One of the most common questions founders ask us is surprisingly simple:
“Should we work with a recruitment agency or hire a recruiter internally?”
But in reality, most startups are asking the wrong question.
The real issue isn’t who should recruit: it’s how much the model costs and how flexible it is for a growing company.
Recruitment agency fees typically range between 15% and 30% of a candidate’s annual salary, meaning that hiring someone with a $100,000 salary can easily cost $15,000 to $30,000 in recruitment fees. For startups planning multiple hires, those costs add up quickly.
Over the past few years, a third model has started gaining traction in the startup ecosystem: fractional recruitment support. Before explaining why many companies are moving in that direction, it’s useful to understand how the traditional recruitment models work.
The agency model
Recruitment agencies are very often the first option companies consider when they need help hiring quickly. In most cases, their model is straightforward: they run the search and charge a success fee once the role is filled.
Agencies can absolutely provide value in certain situations. They often have strong sourcing capabilities, access to candidate databases, and the ability to launch a search quickly. For highly specialized roles, they can sometimes help companies reach talent they would not easily access themselves.
But for startups and growing companies, the agency model often becomes difficult to sustain. The main reason is simple: cost per hire.
Startups rarely hire just one person. Once hiring accelerates, agency fees can quickly accumulate into six figures. For companies operating with limited budget or managing investor funding carefully, these costs can become hard to justify.
Another challenge is that agencies typically operate outside the company. Their objective is to fill the role, not necessarily to help build the company’s hiring foundations. Yet for startups, those foundations matter: defining roles clearly, structuring interviews properly, evaluating candidates consistently, and building recruitment processes that can scale with the organization.
The internal recruiter option
At some point, many companies consider bringing recruitment in-house by hiring a recruiter or talent acquisition specialist.
Internal recruiters can be extremely valuable. They develop a deep understanding of the company’s culture, product, and leadership team, allowing them to represent the organization authentically to candidates. Over time, they can also build structured hiring processes, improve candidate experience, and develop employer branding initiatives.
However, this model only makes sense when hiring volume is high enough. A good recruiter typically costs somewhere between $80,000 and $120,000 per year, often more once benefits and overhead are included. That investment becomes worthwhile when hiring happens continuously.
But the reality for many startups is that hiring doesn’t follow a steady rhythm.
Most companies experience hiring in waves: a few roles this quarter, then a quieter period, then another hiring push after product growth or new funding. In those environments, a full-time recruiter may simply not have enough work to justify the role.
This is where many growing companies start looking for a more flexible solution.
The model gaining traction: fractional recruitment
Over the past few years, more startups have started working with fractional HR and recruiters.
The concept is simple. Instead of paying large success fees to agencies or hiring a full-time recruiter, companies work with an experienced recruitment partner on an hourly and flexible basis.
This approach allows companies to access professional recruitment expertise without committing to permanent headcount or expensive per-hire fees.
For startups, this model solves several problems at once.
First, it is often significantly more cost-efficient. Because recruitment is billed hourly rather than as a percentage of salary, companies pay for the actual time required to run the search. In many cases, this results in recruitment costs that are significantly lower than traditional agency fees, depending on the role and complexity of the search.
Second, fractional recruiters tend to work much more closely with the internal team. Rather than simply sending candidates, they collaborate with founders and hiring managers to define the role, refine job descriptions, structure interviews, and evaluate candidates properly. In many ways, they function like an internal recruiter; just without the fixed cost.
Finally, this model offers something startups value a lot: flexibility. Hiring rarely follows a perfectly predictable rhythm. Some months require multiple hires, while others involve little recruitment activity. Fractional support allows companies to scale recruitment involvement up or down depending on what the business actually needs.
Choosing the right model
In our experience, the best recruitment model usually depends on team size and hiring volume, not funding stage.
Companies with smaller teams or occasional hiring needs often benefit the most from fractional recruitment support. It gives them access to experienced hiring expertise without committing to large agency fees or building an internal recruitment function too early.
As organizations grow and hiring becomes more frequent, they may eventually decide to build an internal talent acquisition team. Even then, many still rely on external partners for specific searches or leadership roles.
And for certain niche positions or highly specialized roles, recruitment agencies can still play a role as well.
The key is choosing a model that aligns with the company’s actual hiring needs, rather than defaulting to traditional approaches that may not fit the reality of a growing startup.
How Hoom approaches recruitment
At Hoom, we work primarily with startups and growing companies that need recruitment support but are not ready to build a full internal recruitment team.
Our approach is based on hourly recruitment support rather than large success fees. This allows companies to invest in the recruitment process itself instead of paying a fixed percentage of salary for each hire.
Because we work closely with founders and leadership teams, our goal is not only to help fill roles but also to help companies build stronger hiring practices as they grow.
For many of our clients, this model leads to recruitment costs that are on average approximately 50% lower than traditional agency models, while providing a more collaborative and integrated hiring experience.
Thinking about your next hires?
Every startup eventually needs to answer the same question: what is the right recruitment model for our growth stage?
The answer is rarely one-size-fits-all. It depends on your hiring plans, your team structure, and the level of recruitment support your organization actually needs.
At Hoom, we help startups and growing companies design recruitment approaches that are flexible, cost-efficient, and aligned with their growth plans.
If you’re planning to hire in the coming months and want to explore whether fractional recruitment support could make sense for your team, we would be happy to discuss your hiring needs!