cycle of repeatedly flip-flopping between in-house and outsourced models like a headless chicken.
“Work closely with operations teams to understand any changes to workloads coming down the line, plus the skills you’ll need in the future. This frontline input is essential if you’re going to create accurate, and useful, resourcing plans.”
Read more: Skills gaps is over-exaggerated by poor recruitment strategies
Johnson also advises HR leaders to measure improvements in how you brand the business, because “organisations with strong employer branding see 50% more qualified applicants and can reduce cost per hire by up to 50%”. You will also want metrics to gauge the quality of new hires, and the time it takes to fill posts. Attach clear KPIs, so you can demonstrate your success to leadership teams.
She flags up the people element too, specifically the relationship between resourcing teams and hiring managers. Key questions are: Who takes the lead in the process? And how do you want them to work together? says Johnson. She also suggests piloting in specific departments, or certain roles, to test the waters before scaling up.
Finally, Johnson reminds HR leaders that the right systems are crucial: “When selecting an applicant tracking system, make sure it delivers on both efficiency and candidate experience. Too often, companies sacrifice their brand reputation when volumes increase and processes become impersonal.”
What to watch out for
“Bringing recruitment in-house can be a smart move, but only if it’s done properly,” warns Fitzgerald. She explains that she’s seen many businesses assume that HR can ‘just take it on’ as another task.
Johnson agrees: “One of the biggest pitfalls is underestimating the specialised skills needed for effective recruitment. HR disciplines require different skillsets. Expecting HR generalists to suddenly become recruitment experts can lead to disappointment.
“Consider whether your current team has the bandwidth and expertise to take on this additional responsibility.”
In the same vein, O’Callaghan advises that “just posting jobs and hoping for the best won’t cut it”. He continues: “You have to know how you’re going to market.
Read more: Businesses face record recruitment difficulties
“Agencies are usually very good at either having a big reach or knowing their market inside out; sometimes both. So, when you bring recruitment in-house, you need a real strategy.”
Other agency benefits, like helping candidates with CV prep, interview skills and research, should be considered too. O’Callaghan suggests replicating these in-house. That said, he strongly advises against cutting off external support entirely: “In-house recruitment doesn’t mean you stop needing expertise; it means you build it internally and try to do it better than when it was outsourced.
“You always need specialists. It’s just about where they sit.
“Keep some flexibility, especially if you hit a tricky role or the internal team is stretched. Knowing you can still tap into outside help if needed gives everyone a bit more confidence in the new setup.”
Johnson confirms that “the most successful in-house recruitment teams know when to use external expertise to their advantage”. Outsourcing is particularly useful for market insights, specialist knowledge, hard-to-fill roles and entering new markets, she says.
Size matters
The size of your organisation will determine what you implement and how, adds Johnson. “Smaller companies may struggle to justify a full-time recruiter, meaning that a blended HR and recruitment role is more practical. If you go down this route, check they’ve got the right skills to wear multiple hats effectively.”
Meanwhile, scale-ups should get recruitment in-house quickly, to control the brand and costs, according to van Eyssen. She adds: “For larger enterprises, a blended model combining in-house teams with selective agency partnerships tends to work best.”
Read more: Five ways to close the skills gap
In-house recruitment doesn’t suit every situation, however. Van Eyssen continues: “Companies without the willingness to invest for the long term, those with highly specialised hiring needs or businesses going through periods of extreme growth, where flexibility is critical, may find a fully internal model too restrictive.”
Certain positions, such as senior leadership roles, may be tricky to fill in-house too, according to Cate Rees, people partner – campaigns at NGO Global Witness. She recommends involving an agency with access to diverse talent, so you don’t risk missing out on important skills and experiences.
Is AI the answer?
AI is already transforming recruitment by streamlining screening, candidate matching and helping with job descriptions. “It takes care of the heavy lifting,” Fitzgerald explains.
“One of our customers – an HR manager in London – recently used our AI matching tool, SmartMatch, to hire someone. She summed it up perfectly: ‘I had a day off, and during that time my boss saw the application, interviewed the candidate and made an offer, all in the same day. It was so quick, it felt unreal.’”
He acknowledges the fear that tech will replace people. But after years as a recruiter, he doesn’t see it that way: “Nothing beats a real conversation or human instinct when it comes to hiring. But tech can free HR up to focus on what really matters: people.”
At ethical AI hiring company Applied, CEO Khyati Sundaram advises carefully considering what parts of the process you can afford to automate “without sacrificing fairness at the altar of efficiency”. He explains that, if you’re not trained on ethical data, “AI recruitment tools can amplify historical biases around what ‘good’ looks like, meaning talented applicants from under-represented groups are passed over for roles.
Read more: Lack of soft skills hampers performance, research suggests
“For example, ‘masculine-coded’ words like ‘individual’, ‘challenging’ and ‘driven’ reduce the number of female applicants by 10%. Rather than hiring an AI recruiter, employers could use AI to eradicate gendered language from job ads, levelling the playing field for candidates while building a robust talent pipeline.”
Jessica Lambourne, head of people at communications company Media Zoo, echoes this: “It’s important that spot checks are done on the CVs that were rejected.” And Rees reminds HR teams there is still “limited trust in AI for many, particularly older generations who can already feel alienated by modern recruitment practices, and people whose first language isn’t English.”
For those considering moving recruitment in-house, it’s clear that the right tools, tech, systems, training and support could save money, build stronger teams, improve retention and much more – provided you keep external recruiters in the picture to call upon. Fitzgerald concludes: “For most day-to-day recruitment, in-house hiring backed by smart tech is not only more cost-effective, it’s better for your people and your culture.”
Five key steps
Jessica Lambourne, head of people at communications company Media Zoo, advises.
1. Assess hiring needs
Are the right people in place, with the correct training, before a flux of recruitment is needed?
2. Assess the technology setup
Invest in an applicant tracking system, to improve candidate experience and provide reporting, and platforms such as LinkedIn Recruiter.
3. Develop processes and policies
This will streamline the candidate experience and help train hiring managers. Review these continuously, to make sure you adapt to the needs of the business, and that the process is fit for purpose.
4. Train hiring managers
They must interview effectively, provide meaningful feedback and collaborate with your teams. Consistency across the business is vital.
5. Have a clear employee value proposition
Strong branding will attract candidates, so the talent team should work closely with marketing, and use platforms like LinkedIn.
This article was published in the May/June 2025 edition of HR magazine.
Subscribe today to have our latest articles delivered to your desk.
