Most comparisons of this decision offer two options. The one that fits a lot of mid size companies is the third, and it rarely appears because neither agencies nor recruiters sell it.
The three options
Agency. A bench, a process and continuity, spread across several clients. You buy capability without a hiring cycle and you start quickly. You also pay for the bench whether or not you use it, and your work competes with everyone else's for attention.
In house hire. Full attention, ownership, and knowledge that compounds inside your company. You pay salary, benefits, management time and a hiring cycle that in this market commonly runs about three months. If they leave, most of what they knew leaves too.
Dedicated talent. One person committed to you, without the fixed employment cost. Full attention like a hire, no hiring cycle like an agency. The trade is that you own the relationship rather than a firm owning it for you.
What none of the quotes include
Three costs that appear after the decision and never before:
Ramp. Weeks before anything ships, in all three models. Ask what shortens it.
Your team's hours. Every question answered is time from someone who was doing something else. This is real and it is never in a proposal.
The handover. What exists if this ends. Without a runbook, the true cost of the engagement includes rebuilding what was built.
Ask each option to name all three in writing. The comparison usually changes shape.
The question that matters more than the number
Who is accountable for my outcome, and what do I own when this ends?
An agency is often accountable for activity and deliverables. A hire is accountable for a number, if you gave them one. Dedicated talent can be either, depending on how you scope it, which means you have to scope it.
When each is clearly right
Agency: the work is episodic, you need several specialisms at once, you cannot absorb managing a person, or you have to start next week.
In house: the work is continuous and deeply specific to your business, and the knowledge has to compound internally. This is the only option that does that.
Dedicated talent: you need continuous attention on a specific problem, you do not want a hiring cycle, and you want one person who knows your business rather than a rotating team.
The worst outcome, and how to avoid it
Paying monthly for activity nobody is accountable for. It happens in all three models and it is always caused by the same three omissions.
Name the number. Name the decision rights. Agree what exists at the end. Do those and any of the three can work. Skip them and none of them will.
A note on comparing rates across models
An agency rate includes overhead, management and margin on a shared resource. A salary excludes benefits, tooling and the cost of the search. A dedicated arrangement sits between them.
Comparing the three headline numbers directly is the most common mistake in this decision, and it usually favours whichever option quoted least honestly.