I've been thinking of starting something similar here in the states (recruiting as a service), but there's always one problem: small companies don't trust anything labeled 'recruiting' or 'hr' to gauge technical talent.

If I can come up with a reliable, repeatable system for identifying good developers, I still have to convince other companies to pay for it. The skepticism I get from companies is off the charts.

Do you know how the "HR as a service" company gets around that? Maybe that's why they embed their employees in the startup (face time generates trust)? I don't see them lasting long, though, for the exact reason you state: they're setting themselves up for high training costs and high turnover.