Talent acquisition is the lifeblood of any successful organisation, particularly in financial services, where the quality of your hires directly impacts performance, client satisfaction, and compliance. In recent years, many large financial services firms have invested heavily in building in-house talent acquisition teams. While this approach can be effective for larger firms with substantial resources, it may not be the right solution for small to medium-sized enterprises (SMEs) with up to 500 or even 1,000 employees.

The question isn’t whether talent acquisition professionals are valuable—they are—but rather, where they can best deliver value and whether in-housing recruitment is the optimal strategy for every business.

Large financial services firms can offer talent acquisition professionals a structured career path, with opportunities to lead teams, work across different departments, and take on varied challenges. For SMEs, it’s often a different story. A standalone talent acquisition professional—or even a small team—can face limited career progression, leading to frustration and high turnover.

Talent acquisition professionals thrive on variety and challenge, but within an SME, the hiring volumes and scope can be narrow. When professionals reach a plateau in their role, they often seek new opportunities elsewhere. This churn comes at a significant cost to SMEs, both in terms of lost expertise and the resources needed to onboard new team members.

Building an internal talent acquisition function isn’t just about hiring people; it involves substantial investments in technology, marketing, and training. The right tech stack—from applicant tracking systems (ATS) to recruitment marketing platforms—requires significant financial outlay and expertise. Many SMEs struggle to make these decisions effectively, particularly when talent acquisition professionals often lack procurement experience themselves.

Additionally, managing an in-house talent acquisition team involves fixed costs. Salaries, benefits, appraisals, and training all add up, making the function a significant ongoing expense. In contrast, agencies and executive search firms operate on a variable cost model. This flexibility was particularly valuable during COVID, when many businesses realised the importance of being able to scale their recruitment efforts up or down as needed.

One of the most striking issues with in-house talent acquisition teams is turnover. It takes months for new hires to fully understand a company’s culture, systems, and hiring needs. Many in-house recruiters spend 12 months getting up to speed, 6 months being highly productive, and then leave for a new challenge. This cycle is not only costly but also disrupts the continuity of recruitment efforts, leaving SMEs scrambling to fill vacancies.

By contrast, external recruitment firms have established teams with deep networks and expertise. Agencies ensure continuity, even when individual consultants move on, because they operate as a collective, leveraging institutional knowledge to deliver consistent results.

In financial services, confidentiality is paramount. Many candidates are wary of sharing sensitive information with in-house talent acquisition teams, even when all in my experience deal with things professionally. Recruitment agencies act as a trusted intermediary, offering a layer of discretion that encourages candidates to engage openly and honestly. This is especially critical for high-level hires, where confidentiality can make or break the process.

For talent acquisition professionals themselves, agencies often provide a more fulfilling career path. Working with multiple clients across various industries and challenges keeps the role dynamic and engaging. Recruitment professionals benefit from strong peer networks, ongoing training, and the opportunity to specialise or diversify their skillsets.

Agencies also handle the administrative and managerial aspects of employment—appraisals, benefits, and professional development—allowing talent professionals to focus on what they do best: finding the right candidates. This creates a win-win scenario, where both recruiters and clients benefit from higher levels of engagement and productivity.

SMEs in financial services should focus on what they do best—serving clients, managing portfolios, and driving business growth—while leaving recruitment to specialists. By partnering with external agencies, SMEs gain access to deep talent networks, cutting-edge technology, and market insights without the overheads of an in-house team.

Agencies bring a broader perspective, often working across multiple industries and geographies, which allows them to identify trends and opportunities that an in-house team might miss. This breadth of experience is particularly valuable in financial services, where the talent landscape is highly competitive and ever-changing.

For larger firms with the scale to offer career progression and absorb the fixed costs of in-house recruitment, building an internal talent acquisition function can be a strategic move. However, for SMEs, the benefits of outsourcing recruitment to experienced agencies far outweigh the costs. It’s not just about saving money—it’s about ensuring access to top-tier talent, maintaining flexibility, and creating a seamless candidate experience.

At its core, talent acquisition is about relationships, trust, and expertise. Whether through an in-house team or an external partner, the goal should always be to find the best candidates for the role and the firm. For SMEs, partnering with a recruitment agency provides the agility and depth of insight needed to thrive in today’s financial services market.