What external recruiting is and how it differs from internal recruiting
When you need someone with a particular skill or experience that’s not present in your current workforce, you have two basic options: internal recruiting (promoting an existing employee) and external recruiting (hiring someone from outside the company). Internal recruiting is usually faster, cheaper, and easier than external recruiting. But sometimes it just doesn’t work.
Internal recruiting fills open roles by promoting existing employees. External recruiting fills those same roles by hiring people from outside the company. Both methods accomplish the same goal: placing talent into open roles. In fact, they’re often used together when applied correctly. The distinction between them is important because it determines what tools and processes you’ll use, how much time and effort you’ll invest, and whether you’ll even be able to afford the process.
Main external recruiting methods
The main external recruiting methods include:
Job boards like Indeed.com
Staffing and recruitment agencies
Employee referrals
Social media recruiting on platforms like LinkedIn or XING
Direct sourcing and headhunting
Your company’s career website
These systems span multiple other systems, including job boards, staffing and recruitment agencies, social media, applicant tracking systems (ATS), customer relationship management (CRM), onboarding, screening, and human resources information systems (HRIS).
Costs and how they break down
In terms of cost, there are two basic models for external hiring: “in-house” and “agency-supported.” In-house means that you hire a recruiter or recruiters to manage the process, while agency-supported means that you outsource the process to a staffing or recruitment firm.
According to SHRM, the average cost per hire in 2025 was $5,475 for non-executive roles. Glassdoor estimates that the average external hiring cost is about $4,000, with an average of 24 days spent on the process. SHRM/ANSI CPH calculates the cost as follows:
(Cost of Internal Recruiting + Cost of External Recruiting) / Total Hires
This standard formula has been around since at least 2012. Most organizations undercount their external hiring costs by only tracking obvious line items like salaries and benefits. According to SHRM, most companies do not account for all the costs involved in external hiring. For example, without using an agency, companies should consider:
Recruiter salary – 30–40% of total cost ($1,400–$1,900)
Job board fees – 20–25% of total cost ($940–$1,175)
Recruiting software – 10–15% of total cost ($470–$705)
Background checks – 5–10% of total cost ($235–$470)
Interviewer time – 10–15% of total cost ($470–$705)
If companies do use an agency, contingency fees can be up to 15–20% of the first-year salary of the new hire. Volume spreads cost more; mid-market companies may need a two-person team, whereas enterprise companies might need 20 recruiters for every 1,000 hires.
Strategic advantages of external recruiting
There are several strategic advantages that make external recruiting worth the added cost and effort. First, it gives you access to a wider pool of talent. Whereas internal recruiting restricts you to the skills and experiences of your current employees, external recruiting opens up the entire labor market to your consideration. This broader perspective can help you find candidates with fresh ideas and specialized skills that aren’t available internally.
Another advantage of external recruiting is that it encourages innovation. By bringing in new perspectives and approaches, you can help keep your organization dynamic and adaptable. And finally, external recruiting is essential for long-term succession planning. If you want to bring in new leaders, you can’t do it through internal promotion alone.
Drawbacks and when external recruiting makes sense
Of course, external recruiting also has some operational drawbacks and risks. It tends to take longer than internal hiring, both in terms of onboarding and ramp-up periods. It also tends to be more expensive than internal promotion. And it often involves data fragmentation across multiple systems, which can lead to inefficiencies and errors.
But despite these disadvantages, external recruiting remains an important part of most organizations’ talent strategies. There are certain organizational conditions under which external recruiting delivers more value than internal promotion. These include situations where the required skills genuinely aren’t present in the internal workforce, where the company needs to scale quickly or build its capability from zero, and where the company wants to refresh its capabilities or increase the diversity of its workforce.
Startups typically rely entirely on external recruiting, since they don’t yet have any employees to promote. Mature enterprises tend to use external recruiting selectively, to refresh their teams or rebalance their skills mix. And internal recruiting tends to be more cost-effective than external recruiting whenever internal talent can fill the role.