What is recruitment outsourcing? Permanent placement fees, process, and how it differs from headhunting

1What is recruitment outsourcing? How it differs from headhunting and staffing

In Chinese, "代招" is short for "recruiting on someone's behalf." The formal industry term is commissioned recruitment (Direct Hire, a form of Recruitment Process Outsourcing): a company entrusts one or more permanent positions to a consulting firm, which finds candidates, does the initial screening and arranges interviews, while the company makes the final decision. Once the hire starts, the employer is the company itself; labor insurance, health insurance and the employment contract are all signed directly with the company. This is completely different from staffing (a dispatched worker's employer is the staffing agency, and the company is only the "client site"; see How staffing costs are calculated).

Contingency recruiting and executive search are often treated as the same thing, but more precisely, executive search is one type of recruiting service. It usually targets senior, confidential, or hard-to-fill roles (such as CEO or CFO), reaching out proactively under a confidential mandate to people who are not yet looking for a job. Recruiting services cover a wider range, from entry-level to mid- and senior-level roles, using database matching, direct outreach, and screening of regular applicants. For details on fee models and how to choose a firm, see How headhunter fees are calculated and How to choose a headhunting firm in Taiwan.

A simple rule of thumb: look at who the employer is to tell whether it's a recruitment agency/headhunter; look at the target level and approach method to tell whether it's an agency or a headhunter.

Three approaches at a glance: comparing employment relationship, cost, and timeline

If you're still unsure whether this role calls for a headhunter, a recruitment agency or staffing, look at this table first, then read on for how to choose.

The legal pitfall companies most often hit with staffing: re-registering existing employees as dispatched workers

In May 2019 (ROC year 108), Taiwan's Labor Standards Act added Article 17-1, which explicitly prohibits the client company (the user enterprise) from interviewing and selecting a specific person first, then asking the staffing agency to put that worker on its payroll and dispatch them back—in other words, picking someone yourself and dressing it up as dispatch. If this is violated, the worker may, within 90 days of starting to provide services, notify the client company in writing of their intent to enter into an employment contract; if the client company fails to negotiate within the deadline or negotiations fail, an employment contract is deemed to exist from the day after the deadline (full text of Article 17-1 of Taiwan's Labor Standards Act). For the full penalties and compliance points, see Legal pitfalls when companies use dispatched workers.

Recruiting services and executive search don't run into the "re-registration" problem, because the hire is the company's own employee from day one. However, the fees that recruiting firms and headhunters charge companies are likewise regulated by Taiwan's Standards for Fee Items and Amounts Charged by Private Employment Services Institutions (see Section 2 below).

How to choose: a 3-question quick check

1. Is this a long-term position, or short-term/replacement staffing? Long-term → outsourced recruitment or headhunting; short-term, seasonal, or leave cover → staffing
2. Is the role a confidential senior position or a regular permanent role? Confidential senior roles such as CEO/CFO → headhunting; regular permanent roles → recruitment outsourcing
3. Do you want to be the employer? Sign the employment contract and manage performance yourself → outsourced recruitment or headhunting; don't want to deal with insurance and payroll admin, just need flexible staffing → staffing

For a full comparison of the three approaches when roles are high-volume, entry- to mid-level and fast-turnover, see Choosing recruitment outsourcing for entry- and mid-level roles.

2How do recruiting agencies charge? Legal caps and fee structures

The most common fee model for outsourced recruitment is success-based: terms are agreed when you engage the firm, and you are charged only when a candidate actually starts; in principle, no hire means no fee. At Step1ne, for example, permanent placement averages from 1.5 months' salary, with the actual rate depending on the difficulty of the role and the engagement contract. We don't compare other firms' rates in this article; readers can request quotes from each firm directly.

What gets mentioned less often is that the fees an agency charges employers are actually capped by regulation. Under Article 3 of Taiwan's Standards for Fee Items and Amounts Charged by Private Employment Service Institutions, the registration and placement fees a for-profit employment service agency charges an employer may not, in total, exceed the hire's first month of salary if that salary is at or below the average wage published by the central competent authority; if it is above the average wage, the total may not exceed four months of the hire's salary. In addition, the service fee per employee may not exceed NT$2,000 per year (Laws & Regulations Database (Taiwan), Standards for Fee Items and Amounts Charged by Private Employment Service Institutions, Article 3). In other words, as long as a quote stays within the legal cap, the fee structure and amount are agreed in the contract between both parties; before you sign, you can ask the agency to explain the basis for its quote.

Note: This cap applies to fees charged to the "employer," which is separate from fees charged to the "job seeker." Under Article 4 of the same Standards, if a recruitment agency also charges the job seeker, the registration fee and placement fee combined may not exceed 5% of the job seeker's first month's salary (Article 4 of the same Standards). A legitimate recruitment service should state in the engagement contract who is charged and how much. Before signing, be sure to ask whether they charge only the company or the candidate as well.

3The full recruitment agency process: from engagement to start date

1. Needs interview: confirm the job specs, requirements, salary range and hiring timeline, and write the fee terms into the engagement contract
2. Sourcing and initial screening: matching against the talent database while proactively reaching out to suitable people who aren't applying yet. At Step1ne, AI conducts the first interview and a consultant then reviews it, cutting the time companies spend on unqualified résumés
3. Submission: only candidates the consultant considers qualified and whose interest has been initially confirmed are sent, so in principle you can schedule interviews with them right away
4. Interview scheduling and follow-up: coordinating both sides' calendars, checking both sides' interest after interviews, and handling salary negotiation and start dates
5. Start date and billing: fees are charged only once the candidate officially starts; if they leave within the guarantee period, a free replacement is provided per the contract

The biggest difference from recruiting in-house is that the two most time-consuming tasks, "screening" and "scheduling interviews," are handed off; the company only interviews candidates who have already been screened once.

4When should you use recruitment outsourcing, and when not?

When recruitment outsourcing makes sense:

• You need this person long-term, not for a short-term or seasonal need
• HR is stretched thin, or you need to fill several openings at once
• Hard-to-fill roles where public postings bring few applicants or uneven quality
• Want guaranteed replacements so you don't start from zero each time
• You need to reach passive candidates who aren't applying yet but fit the profile

When you don't necessarily need outsourced recruitment:

• The position is attractive enough that public postings bring in plenty of qualified applicants
• HR has time and the volume is small, so in-house hiring can handle it
• If you need people for a short time or only temporarily, temporary staffing is usually the better fit. See How Staffing Costs Are Calculated
• For high-volume, fast-turnover entry- and mid-level roles, see how the three approaches (in-house / outsourced recruitment / staffing) compare in Choosing recruitment outsourcing for entry- and mid-level roles

For a full comparison of the hiring channels available to companies and when each fits, see How companies find talent: free channels, 104, and recruitment agencies compared.

5Five questions to ask before choosing a recruitment agency

1. Does it hold a valid employment services license? In Taiwan, private employment service agencies must by law obtain a license from the competent authority; you can simply ask for the license number and verify it
2. When do fees start? Only when the hire starts, or is part charged upfront at signing?
3. How long is the guarantee period? If the candidate leaves during the guarantee period, how is the replacement handled?
4. Who screened candidates before they were sent? Are they just forwarding résumés, or has someone confirmed interest and qualifications by phone or interview first?
5. How is progress reported? How often are updates sent, and can you see which stage each candidate is stuck at?

6Regulations recruitment agencies must follow

7FAQ

Further reading: Commissioned recruitment for companies · How companies find talent · How headhunting fees are calculated · Choosing recruitment outsourcing for entry- and mid-level roles