Hiring the right people for your organisation directly impacts productivity, company culture, and your bottom line.
With job applications often containing inaccuracies, exaggerations, or outright falsehoods, verifying candidates’ backgrounds has become a critical step in recruitment.
A recent national survey of 1,003 Australians by digital-networking platform Tapt found that 33% of job seekers admit to lying during the hiring process, underscoring why thorough pre-employment screening remains critical.
Employers in Australia typically choose between managing pre-employment screening in-house through their HR teams or outsourcing this task to specialist providers. Each method offers distinct advantages and disadvantages, influenced by factors like cost, compliance, speed, and accuracy.
This guide provides a detailed comparison of internal and outsourced pre-employment screening processes, breaking down essential information that you may need to make an informed decision about which is best for you.
What is Pre-Employment Screening?
Pre-employment screening, often called background checking, involves verifying various aspects of a candidate’s history, credentials, and suitability before a formal employment offer is finalised.
Employers typically use these checks to ensure a candidate has genuinely earned their stated qualifications, possesses the right skills, and doesn’t carry risks such as criminal convictions that might affect their role or the company’s reputation.
These checks commonly include criminal records, employment and education verification, reference checks, right-to-work validations, and Working With Children Checks, among others.
In Australia, employers have two primary options for conducting these checks: internally, using their resources and staff, or by outsourcing the process to specialised background checking companies. Each option significantly affects the efficiency, reliability, and cost-effectiveness of the screening process.
Internal Pre-Employment Screening (In-House)
Internal pre-employment screening means your company’s HR or recruitment teams manage all the required background checks themselves. Your staff will contact previous employers for references, validate educational credentials directly with universities, organise police checks, and confirm candidates’ rights to work using online government resources like VEVO.
Companies typically opt for internal screening if their hiring volume is relatively low or budgets are tight. However, this method demands dedicated staff resources and in-depth knowledge of legal requirements and screening processes.
Pros of In-House Screening
- Complete Control Over Checks: Conducting checks internally allows your HR team complete flexibility over the type and extent of checks. Your team can easily tailor screening to the exact requirements of each role, focusing efforts based on specific needs or risk profiles.
- Cost Efficiency for Smaller Businesses: With no third-party provider fees, internal screening can appear financially attractive, especially for small businesses or companies that hire infrequently. Costs generally involve HR staff hours and minor direct expenses like police check fees.
- Data Privacy and Security: Managing candidate data internally helps ensure sensitive personal information remains within your organisation. For businesses that value tight control over candidate privacy and confidentiality, this approach provides greater peace of mind.
- Flexibility and Rapid Adjustments: When the screening process is internal, your HR team can make swift adjustments as company policies or industry regulations evolve. Adding or removing specific checks, for example, becomes straightforward.
- Immediate Insights and Decision-Making: HR can directly observe and integrate screening outcomes immediately into hiring decisions. Results from calls or documents can be actioned quickly without waiting for external providers.
Cons of In-House Screening
- Significant Time Commitment: Conducting thorough screenings internally demands substantial HR resources, potentially delaying hiring processes and overwhelming existing workloads. Tasks like following up with references or educational institutions are often time-consuming.
- Limited Expertise and Resources: In-house HR teams typically manage a broad range of responsibilities and may lack the detailed investigative expertise required for in-depth background checks. This might lead to oversights or incomplete verifications.
- Compliance Challenges: Ensuring compliance with Australian employment laws, privacy acts, and anti-discrimination regulations adds complexity. Mistakes in managing sensitive information or procedures may lead to legal repercussions.
- Potential Bias Risks: When background screening is performed internally, unconscious biases or subjective preferences might influence outcomes. An external, independent service generally provides impartial and objective results.
- Manual Processes Increase Error Risk: In-house screening often involves manual data entry, phone calls, and paper-based forms, increasing the risk of human error. Without specialist tools or automation, inefficiencies can occur, slowing down the hiring cycle.
- Scalability Limitations: Sudden increases in recruitment volumes or urgent hiring requirements may overwhelm internal resources. Internal screening processes often struggle to scale rapidly without hiring additional HR staff or reallocating significant resources.
Outsourced Pre-Employment Screening
Outsourcing pre-employment screening involves partnering with an external provider who specialises in performing background checks for your organisation.
These providers manage all or part of the screening process, from verifying criminal records to contacting past employers and educational institutions.
Businesses with regular or substantial hiring needs often prefer outsourcing, benefiting from the provider’s expertise, technology, and dedicated resources. Companies with limited internal HR capacity or those needing highly thorough screening may also favour this option.
Pros of Outsourced Screening
- Expertise and Reliability: Professional screening companies specialise in verifying candidate backgrounds. Their trained staff have the necessary skills to perform comprehensive and accurate checks, significantly reducing the risk of missed details or fraudulent applications.
- Time Efficiency: External providers handle the administrative burden associated with background checks, freeing your internal HR teams to focus on interviewing and onboarding. Providers typically return results quicker due to their dedicated resources and streamlined processes.
- Simplified Compliance: Specialist providers stay current with Australian privacy regulations and employment legislation. Using an accredited provider reduces your legal risks associated with privacy laws, discrimination guidelines, and other compliance requirements.
- Easy to Scale: Outsourcing is ideal when facing increased hiring volumes. External providers can easily adjust their resources to handle fluctuations in demand without impacting your internal staffing.
- Advanced Technology: Screening providers often use specialised software that automates many aspects of the screening process. Candidates can enter their details securely online, which improves accuracy, speeds up checks, and provides real-time status updates.
- Objective Results: An outsourced partner delivers impartial background checks free from internal biases, ensuring objective hiring decisions based purely on verified facts.
- Enhanced Candidate Experience: Many background check providers offer intuitive, mobile-friendly interfaces and efficient customer support, making the screening process straightforward for candidates. This professional experience contributes positively to your employer brand.
Cons of Outsourced Screening
- Higher Immediate Costs: Outsourced screening involves upfront costs, typically charged per candidate or per screening package. For smaller organisations or businesses with limited hiring, these costs may initially appear higher than an internal process.
- Reduced Control: Working with an external provider can mean less direct control over individual checks and procedures. Customising the provider’s standard services to fit your exact needs can sometimes be challenging, and you rely heavily on clear communication and vendor cooperation.
- Data Privacy Concerns: Entrusting sensitive candidate information to a third party brings additional security considerations. Although reputable providers have robust security measures, sharing personal data externally always carries inherent risks.
- Potential for Delays: When working through a third-party vendor, you might experience delays outside your direct control, such as provider backlogs or slow responses from candidates when liaising with an external agency rather than directly with your organisation.
- Risk of Over-Screening: Providers may encourage comprehensive check packages, some of which might be unnecessary depending on the role. This can lead to higher costs and longer turnaround times than required.
- Managing Vendor Relationships: Selecting and maintaining a productive relationship with an outsourced screening provider requires ongoing management and oversight. This additional layer of administration might be a consideration if your HR team’s capacity is already stretched.
Key Types of Pre-Employment Checks in Australia
When deciding between internal and outsourced screening, employers should understand the major types of background checks commonly used in Australia. These checks form the core components of pre-employment screening and ensure informed, safe hiring practices.
Criminal History Checks (National Police Checks)
A National Police Check reveals any disclosable court outcomes for candidates across Australia. Employers frequently require these checks to ensure workplace safety and integrity.
Australian laws dictate strict privacy and disclosure guidelines, with certain minor or older convictions considered “spent” and not reportable.
Employment Verification
Employment checks verify candidates’ past employment details, including roles, dates of employment, and sometimes job performance. This helps employers confirm accuracy in candidate resumes and prevents fraudulent claims.
Education and Qualification Verification
Verifying academic qualifications involves contacting universities or educational institutions directly. Confirming a candidate’s credentials is essential, particularly for roles requiring specific degrees or professional qualifications.
Reference Checks
Reference checks involve contacting a candidate’s previous supervisors or colleagues to gain insights into their professional abilities, work ethic, and cultural fit. These checks often provide nuanced information that other verification processes may not capture.
Right to Work Checks
In Australia, employers must verify candidates’ legal right to work to avoid significant penalties. This check involves confirming citizenship, permanent residency, or valid work visas through the government’s Visa Entitlement Verification Online (VEVO) system.
Working With Children Checks (WWCC)
Mandatory for roles involving contact with children, WWCC ensures candidates do not have records that would disqualify them from child-related employment. Compliance with state-specific WWCC legislation is essential.
Identity Verification
Identity checks ensure that the candidate is genuinely who they claim to be. Typically, this involves sighting original identification documents such as passports, driver’s licences, or performing digital ID verifications.
Credit and Financial Checks
For roles in finance or fiduciary responsibilities, credit checks assess a candidate’s financial history for indicators of reliability or potential risks related to handling company finances.
Industry-Specific Checks
Depending on your industry, additional screenings may be required. Examples include checks against financial regulatory bodies like ASIC and APRA, professional licence verifications, global sanction checks, or health and medical screenings.
Comparison Table: Internal vs. Outsourced Screening
Below is a simplified comparison highlighting key differences between internal and outsourced screening approaches to assist your decision-making:
| Factor | Internal Screening | Outsourced Screening |
| Cost | Lower immediate fees but involves significant internal resources | Higher direct fees, predictable and scalable |
| Turnaround Time | Potentially slower due to manual processes | Usually faster with dedicated resources and automation |
| Expertise | General HR knowledge may lack specialist background checking skills | Dedicated experts providing comprehensive verification |
| Compliance Management | Requires internal tracking of compliance regulations | Provider manages compliance risks effectively |
| Flexibility | Highly customisable processes | Limited customisation but possible with clear communication |
| Data Security | Internally managed with controlled access | Requires trust in provider’s data protection capabilities |
| Scalability | Limited scalability can strain resources | Easily scalable and responsive to fluctuations |
| Candidate Experience | Dependent on internal processes and responsiveness | Generally smoother with advanced technology and dedicated candidate support |
Key Takeaways
Choosing between internal and outsourced pre-employment screening depends heavily on your organisation’s size, resources, hiring frequency, and compliance requirements. Here are some clear points to guide your decision-making:
- Internal screening provides greater direct control, flexibility, and potentially lower costs, especially suitable for smaller businesses or those with infrequent hiring needs. However, it can be time-consuming and requires significant internal expertise.
- Outsourced screening offers specialised knowledge, efficiency, strong compliance management, and scalability, making it suitable for medium to large businesses or those with substantial or regular recruitment demands. It comes with direct costs, reduced customisation, and requires careful vendor selection.
- Compliance with Australian privacy and anti-discrimination laws, as well as mandatory checks like Right to Work and Working With Children Checks, must be strictly maintained regardless of screening method.
- Many Australian businesses adopt a hybrid approach, conducting simpler tasks such as reference and identity checks internally, while outsourcing complex checks such as criminal history, education verification, and credit checks.
- Regular evaluation of your screening approach ensures alignment with changing business needs, compliance standards, and recruitment demands.
- Selecting a reliable outsourced screening provider involves verifying their compliance standards, turnaround times, technology, data security, candidate experience, and overall industry reputation.
Making an informed choice between internal and outsourced screening is not simply about costs but about strategically balancing control, efficiency, accuracy, and compliance to support smarter hiring decisions.
