Businesses will have to learn from startups to scale back up in the aftermath of COVID19. For many, that will mean outsourcing hires. We’ll take a look at why the coronavirus will turn big, established businesses back into startups. We’ll also tackle what that means for hiring managers, staffing firms, and job applicants. We’ll draw on data from nearly a decade of working with high-growth software startups to help you prepare a little better for a post-COVID-19 job market, whether you’re hiring or applying.

Two scenarios. One outcome for businesses.

Many experts, such as NY Times columnist and economics professor Paul Krugman, say that the economy is essentially in a “medically induced coma.” Unlike any previous recession, our economy is simply on pause. It was strong before Coronavirus and may bounce back faster than many people expect once quarantines are lifted and people can resume their daily routines.

Many businesses have put big projects on a temporary hold, and consumers are putting off major purchases. All that pent-up spending could come bursting out at once when quarantines are lifted.

Many commenters also point to the technological innovations and positive policy changes the pandemic is expected to incentivize. Uber, AirBnB, Slack, Pinterest, Whatsapp, Square, and Venmo all grew out of the needs generated by the last recession. In the coming months, we can expect to see similar inventions focused on remote work, delivery, and health-tech.

Other experts predict that recovery will be slow and difficult. That’s the view taken by Peter Goodman in the New York Times.

“But even after the virus is tamed — and no one really knows when that will be — the world that emerges is likely to be choked with trouble, challenging the recovery. Mass joblessness exacts societal costs. Widespread bankruptcy could leave the industry in a weakened state, depleted of investment and innovation.”

We’re experts in hiring, not economics, so we won’t pretend to know which side is right, or how quickly the economy will rebound after the pandemic is over. But we know, at some point, companies will start hiring again. When that happens, many established businesses will have to operate more like startups.

In the first scenario, where the economy rapidly bounces back from its temporary coma, many businesses will need to rebuild their workforces as quickly as possible. Many companies have already closed down — some temporarily, others permanently. Unemployment has skyrocketed. According to a recent estimate by CNBC, half of all companies are considering layoffs.

When the economy returns, all those businesses that have laid off staff or temporarily closed their doors will need to rehire. Restaurants will need to find new cooks and waiters. Retail stores will need cashiers again. If the economy returns quickly, they will need to staff up quickly. Former employees may not return.

At the same time, there will be lingering uncertainty and increased risk no matter how rapidly the economy bounces back. Many businesses will not want to risk staffing up quickly and having to go through another round of layoffs.

In the second scenario, where the economy doesn’t bounce back, companies will still need to hire up to pre-pandemic levels, but more slowly. Like the first scenario, business leaders will be risk-averse, watching for any sign of trouble.

In other words, well-established businesses will need to hire fast without spending too much, making big commitments, or taking big risks. I’ll talk about what that means for startups first, and then talk about what it means for job applicants.

Why hire like startups?

In both cases, whether the economy speeds up or slows down, many businesses, even well-established companies, will probably find themselves in a similar position to startups — planning for growth amidst a lot of unpredictability. Whether the economy recovers quickly or not, most businesses will want to grow back to pre-pandemic levels. They will work to gain back old customers, find new clients, and staff back up to accommodate that growth.

Much of that new growth will presumably take place surrounded by uncertainty. Like startups, established companies may have to operate without large internal recruiting teams. You may not want to risk staffing up a full recruiting department if you’re not sure whether you can expect growth.

With smaller internal recruiting departments or no recruiting team at all, companies will be faced with some difficult choices.

Some smaller companies will try the DIY route — they’ll hand over the task of posting jobs, weeding through resumes, screening calls, and scheduling interviews to HR, hiring managers, and team leads. They’ll likely get a high volume of responses, too, as workers who were laid off during the pandemic come back to the workforce in droves.

However, DIY solutions end up being the most expensive in the long run. Hiring is a time-consuming process, and our research shows that this method leads to lost productivity in the tens of thousands of dollars for each hire. Wait times alone can cost companies between 30 and 35 thousand dollars. That’s not to mention the lost productivity of hiring managers who have to screen resumes while they could be working.

Other companies will use staffing agencies and recruiting firms. In fact, we expect to see a major uptick in outsourced recruiting — especially for technical recruiting, cybersecurity, and health-tech.

This option also has drawbacks. Many staffing agencies and recruiting firms are not specialized and can struggle to fill high-demand tech positions with candidates that really fit the business’s technical needs. Staffing agencies can also be expensive. Contingency fees can range between 20 and 30 percent of a candidate’s first-year salary. That’s $24,000 to $39,000 just to hire a single software engineer.

A recruiting model that we see being more flexible during this time is outsourced recruiting or Recruitment Process Outsourcing. Wait! We know that sounds super boring. If you’ve read this far, the moment you saw “Recruitment Process Outsourcing” your eyes glazed over and your mouse moved towards the X button. If you’re going to be in charge of hiring, we promise to make this interesting. If you’re just planning to apply to jobs, go ahead and skip to the next section.

Outsourced recruiting is different than the traditional staffing.

Still here? Ok. I assume you’re a hiring manager. Good. Here’s the deal about RPO: it’s when you outsource most of your hiring process to an external recruiting team. It’s not the same as standard recruiting models. Traditional staffing firms usually operate on one-off contingency fee models. Company A sends a job description out to several staffing firms, and they compete to fill the role — for a fee.

Recruitment process outsourcing, on the other hand, is a longer-term relationship, often with a subscription or contract-based pricing model. Rather than farm out job descriptions to multiple staffing firms, companies typically partner with a single RPO firm, at a lower, weekly or monthly cost. The RPO firm acts as an internal recruiting team, sending roles as needed and managing many of the time-consuming tasks that standard staffing models don’t cover.

Why will RPO be valuable in a post-coronavirus world? For one thing, RPO is the only model that gives companies the resources of a large, internal recruiting team, without the costs or long-term commitment. Because they’re tied to you, RPO providers have an obligation to staff tough-to-fill roles that other staffing firms might ignore. The relationship also means you get better-fit candidates for your team because the RPO firm knows your product, tech, and culture.

Hatch IT offers both traditional, “direct placement” recruiting and RPO, but in our experience, RPO is the best and most popular option for startups. They can avoid commitment, contingency fees, and risks, but still fill positions rapidly when they need to. If they need to pause, slow down, or cancel, they can pivot quickly. In a world where companies will need to staff up fast without making big commitments, many will outsource recruiting for the flexibility it provides.

Job Applicants

Hi job applicants! We promised we wouldn’t forget you. We’re going to give you a sneak peek into how companies may be hiring in a post-COVID-19 job market. But first, just a quick recap:

Many well-established businesses will probably hire a lot more like startups — they’ll have limited budgets, small or non-existent recruiting departments, and might be highly risk-averse. Based on our experience working with companies in this scenario, we think many of them will outsource their recruiting to specialized staffing firms.

Because of this, you’re probably going to hear from more third-party recruiters. Many of the jobs you’ll see posted online will have been posted by recruiting firms rather than the company that is hiring. Especially if you have a high-demand technical skillset, recruiters will probably reach out to you via LinkedIn. If you’re in very high-demand fields, you may get phone calls as well. Often, these recruiters will be external contractors who work for the recruiting firm rather than the company they’re hiring from. Many will refer to companies as “our client” and won’t give you a lot of details until you talk to them.

Both you as the job applicant, and the companies themselves, will benefit from this arrangement. If we’re right about RPO, the recruiters will know nearly as much about the company culture and technology as an internal team — maybe even more. It’s in their best interest for you to get the job, and then do really well. Your recruiter will aim for a win-win, coaching you on how to put your best foot forward and providing insights on salary ranges, benefits and more.

Don’t dismiss outreach from recruiters. Contrary to myth, recruiters’ fees don’t impact your salary offer. Avoiding recruiters is more likely to lead to a lower salary than a high one. In fact, companies that are saving money using RPO may be able to offer you even more.

In a post-Coronavirus job-market, recruiters will be your best ally when you search for a job. A good recruiter, especially if they’re working for an RPO firm, will help you find jobs that are the best fit possible. They’ll coach you through the interview process, act as a point of contact, make sure you don’t get ghosted, and help you get the best compensation and benefits package.

It’s hard to predict what will happen with the economy. But we can guess that many companies will have to operate more like startups. Whether you’re a hiring manager or a job applicant, it will pay to be prepared for a job market where companies are risk averse, and many tasks are outsourced.