Independent Recruiters: Riding a Rising Tide

Revenue for exec and contingent search 2013Business reporters need a new angle when they write about the economy. As they search for any bright spots in the market, they revisit the same stories and the same sectors over and over again: the housing sector might be heating up again (or maybe it’s down), Obamacare is helping (or killing) jobs in healthcare, the unemployment numbers are out and the consensus is… blah, blah, blah.

Here’s a new angle: how about writing about the third party recruiting industry? This story has three plot lines any writer would kill for: an industry that’s growing like crazy, nimble small businesses taking share from the dinosaurs, and best of all, a sector that wins after nearly everyone counted them out.


Let’s talk first about how “in demand” independent recruiters are right now. Practically every company in the US depends on search firms in some way. Agencies were responsible for 3.1% of all hires according to a study by the recruiting consultancy CareerXroads in 2012. American companies will spend $8B a year on search firm fees in 2014 according to Staffing Industry Analysts. After a shakeout in 2009, the revenues earned by the contingent recruiting industry have skyrocketed from $4.8B in 2010. Unlike the bubble days of 2007 and 2008, those revenues haven’t drawn a flood of new search firms.

The sense we get at BountyJobs is that the number of search firms is growing, and the quality of the firms is better than it’s ever been. Although overall revenues are still about 25% down from their peak in 2007, independent recruiters are riding a rising tide.

Taking Share

Compare the growth in the contingent space with what’s happening in retained search. According to the same SIA report, fees earned by retained firms have been stuck in neutral for five years, barely budging from $4.7B in 2010 to an estimated $5.2B in 2014. You can interpret this a dozen ways, but, and I’m sure I’ll hear about it, our opinion is that employers have made a dramatic shift by taking low- to middle- executive jobs (VP of marketing, director of clinical trials, etc.) away from the large, centralized executive search firms and sending them to the smaller, more specialized, more regionalized independent recruiters.

Sure, if you need a CEO for your Fortune 500 firm, give Spencer Stuart an upfront exclusive. But if you’re looking for a VP or director of sales at that same Fortune 500 firm, you’ll get better success finding niche recruiters willing to work for a contingent fee as long as you’re willing to give them your time and a market fee on success.

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The Hero Wins

Best of all, recruiters are succeeding when everyone counted them out. If you talk about independent recruiters at a cocktail party, the standard question is often, “Didn’t LinkedIn kill them off?”

Reports of the death of third party recruiters were not only greatly exaggerated , they misinterpreted the impact of recruiting technology. First, agencies were going to be killed by job boards, then by LinkedIn, then by Twitter or Facebook. Each of those tools is fantastic at helping recruiters source candidates, but third party recruiters still thrive.

Corporate recruiters are better than ever, but they will always make independent recruiters a part of their recruiting strategy. Why? To fill a small number of jobs in a highly specialized space, an internal recruiter needs to maintain a huge database of specialized sources to start the hunt, scour hundreds of leads, and suffer dozens of dead-ends before finding the right candidate. With contingent search, that same employer only ends up paying for fruitful efforts (instead of paying for everything it took to get to that fruit). Sometimes a third party recruiter has access to a specialized talent pool, or sometimes the company simply needs a sales headcount filled as fast as possible. Either way, third party recruiters are a brilliant combination of old-fashioned skill armed with new technology and tools.

The best part of the story is that it’s only beginning. As strong as recruiting has been in the past five years, you ain’t seen nothing yet. As the economy expands, jobs hired thru third party search will expand with it. Looking for the next hot sector? It’s here.

Mike Hard is the CEO of BountyJobs, the enterprise agency management company. Companies use BountyJobs to consolidate their existing recruiting agencies into one cloud-based system, centralize spending and administration, and improve their agency performance. BountyJobs is the contingent search solution for more than one third of the Fortune 500, and has a private marketplace featuring more than 10,000 approved third party recruiting agencies. Prior to BountyJobs, he was an executive with Microsoft for 17 years. He received his BA from Yale, his MBA from Harvard, and was a member of the US national rowing team. He lives with his wife and family in New York City. Visit for more information on BountyJobs.


5 Comments on “Independent Recruiters: Riding a Rising Tide

  1. A very interesting contingent firm launched in the DC Metro area is ExecCareers DC. ExecCareers DC attracts executives and managers looking for a more confidential job search experience. They are a candidates’ career concierge. That combined with a LI network of thousands of VPs, Directors and Managers, that they basically make available to their clients, means they can present clients within days. And they do this for a 10% placement fee. Very disruptive.

    1. I don’t think a firm that offers to get executive level candidates for a 10% fee is the type of disruption the industry needs. There’s lots of ways companies can save money by using contingent firms (cutting time to fill for example), but offering below market fees isn’t one of them in my opinion.

    2. Doesn’t sound disruptive to me; sounds like a bunch of re-treads who think that offering a cheap prices will make up for their inability to market effectively. Guess what? It doesn’t work. Next!

  2. Mike – as CEO of Bounty Jobs you are clearly inclined to support Contingent recruiters over Retained. I work as a retained search consultant and am not aware of a single contingent recruiter whose service level matches mine. That is not their fault it is just the nature of the beast — contingent recruiters are being asked to shoulder all of the risks in the search transaction. It is not a model that the best search consultants are using.

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