IT Recruiting Costs Explained

Recruiting costs are one of the most enigmatic topics of the recruitment process. On the surface, it seems pretty straightforward – it is a price tag that includes spending to maintain the recruiting process and the costs related to closing a particular vacancy. 

But the cost of IT recruiting is not just monetary. Other factors also contribute to the price figure, and it is essential to communicate this to keep the client and recruiters on the same page. 

We have already mentioned a breakdown of IT recruiting costs in our piece on cost-effective recruiting. This time, let’s take a closer look at how IT recruitment costs are structured.

What makes up the IT Recruiting Costs?

The cost of IT recruiting reflects the requirements for the scope of the recruitment effort. In other words, it is a combination of: 

• Resources used to fill a specific position;
• Spending required to maintain the overall operation;

But it is more than meets the eye. 

The actual recruitment costs during tech talent acquisition depend on several factors.

Let’s take a closer look at them.

Recruiting Costs Structure

1 The Monetary Costs

The monetary part is an obvious component of the recruiting costs. The monetary costs include:  

• Salary of involved specialists (i.e., researchers, headhunters, recruiters, etc.);
• Compensation of consultants involved in the recruitment process (to screen candidates. verify their skills and expertise, assist with interviews, etc.);
• Commissions and referral bonuses, etc.;
• Then there are operational costs:
• • Proprietary sourcing tools, data scraping services;
  • Advertising costs spent to promote the employer brand and vacant position on different platforms;
  • Appearances in the paid newsletter and job boards;
  • Membership fees for recruitment-related communities;
  • Spending on G Suite, document management services, ATS, CRM, various tracking systems, Confluence, etc.
  • Operational costs also include internet and telephone connection spending, accounting, and administrative operations.

2 Time Investments

The time investment costs of tech recruiting include: 

• Presale period with discussing the goals of the particular recruiting effort. 
• The initial phase when the goals of the recruiting effort solidify. During this time, the position requirements adapt and optimize to be competitive on the market. 
• Time spent writing, editing, posting, promoting vacant positions throughout digital channels. You can approximately optimize the workflow for this part of the recruitment process, but it still depends on the scope of hiring efforts and complexity of the vacant positions. 
• The time required to screen applicants and qualify whether they match the position’s requirements and sort them accordingly (from more to less likely, etc.). 
• The time invested in making an informed decision to hire a candidate. This process includes weighing the pros and cons, comparing options, etc. Consequently, the time required to go through the negotiation stage. Usually, this stage draws out far and wide.
• Then there is the time required for work with the candidate – interviewing, following through each stage of the pipeline, gathering references, and verifying recommendations. 
  • In case there is a need for relocation, recruiters may deal with candidates’ family members. 

3 Productivity and Output Losses

The business workflow operates on the “cause and effect” principle. When the employee is doing his job (for example, sales manager turning leads into customers) – it makes an impact, it makes the wheel turning.

At the same time, when the position is vacant – there is an impact too. The flow of the pipeline either slows down, or there are fundamental elements temporarily missing. 

Either way, the vacant position affects the overall and results in productivity and output losses. The longer it takes to hire a specialist – the more prominent this factor will get. As a result – monetary and time investment increases and so are recruiting costs.

It is one thing the company should always keep in mind while recruiting for vacant positions. 

Here’s how productivity and output losses usually turn out:

• While the position is vacant – the part of the workflow and its output is on hold. For the most part, this can occur only if the productivity losses affect the business’s non-vital elements. 
• To mitigate productivity losses – part of the workload is spread across the other members of the department. This aspect can put a strain on the team but keep the ball rolling. 
• When there are not enough team members to maintain the scope of operation – the scope reduces along with related KPIs to reflect the state of things.

4 Recruitment Costs of Failed Hires

Sometimes a new employee fails to adapt to the company or is unable to handle his responsibilities. That’s a failed hire. Regardless of why, this course of events results in the renewed need to fill a vacant position, which means starting the process all over again. 

Needless to say, fixing costly hiring mistakes requires additional recruiting costs.

There are several ways to keep the impact of this factor under control:

• The company can mitigate this factor by implementing more thorough screening and consideration practices. It is not 100% fail-safe, but lets you make an informed decision.
• Back-up candidates is an excellent way to reduce the time required to find and process new candidates.
• Another way to minimize this factor is to fine-tune your onboarding process so that the candidate will surely adapt to the company and succeed. This aspect is something our HR consultants can help you with.

5 Outsourcing Сosts

When it comes to hiring tech talent with a particular set of skills, hiring a recruitment agency is a no-brainer, especially in terms of keeping recruiting costs under control. And it’s not just because this is a blog of a recruitment agency. 

Here’s why outsourcing recruiting is a viable option.

• The most important aspect of the recruitment effort is cost-effectiveness – due to efficient workflows, expertise, and market knowledge;
• The in-house recruitment team is often limited in reach, industry networking, quality contacts, candidate databases;
• Thus cost-effective ratio goes down. These aspects make other cost factors to balloon. For instance, the recruiting process takes much more time due to extended candidate sourcing.

That is especially the case for complex, high-priority positions like team leads, senior engineers, or top management positions.

Because of that, instead of taking the losses and handling the hiring need on its own, the company can try a proactive recruiting approach and compensate that by hiring specialized people to fill their needs. 

Here’s why hiring a recruiting agency to fill your talent acquisition needs is a good idea:

• Deep and diverse talent pools;
• Fine-tuned recruiting pipeline makes the process more cost-effective;
• More significant scope of industry connections and networking;
• Better knowledge of the job market and available specialists;

In conclusion

Here’s how different factors contribute to IT recruiting costs. As you can see, the end figure is not just about money. It is also about time investments and decision-making. The good thing is that when you understand how each element affects the other – you can manage the whole operation much more effectively.

If you need any assistance in your recruiting efforts – we can help you out.

You want to know more about why IT Recruitment is expensive – check out this article.