Executive Search Firm in Indonesia: How to Choose One
How to choose an executive search firm in Indonesia: retained vs contingency, the fee anchor, licence checks under Permenaker 18/2024, and timeline.
To choose an executive search firm in Indonesia, decide first between a retained and a contingency model, then check the firm's business licence, ask for the fee basis in writing, and compare timelines. Retained firms are paid a fee from the start of the engagement and focus on senior executives, while contingency agencies are paid only once a hire is made. A global anchor for the fee is one-third of the placed candidate's first-year cash compensation.
What does an executive search firm do, and when do you need one?
An executive search firm identifies and approaches senior candidates directly and, in the retained model, manages assessment through to the offer. You need one when the role is senior, confidential or hard to fill through open job ads. The Association of Executive Search and Leadership Consultants (AESC) describes retained firms as focusing on "senior-level executives and board directors", while contingent recruiters typically fill entry- to mid-level roles.
For junior and mid-level hires, a job portal or a placement agency usually fits better, and a search firm adds little. Jesson Global's own guidance names Director-level roles and above, cross-border placements and confidential replacements as the cases where executive search fits best.
Retained or contingency: which model fits?
Use retained search when the role is senior and the assessment matters as much as the sourcing. Use contingency when you can run the selection yourself and the candidate pool is wide. The table summarises the differences described by AESC.
| Aspect | Retained | Contingency |
|---|---|---|
| When you pay | A retainer is charged at the beginning of the relationship | After a candidate is identified and hired |
| Workload of the firm | Few assignments at a time | Many searches at once |
| Who assesses candidates | The firm, using in-depth research and interviews | The client |
| Typical role level | Senior executives and board directors | Entry to mid level |
The split is an industry generalisation. Real contracts can mix the two, for example a partial fee up front and the balance on hire, so read the payment schedule instead of relying on the label.
What does executive search cost?
There is no official tariff for executive search in Indonesia, so the fee is whatever the contract says. The best-documented anchor is Korn Ferry's annual filing with the US regulator. Korn Ferry states that fee revenue from executive and professional search is "generally one-third of the estimated first-year cash compensation of the placed candidate", with a percentage added to cover indirect expenses (Korn Ferry Form 10-K, fiscal 2026). That is one global firm's practice, not an Indonesian market rate, so ask each firm you shortlist for its own basis.
Agree in writing what counts as "compensation": base salary only, or also fixed allowances and guaranteed bonuses. That one definition can move the fee by tens of millions of rupiah.
What does the tax add to a fee?
Tax changes your cash outflow, so budget for it. The Directorate General of Taxes (DJP) explains that although the VAT rate is 12%, the 11/12 multiplier means the VAT charged on non-luxury goods and services stays at 11%. For services, DJP states that PPh 23 is withheld at 2% of the gross value, and the rate is 100% higher if the recipient has no NPWP. Whether a recruitment fee falls in the PPh 23 service list is a classification question to confirm with your tax adviser.
The example below is an illustration. It assumes first-year cash compensation of IDR 1,200,000,000 and a fee of one-third, and a vendor that charges VAT.
| Item | Calculation | Amount (IDR) |
|---|---|---|
| Fee | 1,200,000,000 x 1/3 | 400,000,000 |
| VAT, effective 11% | 400,000,000 x 11/12 x 12% | 44,000,000 |
| Invoice total | Fee + VAT | 444,000,000 |
| PPh 23 withheld | 2% x 400,000,000 | 8,000,000 |
| Paid to the firm | Invoice - PPh 23 | 436,000,000 |
The withheld PPh 23 is not an extra cost. You pay it to the tax office instead of to the firm, so your total outflow stays at the invoice total.
What should you check about a search firm in Indonesia?
Check the licence, the fee rules and the written agreement before you discuss price. The domestic placement rule is Permenaker No. 18 of 2024, in force since 30 December 2024 and replacing Permenaker 39/2016. It governs private placement agencies that place candidates with employers in Indonesia. Ask any firm to confirm which licence category covers its Indonesian work.
| Question to ask | Why it matters | Basis |
|---|---|---|
| Are you a legal entity with a business licence? | A private placement agency (PPTKS) is defined as a legal-entity business holding a business licence | Pasal 1 angka 9 |
| Can I see your NIB and Sertifikat Standar? | These make up the required "perizinan berusaha" | Pasal 10 ayat (2) and (4) |
| Do you charge candidates anything? | Private placement agencies may not charge job seekers placement fees, except for certain positions set by law | Pasal 11 |
| Will the agreement be written, and what will it contain? | It must state parties, rights and duties, scope, number of workers, wage, service fee and placement guarantee | Pasal 54 ayat (2) |
| Who reports the vacancy on SIAPkerja? | Employers must report vacancies; the agency reports if the employer has not | Pasal 29 ayat (3), Pasal 55 ayat (1) |
Pasal 54 requires a placement guarantee to appear in the agreement. Its length is set in the contract, so negotiate the replacement period, what triggers it and whether it is a free search or a partial refund.
Also ask for the fee basis, the payment schedule, how confidentiality is handled and who will personally lead your search. A firm that cannot answer these clearly before signing is unlikely to be clearer afterwards.
How long does an executive search take?
Timelines differ by firm, so compare the stages and not only the headline number, and ask whether the candidate's notice period is included. As one published example, Jesson Global states a four to eight week process: kickoff and brief in week one, market mapping in weeks one to two, screening and vetting in weeks two to four, a shortlist of three to five vetted profiles in weeks four to six, and placement from weeks six to eight, followed by support for both sides for the first 90 days. Every search is led by a senior consultant, and candidates come from direct, confidential headhunting and a private network rather than job-board postings. Indonesian searches run through PT. Jesson Global Indonesia.
If you are weighing a retained search for a Director-level or confidential role, you can talk to our consultants about scope and timeline. For a deeper look at the Bahasa-language fee and tax mechanics, see our guide on biaya jasa headhunter.
FAQ
What is an executive search firm?
An executive search firm identifies, approaches and assesses senior candidates for a client, usually for director-level and board roles. According to AESC, retained firms take on few assignments at a time and focus on senior executives, using in-depth research and interviews instead of relying on job adverts.
How much does an executive search firm charge in Indonesia?
There is no official tariff, so the fee is set in the contract. As a reference point, Korn Ferry reports that its search fees are generally one-third of the placed candidate's estimated first-year cash compensation, plus a percentage for indirect expenses. Ask each firm for its own basis and confirm what counts as compensation.
Who pays the fee, the company or the candidate?
The hiring company pays. Permenaker 18/2024 prohibits private placement agencies from charging job seekers placement fees, except for certain positions regulated by law, and requires the service fee to be stated in the written agreement with the employer.
What is the difference between retained and contingency search?
Retained firms are paid a retainer at the start and handle assessment, while contingency agencies are paid after a hire and leave assessment and selection to the client. AESC notes that contingent recruiters typically fill entry- to mid-level roles and retained firms focus on senior executives.
Is VAT charged on executive search fees?
If the firm charges VAT, DJP explains that the effective rate on non-luxury services remains 11% because of the 11/12 multiplier. You may also need to withhold PPh 23 at 2%, or a rate 100% higher if the firm has no NPWP. Confirm the classification with your tax adviser.
← Back to Insights