_2000px_RGB_pn.png){kind=logo}
Finding the ideal employee is always important - but never cheap. With recruitment costs on the rise, cost-effective hiring strategies are more crucial than ever.
What is the cost of recruiting new employees?
For instance, businesses in the US can expect recruitment costs of 15% to 30% of the employee's first-year salary. According to SHRM, the average cost is $4,683 and goes up to $28,329 for executive roles (1).
In the UK, the average recruitment cost for a mid-level employee is estimated at £6,998 (2), or around 20% to 30% of the annual salary (3). In other parts of Europe, companies spend 10% to 30% of the new hire’s first-year salary on recruitment, which can be a lot if they recruit in developed regions like Scandinavia, Western Europe, etc.
With recruitment costs closely tied to salary, inflation, and wages, hiring can strain budgets. However, cost-effective hiring practices enable companies to secure high-quality candidates while minimizing expenses.
Here’s a detailed look at practical ways to streamline your hiring efforts and control recruitment costs.
Cost-Effective Hiring Strategy: Key Takeaways
Hiring is expensive: Recruitment costs can be 10-30% of a new hire's first-year salary.
Employee referrals have the highest ROI. Encourage employees to leverage their networks and offer incentives for successful referrals. Research indicates that 82% of employers find referrals outperform other hiring approaches in ROI.
Upskilling is four times cheaper than recruiting - according to a recent IT survey. Additionally, 99% of companies report that it improves retention and productivity.
Recruitment Process Outsourcing can save you up to 34%. Partnering with a recruitment outsourcing provider gives you predictable, flexible pricing - saving you up to 34% on recruitment costs.
Boost your online presence: Use social media and a strong employer brand to attract talent.
Optimize the hiring process: Streamline interviews, prioritize candidate experience, and use data to improve efficiency.
How to Reduce Recruitment Costs: Best Cost-Effective Hiring Strategies for 2025
Here’s how you can streamline your hiring efforts and control recruitment costs.
Create an Employee Referral Program
Personal recommendations from friends or acquaintances often carry more influence than other sources - and employment is no exception. Encourage your employees to tap into their professional networks, refer qualified candidates, and promote your company.
Employee referrals often lead to faster hires, reduced hiring costs, and better cultural alignment. 82% of employers rated employee referrals above all other sources for generating the best return on investment (4).
Furthermore, 88% rated employee referrals above all other sources for the generated quality of new hires. Promote participation with rewards like bonuses, recognition, or other perks, making it a practical and budget-friendly approach.
Stay in Touch with Alumni
Former employees can be valuable advocates or even rehires. Maintaining strong alumni networks through newsletters or LinkedIn groups helps you engage with passive candidates who already understand your company culture.
Invest in Up-Skilling and Internal Mobility
Not recruiting at all may be one of the most effective recruiting strategies. As an example - nearly all organizations in recent IT industry surveys (99%) have seen positive outcomes from upskilling, including better retention and productivity, often achieved for less than a quarter of what recruitment typically costs (5).
Promote internal mobility by up-skilling current employees. Training programs and professional development opportunities reduce the need for external hires, fostering loyalty and improving retention rates. This strategy is not just cost-effective but also boosts morale and employee satisfaction.
Build Internship Programs
This is one of the best hiring strategies to reduce costs. Structured internship programs are a dual win. They provide participants with meaningful work experiences while creating a pipeline of potential full-time hires.
Investing in interns helps you identify high-quality candidates early and reduce recruitment costs in the long term. Tap into local talent pools - focus on nearby candidates to reduce relocation expenses.
Find out more about Talent Pipelines & Talent Communities.
Leverage Remote Work Opportunities and Freelancers
By incorporating remote work options into your recruitment strategy, you can access a broader talent pool without geographical limitations. Remote hiring often eliminates relocation costs and expands your reach to top-tier talent.
The freelance workforce represents a compelling talent pool for modern businesses. Organizations are increasingly turning to freelancers, attracted by their cost-effectiveness, flexible availability, and broad expertise gained from diverse client experiences. Rather than relying on traditional recruitment methods, exploring freelancer platforms could help you discover your ideal candidate.
Adopt Flexible Job Descriptions and Skills-Based Hiring
Skills-first hiring is on the rise. Traditional job requirements can sometimes deter high-potential candidates. Emphasize skills over rigid qualifications to attract diverse, capable applicants.
Additionally, host virtual recruitment events such as job fairs or webinars to save on logistical costs while reaching a wide audience. This is especially useful for high-volume hiring strategies - when you need a lot of candidates quickly. You can leverage niche job boards to target specific talent pools cost-effectively.
Strengthen Your Employer Branding - Improve Your Company’s Online and Offline Presence
Your employer brand reflects how potential candidates perceive your organization. A strong employer brand attracts qualified applicants, improves retention, and reduces hiring costs. Highlight employee success stories, foster a positive workplace culture, and maintain active social media accounts to enhance your brand's appeal.
However, do not focus on superficial things, as it can backfire. Modern job seekers are increasingly skeptical of superficial workplace perks such as gaming areas, complimentary snacks, and luxury wellness amenities.
Companies emphasizing these benefits often face public criticism, particularly when coupled with high employee turnover and poor candidate retention.
One of the most cost-effective recruitment strategies is developing a meaningful workplace culture. When you build a genuinely positive environment, your satisfied team members become your most convincing recruitment asset.
Leverage Social Media Platforms
Social media recruiting is a cost-effective way to connect with a broad talent pool. Showcase your workplace culture, values, and projects through platforms like LinkedIn, Facebook, and Twitter. Authentic, consistent content attracts candidates and enhances your employer brand.
Enhance Recruiter-Hiring Manager Relationships
Streamline and standardize your interview process to reduce inefficiencies. One of the best recruitment practices is training hiring managers on effective interviewing techniques. This ensures they identify the best candidates quickly, saving time and resources.
Prioritize Candidate Experience
A positive candidate experience not only boosts your employer brand but also reduces hiring cycles. Clear communication, timely feedback, and a smooth application process are essential components.
“Beware of the influence each person’s experience can have. Every interaction counts. A lack of communication or slow response times can cause candidates to feel undervalued and disengaged, leading them to reject the job offer.” - Ivana Vukotic, Business Development Manager at Serendi.
Learn more about The Top Reasons Behind Rejected Offers.
Leverage Recruitment Data to Make Informed Decisions
Use recruitment analytics. Track key metrics like cost per hire, time to hire, and quality of hire to optimize your strategies. Recruitment analytics can help you identify bottlenecks and refine your processes for greater efficiency.
Utilize AI Recruitment Technology
Invest in Applicant Tracking Systems (ATS) and other recruitment software to automate repetitive tasks, improve candidate screening, and enhance decision-making. Data-driven insights lead to smarter, cost-efficient hiring decisions.
AI recruitment solutions are gaining traction and for a good reason. The results speak for themselves: internal data shows that recruiters work twice as fast, sourcers quadruple their output of potential candidates, positions are filled 20% quicker with highly-qualified candidates, recruiter’s bias decreases, and advertising costs drop by 50%.
But here's the key: AI excels as a supportive tool in recruitment efforts, not a replacement for human judgment. Companies that abandoned human oversight saw their results suffer.
Critics often expose their own implementation failures - expecting AI to work autonomously rather than enhancing human decision-making.
Recruitment Process Outsourcing: A Cost-Optimized Hiring Strategy for Maximum Efficiency
Recruiting and talent acquisition demand significant time, effort, and resources. And sometimes, it is hard for companies to calculate them correctly. Namely, many organizations overlook soft recruitment costs, which experts suggest can be twice as high as the visible, hard costs (2).
For example, soft costs include the time departmental leaders and managers spend supporting the hiring process. When combined with hard costs, these hidden expenses can cause recruitment budgets to soar.
One of the main requirements for a cost-saving hiring strategy is knowing upfront how much it would cost you, with no soft or minimal soft costs.
Outsourcing the recruitment process is the best way to achieve cost transparency. You will get clear, transaction-based price tags that are linked to performance.
With Serendi, you will get a consultative talent acquisition partnership with added benefits:
• Expertise in recruiting and talent acquisition.
• Recruitment models tailored to your needs: End-to-End RPO, Hybrid RPO, Project RPO, On-Demand RPO, Talent Sourcing, Talent Pipelining, Early Careers, and DEI initiatives.
• Recruitment Marketing that amplifies all recruitment efforts.
• Access to advanced AI recruitment tools.
• Enhanced employer branding to attract top talent.
• Faster response times, improving the candidate experience.
• Access to both local and global talent pools.
• Proven recruitment improvements: 68% more candidates, 34% cost reduction, 27 days faster time-to-hire.
Cost-Efficient Hiring Strategies: Conclusion
Saving on hiring strategies doesn’t mean compromising on quality. With the right tools, optimized processes, and a compelling employer brand, companies can attract top talent efficiently.
If managing these strategies feels overwhelming, Serendi, a trusted leader in recruitment process outsourcing (RPO), provides a seamless alternative.
Contact us to discover how we can help build your ideal team.
Frequently Asked Questions about Cost-Effective Hiring Strategies
Which method of recruitment is the most cost-effective?
Employee referrals are often considered one of the most cost-effective recruitment methods. 82% of employers rated employee referrals above all other sources for generating the best return on investment. Furthermore, 88% rated employee referrals above all other sources for the generated quality of new hires. Another option is recruitment process outsourcing. It is a talent acquisition partnership that delivers cost transparency, expert talent acquisition, customizable engagement models, advanced AI tools, and proven results—68% more candidates, 34% cost savings, and a 27-day faster time-to-hire.
How to reduce hiring costs?
Here are some strategies to reduce recruitment costs:
Employee referrals: 82% of employers rated employee referrals above all other sources for generating the best return on investment.
Outsource recruitment process: Partnering with a recruitment outsourcing provider gives you predictable, flexible pricing — saving you up to 34% on recruitment costs.
Leverage technology: Use recruitment software to automate tasks and streamline the hiring process.
Build a strong employer brand: Attract top talent by highlighting your company's culture and values.
Utilize social media: Recruit passive candidates through platforms like LinkedIn and Twitter.
Go Global: Offer remote work opportunities.
How can you control hiring costs?
Typical recruitment costs can vary depending on factors such as the position, industry, and location. However, common costs include:
Advertising costs: Job postings, social media advertising, and print advertising.
Employee referral bonuses: Incentives for employees who refer successful candidates.
Background checks: Verifying a candidate's employment history and criminal record.
For instance, businesses in the US can expect recruitment costs of 15% to 30% of the employee's first-year salary. According to SHRM, the average cost is $4,683 and goes up to $28,329 for executive roles.
In the UK, the average recruitment cost for a mid-level employee is estimated at £6,998 (2), or around 20% to 30% of the annual salary. In other parts of Europe, companies spend 10% to 30% of the new hire’s first-year salary on recruitment, which can be a lot if they recruit in developed regions like Scandinavia, Western Europe, etc.
Which recruitment method is the best?
The best recruitment method depends on your specific needs and the type of position you're hiring for. A combination of strategies, including employee referrals, social media recruiting, and job boards, can be effective. 82% of employers rated employee referrals above all other sources for generating the best return on investment. Employees hired through referrals also show higher engagement and stay longer with the companies.
What are typical recruitment costs?
Typical recruitment costs can vary depending on factors such as the position, industry, and location. However, common costs include:
Advertising costs: Job postings, social media advertising, and print advertising.
Employee referral bonuses: Incentives for employees who refer successful candidates.
Background checks: Verifying a candidate's employment history and criminal record.
For instance, businesses in the US can expect recruitment costs of 15% to 30% of the employee's first-year salary. According to SHRM, the average cost is $4,683 and goes up to $28,329 for executive roles (1).
In the UK, the average recruitment cost for a mid-level employee is estimated at £6,998 (2), or around 20% to 30% of the annual salary (3). In other parts of Europe, companies spend 10% to 30% of the new hire’s first-year salary on recruitment, which can be a lot if they recruit in developed regions like Scandinavia, Western Europe, etc.
Which is more cost-effective, internal or external recruiting?
Internal recruiting may appear to be more cost-effective, but many companies overlook soft costs, which can double the visible expenses. Partnering with a recruitment outsourcing provider offering transparent, all-inclusive pricing helps you implement truly cost-effective hiring strategies and ensures better cost control.
Sources: