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How Much Does Recruitment Cost?: Staff Augmentation vs. In-house Recruitment

How Much Does Recruitment Cost?: Staff Augmentation vs. In-house Recruitment 5
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One thing companies worry about when they need to fill positions is how much does recruitment cost. Recruitment costs, when selecting and hiring new employees, is a highly debated topic in the corporate world.

Companies try to save what they can where they can. So, it is understandable that they want to cover their bases before starting any hiring initiatives.  But keep in mind saving money shouldn’t take priority with these initiatives. It is also necessary to evaluate the different options that exist to develop this process effectively available to carry out your initiative effectively. So you can understand the importance of knowing how much the recruitment cost of a project will be.

How Much Does Recruitment Cost?: Staff Augmentation vs. In-house Recruitment

Recruitment Cost Background

Staff Augmentation and In-house Recruitment are two of the most common recruitment methods used by companies. Many find it hard to decide which they would implement as they bear in mind the rewards, disadvantages and recruitment costs. But with help to a clear understanding of how the recruitment methods work and how much the cost, companies decisions will be a little easier.

How Much Does Recruitment Cost?: Staff Augmentation vs. In-house Recruitment

What is in-house recruitment?

One of the most common options for the hiring process is in-house recruitment or in-house hiring. This involves using the company’s recruiters — usually from the human resources department — for a determined period. When positions need to be filled or created, these recruiters look for candidates within the company. Recruiters look at the candidates who can function or that they can offer opportunities for development to function in company vacancies. 

In-house recruitment is the option for companies that hold the culture of their company to a high regard. Hiring in-house allows dedicated and capable people that already work in the company an opportunity to progress in an environment they already do well in. They already know how the company works and likes to do things. This eliminates the need to teach soft core skills to new faces and wait for them to find their rhythm. 

How much does it cost?

Recruiting costs can be measured by Cost-per-her (CPH). CPH is an average of money spent on a new hire. CPH includes the internal and external expenses incurred by the company to make new hires. This figure allows the company to track the amount of money they spend on filling new job positions and can help to decide whether the recruiting method they used is a right fit. 

The formula for CPH = internal expenses + external costs / total hires

When calculating the internal and external fees associated with the hiring process, you should include job boards fees, candidate assessment costs, external recruiter expenses, employer branding efforts, careers page costs, and internal recruiters’ costs.

Through every company’s recruitment plan or strategy, on average companies can spend at least $3500 per CPH when doing their recruiting.

How Much Does Recruitment Cost?: Staff Augmentation vs. In-house Recruitment

What is staff augmentation?

Staff augmentation, on the other hand, is an outsourcing strategy in which specialized staff from outside the company are hired to carry out different tasks as required. It allows companies to fill specific, temporary roles in order to achieve business objectives. 

This staffing method complements existing teams with specific talent, enhancing business capabilities or filling gaps left by members on extended leave. And, it’s a high-control strategy,  granting the hiring company direct management over the augmented staff.

How much does it cost?

When considering Staff augmentation you don’t need to worry about calculating all the internal and external costs  you have to do with in-house recruitment. When employing this strategy the company or agency you use will take care of everything which is usually included in the cost. 

Another thing about this strategy is that since it is contract-based between the company and the outsourced staffing, the company saves a lot of money. No worrying about health insurance, ongoing training and other benefits. So, typically, though different companies and agencies have different rates, this strategy costs between 20-30% less than in house hiring. It might seem strange that using the employees you already have is more expensive but it is.

Read here: Staff augmentation benefits

Benefits of Knowing the Recruitment Cost

When implementing a strategy to your company, it’s important that you research so you can weigh your options properly. So it’s important to note what positives and negatives a strategy will bring to the table. Here are some advantages and disadvantages of both strategies, so that you can decide the most viable strategy for your company:

Staff Augmentation

Benefits of staff augmentation:

  • Helps to reduce costs related to hiring, full-time salaries, and benefits.
  • Provides contract flexibility in growing your work team when you need it most, or in reducing it to save costs in low demand seasons.
  • Allows you to improve the specialization of your workgroup by incorporating trained employees for your needs.
  • Reduces risks, as the company that provides the specialized equipment guarantees that it can provide the work required. Otherwise, the company takes responsibility for the results of the project.

Disadvantages of staff augmentation:

  • Requires more administrative management when hiring a new team, which may require additional supervision.
  • There may be miscommunication because the company is not always aware of the work culture of your team.

Expand your staff here

In-house Hiring

Benefits of in-house recruitment:

  • Gives greater control of and trust in your company’s recruiters because they work exclusively for you and are aware of recruitment priorities.
  • Provides better communication with new employees while they are learning about their responsibilities and the company’s work culture.
  • Allows you to grow your talent pool and help to ensure that these employees will not be replaced.

Disadvantages of in-house recruitment:

  • Acquiring and retaining permanent employees is more expensive, and you also have to consider workspace, benefits, etc.
  • Managing the workforce is less flexible, and it is difficult to reduce it in seasons of low demand, thus raising costs unnecessarily.
  • There isn’t the same diversity, and ideas and perspectives can be limited.
  • Training existing staff for a specific project can be more expensive than using staff augmentation to acquire specialized staff.

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