Saving on Recruiting costs

Recruiting talent is seeing a new high as organizations are spending a lot to attract the right talent. Industry experts suggest possible cost savings methods.

Organizations are using a host of innovative and at the same time run-of-the-mill methods to hire employees. But in order to be effective and innovative, the compromise has been settled on the high cots. The hiring costs have shot up manifold and companies have started to pinch pockets. Experts say that the average recruitment cost per employee can range anywhere between Rs 50,000 to 60 lakhs depending on the positions.

Industries usually hire using a host of methods ranging from internal movements where the company advertises the position within the organization. This method is considered to be very cost effective as the employee is already a cultural fit and the talent stays within the organization. They also advertise in the mainstream press though it is usually expensive as it includes not only the advertising cost but also the cost of processing, screening and interviewing the candidates.

Many organizations have on-campus and off campus interviews for hiring fresh graduates or post graduates of professional courses. They also use an optimum channel mix strategy for hiring experienced people. The channels of hiring would include in-house technical recruiters using portals and own network, employee referral program, placement consultants etc.

Recruitment costs are taking up a major part of annual budgets of the organizations and are engaging a lot of resources. Companies are working in the direction of reducing these costs so as to save on the costs and allocate funds towards strategic projects. The best way to minimize recruitment cost is to make sure the minimum. Recruitment agencies possibly are the best firms of cost effective hiring as one can outsource the ‘headache’ to a specialist firm and only pay on successful completion of the assignment.

Companies are working on reducing the average cost per hire by relying on employee referrals, innovative recruiting mechanisms, and reducing the reliance on head-hunters the average cost per hire is approximately Rs30,000 to 40,000. To recruit the best talent along with a faster turnaround time, some organizations have created a pipeline for all critical positions and the mapping has been done for all such positions, which impact business. Since they maintain a three candidate ratio for each position, they have a good database already in the system. These initiatives automatically reduce cost.

Companies have devised action plans which suit their needs best and at the same time cut the recruitment costs without compromising on the quality. Many multinational organizations have subscribed to job portals. Most of the recruitment at junior and middle management levels are done though these job portals resulting in reduction in cost and increase in the process speed.

Most of the recruitments at senior levels are done through contacts. They also recruit through employee referral scheme, which helps them in getting the right person for the right job at a very nominal cost spent on recruiting.

Internal referral is the most effective and cheapest mode of recruitment. Companies encourage their employees to refer people for different positions. It ensures that they attract the best talent and also gives an empowering signal to employees about their engagement within the country.

For many organizations employee referrals are the cheapest modes of recruitment. One of the most cost effective modes of recruitment is the daily walk-in interviews that most firms conduct at their offices. This way, they are able to capture the profiles of a significant number of potential candidates that help in recruitment process. Walk-ins are undoubtedly the best and inexpensive mode of hiring and it has proved effective in volume hiring.

Organizations are saving on the high recruitment bills but at the same time are not ready to comprise on talent. The outcome is the development of a few innovative and cost effective recruitment models.

  • colvirendra

    A company should not forget its previous employees, since you know all details about them, they can always be considered for alternate positions. There are many ifs and buts in exercising this option but it should always be explored whenever possible without any ego hassle.

  • N. Ramachandran

    Better employees can be promoted or by job rotations. Company can implement employee referral scheme instead of going through Recruitment Agencies. 25% of recruitment fee being paid to agencies can be offered to the internal employees for the candidate selected.

  • Anupa

    I am utterly thankful for this edition as i am doing a project on the same.

    I need to know how the budget is decided for RPO..and also how an organisation concludes and agree on the point that they need to outsource the recruitment process to a vendor. How the process is carried out from top management till the point of sending requirement to a consultancy fecilitation. Im getting the information by bits and pieces but i shall be highly obiged if any one can help on this.


  • Hi

    I agree to almost all the points mentioned here. you should have given other cheaper sources of recruitment also along with Employee referrals, internal transfers. Walk-ins will be useless for niche skills.

    Give some more ideas on recruiting niche skills.


    Ashok Kolla

  • Really its a good input for Us

    Best Regards

    Ritesh, perot systems

  • pinkii

    can u put light on some new methods of recruitment like Face Book etc and how the cost of recruitment per hire is calculated>>>

  • SKHota

    It is really a good piece of information for our organisation.However can you please give some inputs for economical recruitment of technical officers/skilled hands at a lesser salary for a factory which has no capacity to pay high salary.

  • Hi all!!

    Just need to bring to your notice that our organization has recently started another service for helping organizations to cut recruitment cost.

    We have initiated recruitment test administration and facillitation services wherein we conduct the recuitment test for organuizations using their question bank at outstation locations where. This helps the organization in cutting air / rail travel costs, boarding and lodging costs as well as manhours for employes dputed for this work. Organizations would possibly ask the logical next question about integrity. We are happy to inform all organizations that we have been earlier retained by the British Council on retainership for purpose of condcuting their IELTS exam – the one used for imigration to australia, UK, Canada, New Zealand etc. and have proved our credibility and integrity at that level. This refference should put all speculation to rest. Other than this we have also been retained by several IT MNC in India – the likes of Tech Mahindra, Syntel, Persistent software and Quinnox in the past and present for recruitment test administration and facillitation services.

    Our clients admit that the recruitment costs have been substantially reduced. We hope that our endeavours would receive active promotion and favour amongst all organizations opting for outstation recruitments whether for fresh campus graduates or for experienced hires.

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    Sanjay Patro

  • Poonam Agrawal

    hey nice one

    and i think one of the ways to recruitment can be by visiting social websites like orkut,facebook and thru there one can get information abt the person as well as institutes which have their communities.

  • Surendra Varma

    Nice article,

    With my own experenice in last three years, our recruitment cost is been very low with two methods that we have implemented in our organization. We are IT product company based out of gujarat. First thing we did is that we have created our own IT recruiter team in organization whom we have trained on technology and product who does almost 95% of the total recruitment of our total requirement and second thing is the employee referal programme where is we have got some good referals from our employees.

    I think Employee referals and In house recruitement team is the most effective way of reducing the recruitment cost.


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  • For obvious reasons internal recruitment is the most cost-effective form.
    Recruitment agency costs can be high.