Hire Smarter: Reduce Costs with Outsourced Recruitment with These 9 Tips
Introduction: The Costly Hiring Mistake
John, a manufacturing plant manager, is struggling to fill critical positions on his production line. When a staffing agency offers a solution, he rejects it, thinking the markup is too expensive. Instead, he decides to handle hiring himself, paying for job ads, resume databases, and recruitment software. His team spends hours reviewing applications, scheduling interviews, and screening candidates – time that pulls them away from managing.
Meanwhile, production slows, and overtime costs climb as existing employees try to keep up. Orders are delayed, leading to dissatisfied customers and potential lost contracts. After weeks of effort, John finally makes hires – only to find out weeks later that many of them aren’t the right fit, forcing him to start over. The money he thought he was saving has been lost in hidden recruitment expenses and operational disruptions.
Had John partnered with a staffing agency, the upfront markup would have covered sourcing, screening, compliance, and risk management – delivering pre-vetted candidates ready to work. Instead, his “savings” turned into thousands of dollars lost. The cost of unfilled positions, inefficient hiring, and lost productivity far outweighs the price of outsourcing recruitment to experts.
Key Takeaways:
- The cost of unfilled positions – lost productivity, overtime, and customer dissatisfaction – can far outweigh the cost/benefit of a staffing agency.
- Recruitment expenses add up quickly when handled in-house, including job postings, software, background checks, and HR labor.
- Staffing agencies streamline the hiring process, providing pre-screened candidates who are ready to work, ultimately saving businesses time and money.
1. Advertising and Job Posting Costs
Online recruitment can cost your company thousands of dollars each month. According to the Society for Human Resource Management (SHRM), the average cost per hire is $4,700, but when factoring in lost productivity and hiring mistakes, this cost can be three to four times the salary of the position (SHRM, 2022). Staffing agencies cover the expenses related to advertising job openings and maintaining subscriptions on various platforms, allowing companies to cut these overhead costs and deliver net/net cost savings.
The cost, including lost productivity and hiring mistakes, can reach three to four times the position’s salary -SHRM
2. Time Savings
A slow hiring process leads to lost revenue. Research shows that unfilled positions cost businesses an average of $500 per day (Glassdoor, 2023). Outsourcing recruitment allows your team to concentrate on core business activities instead of spending time on recruitment tasks. Staffing agencies have proven processes and networks to quickly identify and screen candidates, reducing time-to-fill and increasing productivity.
Unfilled positions cost businesses an average of $500 per day -Glassdoor
3. Decrease Fixed Expenses
Fixed labor costs can drain a company’s budget. Outsourcing recruitment helps reduce your company’s fixed expenses, such as payroll taxes, benefit costs, new employee training, overtime pay, and unemployment taxes. According to the Bureau of Labor Statistics, benefits and payroll taxes account for 31.2% of total labor costs in the U.S. (BLS, 2023). By using temporary or temp-to-hire staffing, companies can keep labor costs flexible.
Benefits and payroll taxes account for 31.2% of total labor costs in the U.S. -BLS
4. Risk Management Costs
Hiring always comes with risk, especially when it comes to compliance. Staffing agencies manage unemployment claims, and other employment-related risks, saving your company from these potentially large expenses. By outsourcing recruitment, businesses can minimize exposure to these risks.
5. Lower Overhead Expenses
Recruiting internally requires significant investment in HR personnel, applicant tracking systems, and background check services. Staffing agencies have recruiters who specialize in finding talent, saving your company the expense of hiring and maintaining a full-time recruitment team. This allows businesses to operate more efficiently without unnecessary overhead costs.
6. Reduced Turnover Costs
A bad hire is expensive. Studies show that replacing an employee can cost up to 213% of their annual salary (Center for American Progress, 2023). Staffing agencies conduct thorough candidate screenings and assessments and have expertise in matching candidates with your company’s culture and job requirements, reducing the risk of bad hires. Better-matched candidates lead to higher retention rates and lower turnover costs.
Replacing an employee can cost up to 213% of their annual salary -Center for American Progress
7. Training and Onboarding Costs
Training new hires is time-consuming and expensive. The average company spends $1,252 per employee per year on training (Training Industry Report, 2023). Staffing agencies can provide your company with candidates who are already experienced in specific roles, reducing the costs and time associated with onboarding and training new hires.
The average company spends $1,252 per employee per year on training -Training Industry Report
8. Long Recruitment Cycle Costs
A long hiring process drains resources and productivity. Research shows that the average time-to-hire for manufacturing roles is 38 days (LinkedIn Hiring Trends, 2023). Staffing agencies maintain a database of pre-screened candidates and have access to a larger pool of talent that might be harder to find. This reduces your time and money spent on long recruitment cycles, allowing you to meet production demands faster.
The average time-to-hire for manufacturing roles is 38 days -LinkedIn Hiring Trends
9. Flexibility and Scalability Implications
Businesses need workforce flexibility, especially in manufacturing. Staffing agencies offer temporary staff to meet short-term needs, allowing your company to scale their workforce up or down quickly without the costs of hiring and firing permanent employees. This helps companies remain agile, especially during peak production seasons or economic downturns.
Conclusion: A Smarter Way to Hire
John’s experience is not unique – many businesses face the same hiring challenges. But by outsourcing recruitment to a staffing agency, companies can reduce costs, improve efficiency, and secure the required talent without the headaches of traditional hiring. Whether it’s cutting advertising expenses, shortening recruitment cycles, or mitigating hiring risks, the benefits of outsourced recruitment are clear.
Many companies hesitate to use a staffing agency because of the perceived cost, but what they don’t realize is that unfilled positions and inefficient hiring processes are far more expensive. Partnering with a staffing agency ensures you get qualified candidates faster, reducing downtime and keeping operations running smoothly.
~ Tracy Nice, Owner/CEO, First Call
If your company is ready to hire smarter and save money, consider partnering with a staffing agency.
Sources: Society for Human Resource Management (SHRM), 2022; Glassdoor, 2023; Bureau of Labor Statistics (BLS), 2023; Center for American Progress, 2023; Training Industry Report, 2023; LinkedIn Hiring Trends, 2023.
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