The Hiring Dilemma: Agency or In-House?

A hiring manager at a growing fintech company faces a decision:

Situation: Series B funding just closed. Need to hire 20 engineers in the next 6 months.

Options:

  • Option A: Use recruitment agency. Fast, proven, but costs RM 40K-70K per hire (RM 800K-1.4M total)
  • Option B: Build in-house recruiting team. 2-3 recruiters. RM 500K salary. But takes 3-4 weeks to hire and train recruiters

What’s the right choice?

The answer: It depends. On your stage, budget, timeline, and strategic priorities.

Quick Comparison: Agency vs. In-House at a Glance

FactorRecruitment AgencyIn-House Recruiting
Cost per hireRM 40K-70K (20-25% salary)RM 15K-25K (spread across hires)
Time-to-hire4-8 weeks6-12 weeks (slower)
Quality of hiresHigh (vetted network)Medium-High (depends on skill)
Startup costRM 0 (pay per hire)RM 500K-800K/year (2-3 recruiters)
Best forSpeed, executive roles, one-off hiresVolume hiring, ongoing recruitment
Worst forBudget-conscious, volume hiringUrgent hiring, niche skills
ControlMedium (agency owns process)High (you own everything)

The Case for Recruitment Agencies

When Agencies Make Sense

Scenario 1: You Need Speed (< 8 weeks)

Your options with in-house:

  • Hire recruiters: 2-3 weeks
  • Onboard & train: 2-3 weeks
  • Source & interview: 4-6 weeks
  • Total: 8-12 weeks (too slow)

Agency approach:

  • Brief agency: Day 1
  • Source candidates: Week 1-2
  • Interviews & offers: Week 2-4
  • Total: 4-8 weeks ✅

Scenario 2: Executive/Leadership Roles (VP, C-Suite)

Agency advantage:

  • Specialized networks (deep relationships)
  • Passive candidate access (VPs not on LinkedIn)
  • Confidentiality (don’t want departure leaked)
  • Negotiation expertise

Scenario 3: Specialized/Niche Skills (DevOps, ML, Data Science)

Agency advantage:

  • Specialized networks (DevOps agencies have lists)
  • Can search nationally/regionally (Singapore, India)
  • Know where to find passive candidates (GitHub, communities)

Scenario 4: You Don’t Have Recruiting Capability

Agency advantage:

  • Turnkey solution
  • No learning curve
  • Lower risk (they’re accountable for quality)

The Pros of Using Recruitment Agencies

✅ Speed (4-8 weeks vs. 8-12 weeks) ✅ Quality (higher retention, better fits) ✅ Specialized expertise ✅ Risk reduction (guarantees quality) ✅ Flexibility (pay as you go) ✅ Access to passive candidates

The Cons of Using Recruitment Agencies

❌ Expensive (RM 40K-70K per hire) ❌ Less control ❌ Quality variable by agency ❌ Limited culture fit assessment ❌ Confidentiality concerns

The Case for In-House Recruiting

When In-House Makes Sense

Scenario 1: Hiring 50+ People Annually

With agency (50 hires/year):

  • Cost: 50 × RM 50K = RM 2.5M/year

With in-house (50 hires/year):

  • Recruiter salary: RM 500K × 3 = RM 1.5M/year
  • Cost per hire: RM 30K

Net savings with in-house: RM 1M/year

Scenario 2: Culture-Critical Hiring

In-house advantage:

  • Recruiter embedded in culture
  • Can assess culture fit directly
  • Hiring reflects your values

Scenario 3: Complex/Custom Roles

In-house advantage:

  • Long conversations to understand complexity
  • Communicate nuance to team
  • Train team on what to look for

Scenario 4: Ongoing, Predictable Hiring

In-house advantage:

  • Recruiter becomes expert in your needs
  • Builds networks over time
  • Creates talent pipeline

The Pros of In-House Recruiting

✅ Much cheaper (RM 15K-25K per hire) ✅ Full control ✅ Better culture fit ✅ Relationship building ✅ Confidentiality ✅ Consistency

The Cons of In-House Recruiting

❌ Higher initial cost (RM 500K-800K/year) ❌ Slower hiring (6-12 weeks) ❌ Quality risk (depends on recruiter skill) ❌ Scaling challenges ❌ Coverage gaps (vacation, turnover)

Cost Comparison: Real Numbers

Scenario A: Hiring 20 People/Year

With Recruitment Agency:

  • Cost per hire: RM 50K
  • Annual cost: RM 1M/year
  • Time-to-hire: 6 weeks

With In-House (2 recruiters):

  • Recruiter salary: RM 1M/year
  • Cost per hire: RM 55K/year
  • Time-to-hire: 8 weeks

Winner: TIE (similar costs, agency slightly faster)

Scenario B: Hiring 50 People/Year

With Recruitment Agency:

  • Annual cost: RM 2.5M/year

With In-House (3 recruiters):

  • Cost per hire: RM 33K/year
  • Annual cost: RM 1.65M/year

Winner: IN-HOUSE (Save RM 860K/year)

Scenario C: Hiring 100+ People/Year

With Recruitment Agency:

  • Annual cost: RM 4.5M/year

With In-House (5-6 recruiters):

  • Cost per hire: RM 29.5K/year
  • Annual cost: RM 2.95M/year

Winner: IN-HOUSE (Save RM 1.55M/year)

The Hybrid Approach (Best of Both)

Most successful companies use hybrid approach:

Hybrid Model: In-House + Selective Agency Use

Structure:

  • In-house team (2-3 recruiters): Handles ongoing hiring, volume roles
  • Recruitment agencies (1-2): Handles speed roles, executive search, specialized hires

Example (50 hires/year):

Hire TypeVolumeMethodReason
Standard roles30In-houseCost-effective, culture fit
Specialized roles10AgencySpeed, specialized networks
Executive/Management3AgencyExpert executive search
Urgent one-off7AgencySpeed when needed

Cost breakdown:

  • In-house team: RM 1M/year
  • Agency for 20 hires: RM 1M/year
  • Total: RM 2M/year (vs. RM 2.5M all agency)

This is the sweet spot for most growth companies.

Decision Matrix: Should You Use Agency or In-House?

1. How many people do you plan to hire this year?

  • < 10 people: Use agency
  • 10-30 people: Use hybrid
  • 50+ people: Use in-house

2. How urgent is your hiring timeline?

  • < 4 weeks: Use agency
  • 4-8 weeks: Use either
  • 8+ weeks: Use in-house

3. What’s your budget for recruiting?

  • < RM 500K/year: Use agency (pay per hire)
  • RM 500K-1M/year: Use hybrid
  • > RM 1M/year: Use in-house

4. How important is culture fit?

  • Not important: Use agency (speed focus)
  • Important: Use in-house
  • Very important: Use in-house only

5. Do you have specialized/niche hiring needs?

  • Yes (DevOps, ML, executives): Use agency
  • No (standard roles): Use in-house

Real Malaysia Case Studies

Case Study 1: E-Commerce Startup (Hybrid Approach)

Company: ShopHub (Series A, 50 people)

Hiring need: Scale from 50 → 120 people in 12 months

Execution:

  • In-house: 45 hires (standard roles) - RM 1.5M
  • Agency: 25 hires (specialized + speed) - RM 1.25M

Total cost: RM 2.75M (vs. RM 3.5M all agency) Savings: RM 750K

Case Study 2: Enterprise Software (In-House)

Company: CloudSoft (RM 500M ARR, 300 people)

Hiring need: Consistent 80-100 hires/year

Execution:

  • 6-person recruiting team: RM 3M/year
  • Agency for 2 executive hires: RM 160K/year

Total cost: RM 3.16M vs. all agencies: RM 4.5M Savings: RM 1.34M/year

Case Study 3: Fintech Pre-Series A (Agency)

Company: PayNow (15 people)

Hiring need: 8 engineers in 6 months

Execution:

  • Hired 8 engineers in 5 weeks average via agencies
  • Cost: RM 480K

Why agency won: Speed was critical for Series A timing.

Red Flags: When Things Go Wrong

Red Flags for Recruitment Agencies

❌ Agency keeps sending unqualified candidates ❌ Agency blames you for not hiring ❌ Recruiter leaves agency; quality drops ❌ Costs spiraling higher than expected

Red Flags for In-House

❌ Recruiter not delivering (< 2 placements/month) ❌ High turnover after hire (retention < 80%) ❌ Team complains about hire quality ❌ Recruiting process not improving

How to Transition Between Models

If Switching from Agency to In-House

Timeline: 8-12 weeks

  1. Hire recruiter (weeks 1-3)
  2. Knowledge transfer from agency (weeks 4-6)
  3. Overlap period (weeks 6-10)
  4. Transition complete (week 12+)

If Switching from In-House to Agency

Timeline: 2-4 weeks

  1. Brief agencies (week 1)
  2. Candidate sourcing (weeks 2-3)
  3. Complete transition (week 4)

Key Takeaways

  1. Agency for speed (4-8 weeks), in-house for control (6-12 weeks).

  2. At 20 hires/year: Cost roughly equal (RM 1M agency vs. RM 1M+ in-house)

  3. At 50 hires/year: In-house saves RM 1M/year

  4. At 100 hires/year: In-house saves RM 1.5M-2M/year

  5. Hybrid is sweet spot: In-house handles volume, agencies handle speed + specialized

  6. Culture fit advantage: In-house recruiter embedded in culture > agency

  7. Specialized hires need agencies: DevOps, ML, executives = agency expertise

  8. Speed critical? Use agency: Series A closing, urgent scaling

  9. Quality depends on execution: Best agencies rival best in-house teams

  10. Don’t choose based on cost alone: Consider speed, culture fit, control

Decision Tree: Quick Reference

Do you need hires in < 4 weeks?
├─ YES → Use agency
└─ NO → Continue

Are you hiring 50+ people this year?
├─ YES → Build in-house
└─ NO → Continue

Do you have RM 1M+ recruiting budget?
├─ YES → Build in-house + selective agency (hybrid)
└─ NO → Use agency (pay per hire)

Is culture fit critical for success?
├─ YES → Build in-house
└─ NO → Use agency

Are you hiring specialized roles?
├─ YES → Use agency for those + in-house for standard
└─ NO → Use in-house

Getting Started: Next Steps

If You Choose In-House:

  1. Define recruiter role
  2. Post job, hire recruiter (2-3 weeks)
  3. Onboard, train (3-4 weeks)
  4. First hires should come week 6-8

If You Choose Agency:

  1. Identify needs (roles, timeline, budget)
  2. Request proposals from 2-3 agencies
  3. Brief top agencies
  4. Begin sourcing week 1

If You Choose Hybrid:

  1. Hire 2 in-house recruiters (4 weeks)
  2. Brief 2 agencies for specialized roles (week 1)
  3. Run in parallel (weeks 4-12)
  4. Optimize model based on results

About Weizhen Recruiters

Weizhen Recruiters helps companies decide: agency, in-house, or hybrid?

Our philosophy: The best model depends on YOUR situation, not ours.

What we do:

  • Full-service recruitment
  • Hybrid partnerships
  • Consulting on hiring strategy
  • Team training for in-house recruiters

Our track record:

  • 500+ placements/year in Malaysia
  • 90%+ retention rate
  • Average time-to-hire: 5 weeks

Learn more about our services →

Or book a free consultation to discuss your hiring strategy.