Staffing Agency vs Direct Hiring: Which Approach Offers the Best Benefits for You

One of the biggest decisions to be made when it comes to building a high‐performing team in healthcare is whether to use a staffing or recruitment agency or to handle the hiring process directly (direct hire). Each approach has its own merits, cost implications and trade-offs. For organisations like hospitals, clinics and healthcare staffing specialists, choosing the right recruitment route is vital for quality, speed, cost control and long‐term workforce stability. In this blog, we explain and compare the two key approaches: what direct hire is, how it works, its pros and cons, then look at staffing or recruitment agency models, their processes, benefits and drawbacks, and then guide you on which route to choose, especially in a healthcare context. We’ll also compare costs, highlight scenarios for each approach, and show how a combination strategy may offer a powerful recruitment plan.

What Is a Direct Hire?

Direct hire (sometimes called “direct staff recruitment”) refers to the process where the organisation itself takes full responsibility for every step of the recruitment process, from job-advertising, shortlisting, interviewing, hiring and onboarding. There is no third-party agency handling the role; the employer brings a new staff member straight into its payroll.

In the healthcare sector, this might mean a hospital trusts’ internal HR team adverts a registered nurse role, manages applications, runs interviews, coordinates the credentials required (for example, membership with the Nursing and Midwifery Council) and then appoints the candidate directly onto the trust’s payroll.

What’s The Direct Hiring Process?

The direct hiring process often involves the following steps:

1. Define the role: Employer writes the job description, determines the contract type (permanent/temporary), shift routine and required registration/licence.
2. Advertise and source: The employer markets the vacancy via the trust website, job networks, social media, advertisement and/or internal networks.
3. Short-listing and screening: The internal team reviews applications and CVs, may conduct telephone or face-to-face interviews, check registration/licensing, references, and right-to-work.
4. Interview and selection: Candidates are interviewed, possibly assessed for culture fit and clinical competence, and checks are completed.
5. Offer and onboarding: The successful candidate is offered the role, the contract is signed, induction is planned, credentials are verified, and training is scheduled.
6. Integration and retention: The employer monitors the new hire’s performance, rotational plan, shift allocation, mentoring and retention supports.

The direct hire model gives the employer full control over the process, the selection of candidates, culture alignment and onboarding. But it also demands internal resources, specialist skills and time.

Pros & Cons of Direct Hiring

Pros

• Full control over candidate selection, process and employer brand.
• Potentially lower long-term cost because no agency markup or fee in some cases, though internal costs apply.
• Stronger culture fit and stability: the new hire is integrated directly into the organisation’s workforce and may stay longer.
• Consistency in onboarding and alignment with employer values from day one.

Cons

• Resource-intensive: Requires HR or recruitment capacity internally, time, an advertising budget, and the ability to screen, interview, and manage onboarding.
• Longer time to fill: Especially if the internal team lacks specialist recruitment experience, roles may remain vacant longer, which in healthcare leads to pressure on the workforce and possible reliance on expensive agency cover.
• Risk of bad hire: Internal processes may be less efficient or less refined than specialist recruiters, increasing the chance of mis-match and turnover. As one UK recruitment insight noted: “With the average new hire costing £6,000, organisations cannot afford always to look externally.” (HR Grapevine)
• Opportunity cost: while internal staff spend time on recruitment, they may be distracted from core HR tasks or operational priorities.

In short, direct hiring works best when the organisation has strong HR/recruitment capability, the role is strategic or long-term, and the time-to-fill is acceptable.

What Is a Staffing or Recruitment Agency?

A staffing agency (also often called a recruitment agency) offers an external partner to manage part or all of the hiring process for you. They may specialise in particular sectors (for example, a healthcare staffing agency) and supply candidates either for permanent direct hires, temporary/locum roles, or fixed-term contracts.

Such agencies maintain a database of candidates, manage vetting, interviews, regulatory checks, placement logistics, sometimes payroll for agency staff, and provide specialist sectors with access to talent pools the employer may not reach directly.

It is important to note that while people use the terms “staffing agency” and “recruitment agency” interchangeably at times, there are distinctions, such as some agencies specialise in temp/contract work (staffing), others in direct hire/permanent placements (recruitment). One resource explains the difference as employment agencies for temp-roles and recruitment agencies for full-time roles (Recruiter Startup).

What’s The Staffing Agency Hiring Process?

The staffing agency hiring process typically involves:

1. Client briefing: The employer and agency agree on the requirement, role description, contract type, timeline, remuneration, and service level (such as replacement guarantee).
2. Candidate sourcing and screening: The agency uses its pool, advertises, headhunts, checks credentials, interviews, and presents a shortlist to the employer.
3. Employer interview/selection: The employer chooses from shortlisted candidates, interviews and confirms the hire.
4. Offer, placement and onboarding: The agency may manage the contract, payroll (for agency workers), compliance (DBS checks, registration), and induction. For direct hire roles via agency, they may help negotiate employment terms.
5. Ongoing service: Depending on contract, the agency may supply replacement if a hire leaves within the guarantee period, provide workforce report, monitor candidate retention and may manage bank or locum staff pool.

Pros & Cons of Staffing Agency Hiring

Pros

• Access to a wider and more specialist talent pool, especially for hard-to-fill or niche roles.
• Faster time to fill, because the agency already holds candidate pipelines, has screening systems, and can mobilise quickly.
• Reduced internal workload, freeing up internal HR and hiring managers to focus on core operations.
• Flexibility: Agencies can supply permanent, fixed-term, bank or locum workers, useful in fluctuating demand environments.
• Guaranteed replacement: Many agency contracts include a guarantee if the hire leaves within a certain time.

Cons

• Higher cost: Agency fees or higher markup on hourly rates means the hire via agency may cost more in the short term. According to a UK cost of recruitment insight, hiring costs may vary from 12 % for in-house to 22 % for agency-led solutions. (talentinsightgroup.co.uk)
• Less control over detailed process, cultural fit or employer brand messaging unless the agency works closely with the employer.
• Possibility of over-reliance: If an organisation repeatedly uses agencies instead of building internal capability, it may face escalating costs and a weakened employer brand and they may face lack of expertise entirely if they ever need to hire directly.

Commitment risk: For agency placements (particularly temporary or locum), the candidate’s loyalty or longevity with the organisation may be lower than that of a direct hire.

Which Hiring Route Should You Choose?

There is no one-size-fits-all answer. The decision depends on multiple factors:

• Urgency and volume of hiring: If you are filling many roles at once (for example, in a large expansion or urgent staffing gap), a staffing agency may expedite the process.
• Role type: Permanent, strategic roles may favour direct hire; short-term, flexible or surge-demand roles breed better via agency.
• Internal capability: Do you have sufficient HR and recruitment resources to manage direct hiring? If not, agency support is sensible.
• Cost considerations: If you are focused on long-term stability and cost per hire, direct hiring may deliver better ROI, but if you value speed and access, an agency may justify its fee.
• Employer brand and culture fit: If cultural fit and branding are critical, direct hire may offer more control; however, a good agency can still deliver high-calibre candidates if they work closely with you.

In many healthcare settings, combining both approaches yields the strongest strategy.

Cost Comparison – Direct Hiring vs Staffing Agency

When cost is a critical consideration, it is helpful to examine typical benchmark figures and cost drivers. UK research offers useful insights:

• According to a UK blog, “the average cost to hire an employee in the UK is £6,125”, covering average internal and external recruitment expenses. (Indeed Flex UK)
• Another UK insight shows that hiring costs vary from about 12 % for in-house teams to 22% when recruitment is agency-led. (talentinsightgroup.co.uk)
• Benchmark data for cost per hire reports agency average: £3,000-£5,000 per hire. (TenRecs Insights)

From this, we can draw features:

• With direct hire, internal advertising, hiring manager time, selection, onboarding, training, etc., all incur unseen costs. If you internalise all tasks, you save the agency markup, but you bear the full recruitment lifecycle cost.
• With a staffing agency, you pay for expertise, candidate pipeline, outsource screening and time savings; but you trade higher direct cost for potentially quicker fill and lower vacancy cost.

For example, a hospital trust dealing with vacant nursing posts may incur overtime payments, agency bank staff charges, affected patient throughput and staff fatigue. The cost of vacancy and slow recruitment may far outweigh the agency fee.

When To Use Direct Hiring vs Staffing Agency

Choose Direct Hiring if:

• You have sufficient internal HR/recruitment capacity and processes.
• You are hiring for permanent, long-term roles where cultural fit and retention matter.
• You have time to recruit (not an urgent gap), and the role is well defined and repeatable.
• You want to control employer branding and candidate experience.
• Cost per hire and long-term stability are key metrics.

Choose Staffing Agency Hiring if:

• You have urgent vacancies or a large volume of hires in a short time.
• You are hiring for niche roles, hard-to-fill positions, or roles needing specialist recruitment.
• Your internal team is stretched, lacks specialist databases, or candidate reach.
• You want flexibility, bank nurses, locum roles, and surge staffing.
• You value speed over ultimate hiring cost, or you want guaranteed services and replacement clauses.

What Types Of Companies Use Staffing Agencies?

In the UK healthcare sector, staffing agencies are frequently used by:

• NHS trusts and foundations, when facing high vacancy rates or a sudden surge in demand.
• Private hospitals and care homes that require flexible staffing to meet fluctuating demand, ward closures or agency cost control.
• Specialist clinics or services (e.g., theatre, intensive care, mental health) that require specific niche skill sets.
• International recruitment programmes whereby overseas nurses are sourced via specialist agencies and placed into UK providers with visa support.

These organisations choose staffing or recruitment agencies because they value access to a broader talent base, speed of deployment and workforce flexibility.

5 Scenarios When Direct Hiring Is The Best Option

1. A hospital is expanding a new ward, planning a five-year programme of specialist nursing roles, and wants a consistent team culture. Direct hire allows building from scratch.
2. A specialist private clinic is recruiting a senior nurse manager role; internal HR wants to maintain full control over candidate experience and selection, and direct hire is appropriate.
3. A trust has a strong internal recruitment breed built over decades with an excellent employer brand; they can leverage this to attract candidates without paying agency fees.
4. For staff development roles or training positions that are long-term with high retention potential, direct hire will deliver the best value over time.
5. When the role is repeated often and internal recruitment processes are refined, bringing in an agency every time could be inefficient; direct hire makes sense.

Consider Combining Direct Hiring and Staffing Agencies for a Strong Recruitment Strategy

Many organisations adopt a hybrid approach. They use staffing agencies for surge, locum and hard-to-fill roles, and direct hiring for permanent core positions. This allows them to benefit from agency speed and talent pools while retaining cost control and long-term culture fit for their stable workforce. The agency handles volume peaks or niche roles while internal HR focuses on strategic hires and retention. Over time, this combined model often delivers the best of both worlds.

Metrics to Track The Performance Of Your Hiring

Regardless of the route chosen, tracking metrics will determine whether your strategy is working. Key metrics include:

Cost per hire: Total recruitment cost divided by the number of people hired.

Time to fill: Days from vacancy to start date.

Quality of hire: Retention at 12/24 months, performance reviews, cultural fit.

Vacancy rate: Proportion of key roles vacant, incidence of agency cover.

Agency spend vs internal spend: Monitor shifting balance over time.

Source of hire: Internal, direct advertising, agency, referral.

Candidate experience and employer brand: Application abandonment rates, feedback scores.

Regular review of these metrics helps fine-tune whether direct hiring, agency support or a hybrid strategy is delivering the best value.

References

1. The Cost of Recruitment (talentinsightgroup.co.uk)
2. How much is recruitment actually costing you? (Indeed Flex UK)
3. How Do Your Recruitment Performance Metrics Compare to Industry Benchmarks (TenRecs Insights)
4. Recruitment Agency vs Direct Hiring (Langley James)
5. Employment Agency vs. Recruitment Agency (2024 Comparison) (Recruiter Startup)
6. How to get value for money from your recruitment agency (peoplemanagement.co.uk)