Are you looking for a recruitment agency provider in Indonesia? There are a lot of options available out there. In fact, the recruitment market is competitive and overcrowded with multiple recruitment agencies in Indonesia. So how to choose the right recruitment agency?
Let’s start from the beginning. In this article, we explain what are the main types of recruitment agencies in Indonesia, how they work, and what should be the main criteria for selection if you are looking for a reliable recruitment agency in Indonesia.
What is a recruitment agency?
A recruitment agency is a recruitment provider providing staffing services to organizations. Recruitment agencies operate as an extension of the organization’s HR team to find and hire candidates for the open positions they find tough to find.
How does a recruitment agency work
Recruitment agencies work with employers to understand their hiring needs and use various methods such as job postings, social media, headhunting, and their own database of candidates to identify potential candidates for the position.
The agency then screens and assesses the candidates to ensure they meet the requirements of the role, and presents a shortlist of qualified candidates to the employer for consideration. Recruitment agencies may also provide additional services such as skills testing, and background checks, and provide further assistance throughout the onboarding process.
For employers, working with a recruitment agency can save time and resources, as the agency handles many of the tasks associated with finding and hiring candidates.
For job seekers, recruitment agencies can provide access to a wider range of job opportunities and can help connect them with potential employers.
Top reasons why companies request a recruitment agency in Indonesia
The talent war has become more intense in the land of smiles, especially in some industry sectors such as Tech, Hospitality or Manufacturing. To keep a competitive edge, organizations want to get the best ROI from their new hires. This means being able to recruit the best possible talents for the organization. This is when recruitment agencies come into play.
Here are the top reasons why organizations request recruitment agency support in Thailand:
- Limited reach on the candidate market: This is the case for SMEs whose notoriety is low in the labor market. Whenever they publish a job to the public, SMEs tend to only receive a few profiles because of their limited notoriety. Using a recruitment agency helps them expand their talent pool with candidates who would have not applied directly to their organization.
- Lack of recruitment skills in-house: Still in Thailand, House teams do not present “Headhunting” experience. Some companies have opted to recruit recruiters coming from agencies in order to maximize their in-house capabilities.
- Time & pressure to hire: Poor workforce planning often leads to using a recruitment agency. Whether it is for a new hire or a replacement, the urgency to hire is the top reason why companies opt for a recruitment agency. The recruitment has just been opened and “we need it for tomorrow” is a recurring remark provided by organizations to headhunters
- Strategic recruitments due to skills scarcity: Some positions are simply dedicated to recruitment agencies. Why? because the labor market is too tight to find it by yourself. In Thailand, this is the case for IT and digital positions where talent is so scarce that it justifies recruitment agency support.
- Opening up in a new country: Whenever companies want to develop business in Thailand, they often need local hires who will be able to develop the market in the country or in the region. These first hires are even more strategic because the company does not present an existing footprint in the country. Beyond getting the right person aboard, the organization usually seeks recruitment agency support to get advice and support about local labor law and to comply with the requirements of the local regulations.
Types of recruitment services provided by recruitment agencies in Indonesia
There are 3 main types of recruitment services in Thailand:
- The permanent search recruitment providers: The most widely known recruitment partner on the market. Permanent recruitment search providers in Thailand usually offer headhunting services on behalf of their customers. Large recruitment agencies organizes their services around different specialized divisions. For example Legal / IT / Finance / Executive search etc. In Thailand, the remuneration model of permanent search recruitment providers is based on success (contingency) or retainer search, more details are below.
- The MSP provider: The managed service provider (MSP) is a staffing outsourcing solution aiming at outsourcing temporary workers for mass hiring needs. The agency is usually responsible for the end-to-end management of the contingent workforce, from hiring to employment, ensuring the workforce’s compliance with the local regulations in place. The remuneration model of the MSP provider can vary depending on the customer’s needs, but pricing is usually defined based on the price per hour of the workforce VS the volume hired.
- The RPO provider: The Recruitment Process Outsourcing provider (RPO) is a provider that operates as an in-house recruiter on behalf of your organization. It relieves the employer from administrative duties related to recruitment. Instead, the recruitment function is handover to the provider who will ensure to provide a seamless recruitment service for the organization, including employer branding, and talent acquisition. The remuneration of the RPO provider is a monthly recurring cost for the service provider, a bit like a subscription model depending on the number of months of service required by the customer.
Recruitment companies in Indonesia
- Recruitment freelancers: Recruitment freelancers are increasing in Thailand. They usually have a background in recruitment agencies or as In house recruiters. They prefer to operate on their own and are usually chosen by customers because of their networks. Recruitment freelancers tend to specialize in some industry areas (IT/Finance/Sales / Engineering) in order to make a case for successful recurring businesses.
- Boutique recruitment ( 5- 50 people): Boutique recruitment companies represent the bulk of recruitment companies existing out there. They are usually between 5-30 people and some have different offices in the region. Boutique recruitment companies usually specialize in a few fields but are not able to present a dedicated expert for each possible job function on the market. They tend to identify niche areas to focus their services on and build sustainable relationships with their clients. As the name suggests, boutique recruitment agencies are focused on providing bespoke services on specialized areas. Because they choose their assignments in specific areas,, boutique recruitment providers prefer to work with a retainer (deposit fee).
- Large recruitment firms (100+): In Thailand, large providers are usually historical recruitment groups, such as PRTR, or international recruitment firms such as Addecco, Michael Page, or Robert Walters. Such firms have rolled out their COEs locally and are able to provide end-to-end recruitment services for permanent recruitment search, MSP, and RPO.
Remuneration model of the permanent recruitment search provider
1. The recruitment fee
In exchange for successful candidate placement in a job, recruitment companies charge organizations a recruitment fee.
The recruitment fee is a % of the annual Gross basic salary of the employee placed in a job.
Although we noticed different pricing may apply depending on the recruitment provider type required (Permanent recruitment, MSP, RPO). The pricing for permanent recruitment search in Thailand is very well aligned between recruitment providers (Freelancers, boutique search, large recruitment firms)
Such recruitment fee usually fluctuates between 18% and 25% of depending on the job search difficulty.
The recruitment fee generally includes:
- Gross basic salary + Fringe benefits (Ie: company car, fixed allowance etc)
The recruitment fee generally excludes:
- Variable, optional benefits and bonuses (provident fund, variables bonuses based on performance etc.)
For example, if a recruitment company successfully places a candidate in the position of sales supervisor at an offered monthly gross basic salary of 60,000 THB, at recruitment of 20%, the recruitment fee will be.
- Basis for the recruitment fee calculation (15,000,000 IDR (gross monthly basic salary) * 12 (month) = 180.000.000 IDR
- Total recruitment fee (20%) = 36.000.000 IDR
- To this amount, VAT will apply, +7%, the total cost to pay for the customer will be : 38.520.000 IDR
2. Contingency VS Retainer fee: what is the difference?
- Contingency fee: The recruitment agency only gets paid if a candidate is successfully hired by the organization. This is the most common model used in Thailand as there are no upfront fees paid by the organization
- Retainer fee: The organization pays a deposit fee before the recruitment agency starts the search. The deposit fee usually equals for ⅓ of the potential recruitment fee. The retainer search is generally used for executive search positions. This method allows the recruitment provider to secure resources that will be entirely focused on the search to perform headhunting.
3. General terms and conditions
Payment terms: In Thailand, the payment terms are usually 30 days, especially for contingency recruitments. Providers are more flexible on credit terms whenever some guarantees are provided to them (ie. Retainer deposit, or exclusivity).
Replacement guarantee period: In Thailand, the replacement guarantee period equals the probationary period of the employee, 90 days. Although the recruitment provider may not offer a refund in case of employee resignation, the recruitment provider usually commits to replace the candidates for free (at least one time) if he/she leaves within the 90-day period.
Exclusivity: It is common to have recruitment agencies asking for the exclusivity of the role to the organization. If the organization provides exclusivity to the recruitment provider, they will be more likely to focus their time and internal resources to fill the role. However, if the recruitment provider sees you are already working with 3 or 5 other agencies, they may not commit much time to your role.
How to choose your recruitment agency in Indonesia
With so many recruitment agencies out there, how do you choose the right one for your organization? Here are the key criterias to consider when selecting a recruitment agency.
- Cost (Budget): Ensure that a budget is allocated to the recruitment agency. The usual barrier for organizations is the high cost of the recruitment fee. If you are using a recruitment agency, you should ensure that the recruitment fee provided is reasonable and matches your budget consideration.
- Industry experience of the researcher that will work for you: Do not let you be influenced by the recruitment company’s brochure and marketing materials. Instead, ensure you are talking to a recruiter that knows your industry and who has the right knowledge to understand your job requirements. Ultimately, the recruiter assigned to your job will make a difference for you.
- Talent pool size: Larger agencies may guarantee a wider pool of candidates, whereas smaller boutique agencies may present a talent pool focused on certain niche positions.
- Recruitment methods: Ask the agency about their recruitment methods. Do they rely solely on job boards or do they have their own database of candidates? Do they use social media to attract passive candidates? A good recruitment agency will have a variety of methods to attract the best candidates.
- Screening process and assessments: A rigorous screening process is essential to ensure that the candidates presented to you meet the requirements of the role. If the agency is only dropping CVs to you, you are losing your time. Instead, ensure that the agency has different methods to qualify candidates. For example, by using assessments targeted to your job’s requirements, and how they assess for cultural fit.
- Communication: Ensure that the recruitment agency you will work with you will keep you informed at every stage and responds proactively to your questions. In addition, a quality recruitment provider will provide you with advice about the candidate market so you can make the right hiring decisions.
- Track record: Check the agency's track record, including their success rate in filling similar roles to the ones you need to fill. Ask for references and follow up with them to get an idea of the agency's performance.
- Size of the agency: Consider the size of the agency. Here, you want to ensure that the agency has the required resources to treat your handle your recruitment as a priority. Do not hesitate to ask about who will be the recruiter who will handle the search for you.
Huneety unique value proposition to recruit qualified candidates in Indonesia
Affordable HRTech solutions to address your talent shortage
Huneety is an HRTech company based in (Thailand). We provide solutions to companies in order to address their talent shortage in Thailand. Huneety is built by Talent Acquisition professional experts, with the mission to provide support to companies who are suffering the most from the talent shortage and are not using new resources due to cost sensitivity.
Huneety brings an affordable and easy-to-use HR solution for companies to thrive. As part of our vision, Huneey offers free features for companies to:
- Capture candidates in the platform,
- Assess the candidate’s soft skills, hard skills, behaviors, and personality.
- Select the right applicants.
The Huneety recruitment service promise
Whenever a new recruitment service project is signed, we commit to deliver qualified candidates within 5 business days
When starting a recruitment project with Huneety, you can tap into an existing talent pool of candidates prequalified with Huneety technologies. This allows us to speed up our recruitment pipelines and deliver pre-qualified candidates faster.
0 upfront fees, 40% cheaper than traditional recruiters. Thanks to our proprietary recruitment technologies and existing talent pool, Huneety is better suited to fill vacancies affected by talent shortage. For our customers, this results in fees 40% cheaper compared to traditional recruiters.
90-day free replacement guaranteed. Huneety believes in talent retention and high-quality candidate matches. If for any reason your new recruit won't complete their probation period, Huneety teams will work to provide an alternative recruitment talent, for free.
Free assessments for every single hire. Each candidate delivered into your opened recruitment project is already pre-assesed with Huneety assessments. We ensure candidates are matching your culture fit, soft skills, and hard skills requirements before you schedule interviews with the hiring manager.
How Huneety delivers qualified candidates faster.
We are able to service your recruitment priorities for any type of role, in any industry. Huneety leverages a network of recruitment agencies (Mid size and large sizes) as well as freelancers to deliver qualified candidates directly into the Huneety platform. Each recruitment partner is already selected by our teams according to their expertise, track record, and talent pool records.
At the beginning of a new recruitment project with your organization, Huneety will directly select among our network the recruitment provider who presents the right talent pool related to your job.
Huneety team maintains constant communication between your recruitment teams and the candidates and ensures all the steps of your recruitment process are covered until the successful placement of the candidate in your organization.