By Vadym Lobariev, founder of MindHunt — running a recruitment agency since 2011
Most explanations of how recruitment agencies work are written by agencies trying to sell their services. This one is written by an agency founder trying to be honest about when agencies are useful, what distinguishes good models from bad ones, and why some common assumptions about recruiting cost companies more than they realise.
Why Companies Actually Hire Recruitment Agencies
In my experience, companies hire recruitment agencies for two distinct reasons — and knowing which one applies to you determines what kind of agency relationship will work.
Reason 1: No internal capacity for recruiting operations.
The company has open roles, a hiring manager, and the ability to run interviews — but no one to handle the upstream work: writing and posting job descriptions, reviewing applications, screening candidates, scheduling. They need a shortlist of qualified people to interview. They do not need someone to run their entire hiring process.
This is a genuine and legitimate need. The right agency for this situation sources efficiently, screens properly, and delivers candidates who are worth the hiring manager's time.
Reason 2: Unable to attract candidates through job postings.
The company has tried posting on LinkedIn and job boards. Applications come in slowly, or the profiles are wrong, or the best candidates are simply not applying because they are employed and not looking. They need active outbound search — sourcing, headhunting, direct outreach to candidates who are not looking.
This is the harder and more valuable case. It is also where the quality of the agency matters most, because this type of search requires genuine sourcing capability, not just access to a database.
Both are legitimate reasons. The mistake is applying the wrong agency model to each.
How Agency Models Differ
Recruitment agencies broadly divide into two categories: those paid by client companies and those paid by candidates. The candidate-paid model (common in some markets for CV review, coaching, and placement fees) is not what most IT companies use. This article is about the client-paid model.
Within client-paid agencies, there are two fundamentally different approaches:
Success-based (contingency) agencies: The agency works on a role and charges a fee only if they successfully place a candidate — typically 15-20% of the first-year salary. The client pays nothing unless a hire is made.
Retained or subscription agencies: The client pays a fee upfront (or on a regular basis) for the agency to conduct the search. The payment is not contingent on a successful placement.
These sound similar. They produce very different incentives and very different outcomes.
The Car Mechanic Analogy
Here is the best way I know to explain why success-only recruiting is structurally broken for everyone involved.
Imagine you need your car fixed. You call a mechanic and say: "I would like you to fix my car. But I should tell you — I am also going to try fixing it myself, and I might hire another mechanic at the same time. And at any point, I can tell you to stop — I might decide I don't need it fixed anymore, or I might have found someone else to do it. And by the way, you only get paid if the car is actually fixed."
Would any serious mechanic agree to this? Would you expect them to give your car their full attention under these conditions?
This is exactly the arrangement companies propose when they hire multiple agencies on a contingency basis. Each agency works on the role knowing that any other agency might close it first, that the company might cancel the vacancy at any time, and that their work may produce nothing.
The expected outcome: each agency will put limited effort into the search, focus on candidates they can place quickly rather than the best candidates, and deprioritise the role when something easier comes along. This is not agency failure — it is rational behaviour in response to the incentive structure.
The common justification is "competition between agencies will produce better results." This is wrong. Competition between agencies produces faster, lower-quality results. The agencies are competing to place first, not to find best.
Why Retained and Subscription Models Work Better
If success-based models create misaligned incentives, retained and subscription models align them.
When a client pays a retainer or subscription, both sides have made a commitment. The agency has reason to invest proper time and process into the search. The client has reason to maintain a stable, engaged hiring process rather than cancelling and restarting.
At MindHunt, we work on a subscription basis. Here is why:
We use MindHunt AI and 20 years of experience to run thorough searches — sourcing hundreds of candidates, screening properly, maintaining a pipeline. This takes real time and real effort. We can only do it properly when we know the search will continue long enough to produce results.
When a company gives us a vacancy and cancels it one week later, then gives us another one and cancels that too — this is not a recruitment agency problem. It is a company problem. The company does not have a stable hiring process, and no agency model can fix that.
Results require process. Process requires commitment from both sides.
What a Recruitment Agency Actually Does — Step by Step
Brief and market analysis. Understanding the role at a level of detail that goes beyond the job description. What does the right person actually look like? Where are they likely to be? What will make this role attractive to someone who is already employed?
Sourcing. Going out to find candidates rather than waiting for applications. For senior and specialist roles, this means LinkedIn outreach, DOU and Djinni for Ukrainian market, GitHub for technical roles, direct network referrals. MindHunt AI automates the initial sourcing layer — finding and scoring candidates from LinkedIn and GitHub from the job description, then fetching contact details in one click.
Screening. First conversations with candidates to assess fit, experience depth, motivation, salary expectations, availability, and any hard constraints. Only candidates who pass screening reach the client.
Presentation and coordination. Presenting candidates with context — not just a CV but an assessment of why this person is relevant, what their situation is, and what questions remain. Coordinating interview scheduling, managing candidate communication, and maintaining momentum through the process.
Offer management. Supporting the offer stage, helping candidates navigate counter-offers, and following through to placement and start.
Weekly reporting. Throughout the search: how many candidates were identified, contacted, responded, and are in progress. The client always knows what is happening.
What to Look for When Choosing an Agency
Transparency about their process. Can they explain specifically how they will source for your role? If the answer is "we have a large database," ask when the database was last updated and how many candidates in it are actively open to new roles.
Domain expertise. An agency that recruits across 15 unrelated industries is unlikely to have deep knowledge of the Ukrainian IT market, fintech domain requirements, or the difference between a strong and weak Go developer. Specialisation matters.
Honest about timelines. A good agency tells you upfront if your brief is unrealistic, if the compensation range is not competitive, or if the market for this specific profile is smaller than you expect. An agency that promises quick results without knowing these things is not being honest.
Clear model. Understand what you are paying for and when. Success-based and retainer models have different implications for how the agency prioritises your search.
If you want to discuss whether a subscription or headhunting model is right for your search, book a call with MindHunt.
Related reading: What Makes an IT Recruitment Agency Actually Good · Recruitment Subscription vs Success Fee · The IT Recruitment Process: What Goes Wrong
Written by
Vadym Lobariev
MindHunt is an AI powered recruitment firm for founders, C-level and hiring managers who are tired of posting and praying. We execute a proven sourcing process for your hardest roles and show you the work every week — so you can make hires with confidence, not hope.
