Comparing the costs of various talent acquisition models is not as straightforward as most people think. There are hidden costs to some of the more popular alternatives. A hybrid solution could be a viable option.
Comparing the costs of in-house recruiting, recruitment process outsourcing (RPO), and contingency recruiting can be complex and dependent on several factors, including the organization’s size, the industry, the level of the position being filled, and the geographical location. However, here are some general considerations for each option:
In-house recruiting costs:
Internal recruiters are typically salaried employees, so the cost of hiring and training them is an upfront investment.
However, once trained, in-house recruiters can be a cost-effective option for filling open positions, as there are no additional fees for their services beyond their salaries and benefits.
The costs of recruiting software, job boards, and other technology may also need to be considered.
- Internal recruiters are often overwhelmed with the number of positions to fill. This can lead to high hidden costs by increasing the time-to-hire, raising opportunity costs, a reduction in revenue, and impacting the quality of the talent hired.
Recruitment Process Outsourcing (RPO) costs:
The cost of an RPO solution can vary based on the scope and complexity of the services provided, as well as the level of expertise and experience of the RPO provider.
RPO can be a cost-effective solution for organizations that need to fill multiple positions or those with limited resources and cannot afford to invest in hiring and training a dedicated internal recruiting team.
- RPO is the alternative for companies that “do not want to be in the recruiting business.” It allows them to focus on their core business.
However, the cost of RPO could seem higher than the cost of in-house recruiting due to additional fees for the services provided by the RPO provider. This, however, is compensated by the quality that RPO can deliver.
Contingency recruiting costs:
Contingency recruiters are typically paid on a commission-only basis, meaning that the cost of their services is tied to the successful placement of a candidate.
The commission rate is typically a percentage of the candidate’s first-year salary, ranging from 20% to 35%.
This can be a more expensive option than in-house recruiting or RPO, especially for high-level positions or positions with higher salaries.
However, contingency recruiters can be a good option for organizations needing to fill a position quickly and not having the internal resources to manage the recruitment process.
Overall, the cost of recruiting depends on several factors, and each option has its own benefits and drawbacks. In-house recruiting may be more cost-effective in the long run, but it requires an upfront investment in hiring and training internal staff and a long-term commitment to excellence. RPO is a high-quality, scalable, and flexible option but may have additional fees. Contingency recruiting can effectively fill positions quickly, but it may be more expensive, especially for higher-level positions. The best option for an organization will depend on its specific needs and resources. Discuss with SG2 which option is best for your organization. Sometimes, a hybrid solution can deliver the best of all worlds.