Outside Recruiters Judged Most Effective Overall

August, 2006

The IT job market over the past ten years has gone from boom to bust and back toward growth, though not at the levels seen in late 1990s. And, just as the high tech job market has changed dramatically, the best processes for finding and hiring IT professionals have also changed. Use of IT recruiting strategies that worked well during the boom years or during the last recession, are not likely to be the best recruiting processes for hiring in today’s IT job market. This article provides an executive summary of our full report, IT Recruiting: Which Ways Work Best Today, which highlights the current popularity and effectiveness of nine IT recruiting strategies and analyzes the advantages and disadvantages of each method in today’s economy.

Information technology recruiting is becoming more difficult. According to our survey of nearly 200 IT executives in North America, organizations are finding their IT recruiting efforts to be more difficult this year than in 2005. As shown in Figure 1, 31% of the respondents indicated that efforts to recruit IT professionals are more difficult than last year, and 9% stated that recruiting is much more difficult. Only 10% of the respondents state that their efforts were easier in 2006. We also noted this trend in spot polls we conducted in 2004 and 2005, indicating difficulty in recruiting has become an ongoing issue for IT management.

Recruiting Fig1 - Outside Recruiters Judged Most Effective Overall

Although talented IT professionals still can be found in today’s job market, the difficulty in identifying, attracting, and hiring new employees is shifting IT hiring trends back to a more traditional model, such as use of outside recruiters.
The full version of this report traces the swings in the IT job market over the past decade and the factors that have driven IT recruiting trends. With that backdrop, the report highlights nine IT recruiting methods in terms of their popularity and effectiveness as judged by our survey respondents.

The nine methods analyzed are: employee referrals, online job boards, corporate websites, in-house recruiters, outside recruiting firms, print ads, internships, job fairs/events, and outplacement services. The popularity and effectiveness of each IT recruiting strategy are analyzed by size of organization.

In terms of popularity, the study found that employee referrals are the most frequently used method, across organizations of all sizes, followed by online job boards and corporate websites. Outside recruiters, however, fall far down the list, with many companies choosing not to use IT recruiting companies at all.

The popularity of these various recruiting methods, however, is not a good measure for their effectiveness or their results. When we asked respondents to indicate which method was most effective and which method generated the greatest number of new hires, the results were quite different.  Employee referrals were judged most effective–no surprise there, as referrals from employees generally produce well-qualified candidates and any referral bonuses paid are generally modest compared to what would be paid to an outside recruiter. However, employee referrals fell far down the list in terms of the number of new hires, making them generally insufficient as the primary means of bringing in new talent.

A big surprise came, however, when we looked at outside recruiting firms. Even though outside recruiters are ranked sixth in terms of popularity of recruiting methods, headhunter firms rank second in terms of overall effectiveness and they take first place in terms of the greatest number of new hires produced. This combination of effectiveness and volume puts outside recruiting firms in the top spot in the study.

Interestingly, inside recruiters did not score as well as outside recruiting firms in terms of effectiveness or volume of new hires.

The full study provides the detailed statistics and analysis for each of the nine recruiting methods by organizational size. This analysis indicates that many IT organizations are not utilizing the best methods for today’s IT job market, most likely because they are focusing on the up-front out-of-pocket costs of some methods while neglecting to account for the hidden costs of other methods in terms of management time to search through resumes and the cost of missing the best candidates.

The study includes recommendations for optimizing IT hiring methods for today’s IT job market.

August 2006

This article is an executive summary of our full report, IT Recruiting: Which Ways Work Best Today

The full report may be purchased at the following link:  https://avasant.com/report/it-recruiting-which-ways-work-best-today-2006/