Our columnist gives her take on why recruiters are still relevant. A former banker, who now works as a headhunter, the author has more than 10 years’ experience at leading firms in Asia.

If you haven’t read her previous articles, click here, here, here, here, here, and here.

Until about two months ago, agency recruiters had serious concerns about the future of their industry. There was a genuine fear that more recruitment companies would be phased out – victims of direct sourcing by the banks.

But it looks like that Armageddon scenario was never a real possibility. Of course recruitment firms have been hurt badly, maybe more so than the banks themselves, but if optimistic employment trends continue and hiring gains sustainable volumes, internal HR will have to turn to headhunters again to manage the growth.

Even the likes of JP Morgan and Merrill Lynch, which have actually hired headhunters to recruit for them internally, might find it a challenge to continue cutting their agency mandates for too much longer.

And that’s not saying anything about senior roles - say from VP and above. At that level, headhunters can rest assured that direct sourcing doesn’t stand a chance and will be out of vogue sooner rather than later.

But what direct sourcing has definitely done is made headhunters even more alert and on their toes all the time. If banks’ HR have closed ranks and now only mingle with their favourite few recruiters, then agencies too are closing in on their current clients, even as they try to tap newer avenues and markets.

Recruiters are trying to develop new business in different organisations, segments and markets, but they are simultaneously holding onto their key clients through heightened screening of candidates, aimed at getting closures, not simply at keeping a dialogue going.

So direct sourcing ironically makes the very thing it set out to negate – relationships between agencies and banks – more effective. However this definitely comes at the cost of revenues. Lower volumes, longer turnaround times, stringent screening and extra rounds of approvals are all a direct consequence of direct sourcing.

In the final analysis, this whole phenomena of direct sourcing seems to have been contrived by smart HR people within banks in a bid to preserve and justify their own jobs.

And perhaps in that regard it has worked. If it wasn’t for direct sourcing, what else would HR professionals have done during the past year of low recruitment volumes? Most other job functions - from accounting to admin, front office to finance - have had their numbers cut. HR headcounts at banks, however, have stayed remarkably stable.