Overview
External recruiters are third-party professionals who find and present candidates for a fee, typically a percentage of the hired candidate's first-year compensation. They operate in two main models: contingent (paid only on successful hire) and retained (paid upfront in phases).
For engineering hiring specifically, headhunters provide access to passive candidates who aren't actively job searching—the engineers happily employed at competitors who won't see your LinkedIn InMails. Good tech recruiters have cultivated networks over years and can reach candidates invisible to your internal team.
The decision to use external recruiters involves trade-offs: significant cost versus speed and access. For most standard roles, internal recruiting or direct sourcing yields better ROI. For specialized skills, senior positions, confidential searches, or urgent needs, the right agency partnership can be the difference between filling a critical role and watching it sit open for months.
When External Recruiters Make Sense
External recruiters aren't cheap. At 20% of a $180,000 salary, you're paying $36,000 per hire—money that could fund months of internal recruiting effort. Understanding when this investment makes sense is crucial.
High-Value Use Cases
Hard-to-fill specialized roles:
When you need a senior Rust systems engineer with kernel experience, or a machine learning engineer who's shipped recommendation systems at scale, the candidate pool is tiny. External recruiters with established networks in these niches can reach candidates who would never see your job posting.
Senior and executive positions:
Staff+ engineers and engineering leaders often aren't actively looking. They respond to personal outreach from recruiters they've worked with, not LinkedIn messages from unknown sourcers. Retained search firms specialize in these high-stakes placements.
Confidential searches:
Replacing an underperforming leader or hiring for a stealth project requires discretion. External recruiters can conduct searches without revealing your company's involvement until appropriate.
Urgent needs:
When a key engineer gives notice and you need a replacement in weeks, not months, agencies can accelerate the timeline dramatically. They're already talking to relevant candidates; you're starting from zero.
No internal capacity:
Startups without dedicated recruiting often default to agency use. While building internal capability is usually better long-term, agencies bridge the gap when you need to hire now.
When NOT to Use External Recruiters
Standard roles you can source:
Junior to mid-level engineers in common stacks (React, Python, Java) are findable through job boards, referrals, and basic outreach. Paying 20% when you could hire directly wastes money.
When you have time:
If the role isn't urgent, invest in building direct candidate relationships. The cost savings fund better compensation and employer branding.
Roles requiring deep culture fit:
External recruiters screen for skills, not culture. If culture fit is paramount, you'll still do heavy lifting—and might reject many agency candidates anyway.
When you haven't defined the role:
Agencies can't hit targets you haven't set. Vague requirements mean wasted submissions and frustrated partners.
Choosing the Right Recruiting Partner
Not all recruiters are created equal. The difference between a tech-specialized firm with deep engineering networks and a generalist agency is enormous.
Specialization Matters
Tech-focused vs. generalist:
Generalist agencies staff nurses, accountants, and engineers from the same desk. They lack the technical knowledge to evaluate candidates and the network to reach good ones. Insist on agencies that specialize in engineering.
Domain expertise:
A recruiter who's placed 50 ML engineers understands what makes a strong candidate. A generalist Googling "machine learning skills" does not. Ask agencies about their track record in your specific domain.
Network depth:
The best technical recruiters have cultivated relationships over years. They know who's quietly open to opportunities, who's unhappy at their current role, who has skills they haven't yet used professionally. This intelligence is their value.
Evaluation Questions
When vetting agencies, ask:
About their network:
- How many engineers in [your specialty] have you placed in the last year?
- What companies have you recruited from for similar roles?
- How do you reach passive candidates in this space?
About their process:
- What's your screening process before submitting candidates?
- How do you assess technical competence?
- What information will you provide with each submission?
About their understanding:
- What makes someone successful in this type of role?
- What compensation ranges are you seeing for this profile?
- What's your take on our job description?
Good recruiters have thoughtful answers. They push back on unrealistic requirements. They ask probing questions about your actual needs. Recruiters who say "yes" to everything without demonstrating expertise should be avoided.
Red Flags
Avoid agencies that:
- Can't articulate experience in your specific technical domain
- Pressure you to make decisions before you're ready
- Refuse exclusive or preferred arrangements (always hedging)
- Have high turnover among their own recruiters
- Submit candidates without thorough vetting
- Can't explain their fee structure clearly
- Refuse to share references from recent engineering clients
Fee Structures Explained
Understanding recruiter economics helps you negotiate effectively and set appropriate expectations.
Contingent Search
How it works:
You pay nothing unless you hire a candidate they present. Fees typically range from 15-25% of first-year base salary (sometimes total compensation).
Pros:
- No upfront cost
- Risk is on the recruiter
- Easy to engage multiple agencies
Cons:
- Recruiters prioritize roles most likely to close
- Less investment per search
- Candidates may be shared across multiple clients
- Quality can suffer from volume pressure
Best for: Mid-level roles, common skill sets, situations where you want to "test" an agency relationship.
Retained Search
How it works:
You pay in phases—typically one-third upfront, one-third at candidate presentation, one-third on hire. Fees are usually 25-35% of total first-year compensation.
Pros:
- Agency is fully committed to your search
- More thorough, customized approach
- Exclusive access to candidates
- Partner invests in understanding your needs
Cons:
- Upfront cost regardless of outcome
- Committed to one agency
- Higher total fees
Best for: Senior/executive roles, confidential searches, hard-to-fill specialized positions, when you need deep partnership.
Hybrid Models
Some agencies offer modifications:
- Engaged search: Small upfront fee with remainder contingent
- Exclusive contingent: No upfront fee, but you commit to one agency for a period
- Reduced fees for volume: Discounts for multi-hire engagements
Negotiation Tactics
Fees are negotiable, especially for:
- Multiple hires (volume discounts)
- Established relationships (loyalty pricing)
- Slower-moving searches (reduced urgency premium)
- Referral arrangements (ongoing partnership terms)
What's typically non-negotiable:
- Guarantee periods (typically 90 days—if hire leaves, refund or replacement)
- Payment terms (30-60 days after start date)
- Basic due diligence and support
Managing the Relationship
Agency relationships work best when treated as partnerships, not transactional vendor arrangements.
Setting Clear Expectations
Role requirements:
Provide detailed, realistic requirements. Include must-haves versus nice-to-haves clearly. Share your actual hiring bar, not an aspirational wishlist. The more specific you are, the better candidates you'll receive.
Process and timeline:
Explain your interview process, expected timeline, and decision-making structure. Agencies work better when they can set accurate candidate expectations.
Communication cadence:
Agree on how often you'll connect, who the points of contact are, and how feedback will be shared. Regular check-ins prevent drift and frustration.
Feedback quality:
Commit to providing detailed, timely feedback on every candidate. "Not a fit" helps no one. "Strong technical skills but communication concerns in system design discussion—we need someone who can present to executives" helps the recruiter calibrate.
Being a Good Partner
Responsiveness:
Review submissions promptly. A week of silence while a candidate waits is a week they might accept another offer. Respect the recruiter's time by honoring scheduled calls.
Honesty:
If your requirements change, budget shifts, or the role is frozen, communicate immediately. Agencies invest significant effort; blindsiding them damages the relationship.
Exclusivity consideration:
For senior roles, consider exclusive arrangements. When agencies know they're competing with three others on contingent terms, they invest less in each search. Exclusivity creates partnership.
Market listening:
Good recruiters provide market intelligence. Listen when they tell you your compensation is below market, your process is losing candidates, or your requirements are unrealistic. They're talking to the candidates you want.
Common Relationship Failures
Treating recruiters as resume factories:
Demanding high volume without partnership. This gets you quantity, not quality.
Ignoring market feedback:
Insisting your $150K budget will attract staff engineers in San Francisco because "that's what we pay." It won't.
Slow feedback loops:
Taking weeks to review candidates, losing them, then blaming the agency for "low quality."
Unrealistic requirements:
Wanting 10 years of Kubernetes experience for a junior salary. Agencies can't magically create candidates who don't exist.
Switching agencies constantly:
Building no relationships, starting over each search, never getting an agency's best candidates.
Getting Maximum Value
Beyond Filling Roles
Good agency relationships provide value beyond individual placements:
Market intelligence:
What are competitors paying? What benefits matter most to candidates? What's the candidate sentiment about your company? Recruiters talk to engineers daily—leverage their insights.
Employer brand feedback:
Recruiters hear what candidates say about your interview process, compensation, and reputation. This feedback is invaluable for improvement.
Compensation benchmarking:
Agencies see offers accepted and rejected across companies. They know what it actually takes to close candidates, not what surveys report.
Pipeline for future roles:
Established relationships mean faster starts on future searches. Good recruiters remember strong candidates who didn't work for one role but might fit another.
Measuring Agency Performance
Track metrics that matter:
Quality indicators:
- Submission-to-interview ratio (should be 50%+)
- Interview-to-offer ratio (shows calibration)
- Offer acceptance rate (candidate quality and expectation setting)
- 90-day retention (did they screen for fit?)
Process indicators:
- Time to first qualified submission
- Responsiveness to feedback
- Accuracy of candidate information
- Quality of candidate preparation
Don't measure:
- Volume of submissions alone (easy to game with low quality)
- Speed without quality consideration
- Inputs without outcomes
When to End a Relationship
Exit signs:
- Consistent misalignment despite clear feedback
- Candidates who misrepresent their skills or experience
- Lack of progress with no communication
- Pressure tactics or unprofessional behavior
- Failure to adjust approach based on feedback
- Candidates report poor recruiter experiences
End professionally—the recruiting world is small, and today's failing agency might have the right recruiter for tomorrow's search.
Internal vs. External: Building the Right Mix
Most mature hiring organizations use a mix of internal recruiting and selective agency partnerships.
Build Internal First
For recurring needs, internal recruiting capability offers:
- Lower per-hire cost over time
- Better cultural understanding
- Institutional knowledge retention
- Direct candidate relationships
Use Agencies Strategically
Complement internal teams with agencies for:
- Surge capacity during rapid growth
- Specialized searches outside internal expertise
- Senior/confidential searches
- Geographic expansion
The Hybrid Model
A common effective approach:
- Internal team handles 70-80% of roles (standard, ongoing needs)
- 2-3 agency partnerships cover specialized and senior needs
- One retained firm for executive search
- Clear criteria for when each channel is appropriate
This provides cost efficiency, flexibility, and access to candidates you couldn't reach alone.