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If you're a tech recruiter, the phrase "cost-per-hire" probably keeps you up at night.
After all, every time you need to fill a developer role or find that elusive IT specialist, it's like a little countdown starts in your head – tick, tick, tick – that's the sound of money going out the door, a budget emptying, a manager on your back.
But here's the thing: understanding cost-per-hire isn't about getting stressed; it's about getting smart. Think of it less like a budget drain and more like a strategic lever you can pull to optimise your whole hiring process.
In this guide, I'll break down exactly what goes into your tech recruitment costs. We'll cover how to calculate cost-per-hire, why those numbers are often higher in tech than other industries, and, most importantly, what you can DO about it.
Sound good? Let's dive in.
What is Cost-Per-Hire?
Forget fancy business jargon – think of cost-per-hire like your "new employee price tag." It's not just the salary they'll make but all the little (and sometimes not-so-little) expenses that add up on the path to getting them settled at their new desk.
Understanding this is your key to getting people in the door quickly, maximising your budget, keeping everyone happy, the process smooth, and your business thriving. It's how you become one of the best recruiters in the business.
But let's start at the top - what's actually in that "price tag"?
- The "Help Wanted" Sign: Job boards, social media ads... getting the word out about that awesome developer role you need to fill isn't free.
- Headhunters on Speed Dial: Agencies can find amazing talent, but naturally, their services come at a cost.
- Your Team's Time is Money: Every interview, every resume reviewed – that's your HR team's valuable hours, which factor into the bottom line.
- Techie Testing Tools: Any specialised software used for assessments or skills checks adds another line item.
Why Tech Recruiters Should Obsess Over Cost Per Hire (in a Healthy Way)
The tech world is a wild ride. You're not just competing on salary; you're competing on perks, culture, and the promise of working on cutting-edge projects... and this takes resources.
Understanding your cost of hire figure isn't about penny-pinching. It's about:
- Efficiency: Are you wasting time/money on methods that don't yield great candidates?
- Budgeting Brilliance: Can you accurately forecast how many hires your budget really allows?
- Staying Competitive: If your costs are out of control, amazing talent could slip right through your fingers.
As mentioned above, cost-per-hire isn't a monster under the bed. It's a powerful tool that, once you understand it, can help you hire top tech talent without blowing your budget.
How to Calculate Your Cost-Per-Hire
Okay, let's get a little nerdy. Calculating your cost-per-hire (CPH) is like levelling up in a strategy game. The more data you have, the smarter moves you can make to optimise your hiring.
Here's the breakdown;
Step 1: It's All About the Inventory
- Inside Costs: This is your HR team's time. Figure out their hourly rate based on salary, then multiply by how many hours they spend interviewing, screening resumes, etc. Don't forget those sneaky "hidden costs" like training and any fancy recruiting software you use.
- Outsourcing Expenses: Every time you use a job board, hire an agency, run background checks – there's a price tag. Tech hiring might mean niche sites like GitHub – those fees definitely add up!
Step 2: Who Made the Team?
Count up how many folks you hired in the time period you're measuring (maybe it's a month, a quarter, or a whole year).
Were they full-time devs? IT experts? Even interns-turned-employees count. The point is to be consistent so you can compare your CPH over time.
Step 3: Time for the Tally
Add up ALL your costs from Step 1. This is your total recruiting spend for that time period.
Step 4: The Magic Formula
Ready for some super simple maths?
Total Recruiting Costs / Total Number of Hires = Cost-Per-Hire
Boom. Now, you've got an average cost for bringing each new team member on board.
Note: It's helpful to break this analysis down by the type of tech role - CPH for a senior software engineer versus a help desk specialist might be wildly different, and knowing that lets you budget smarter!
Here's an example of what this looks like in the real world.
Imagine you're a tech startup that spent $120,000 on recruiting last year and ended up hiring 30 amazing devs and IT folks. Crunching the numbers, your cost-per-hire comes out to $4,000 per person, which is the tech average.
Okay, but what does that $4,000 cost of hire figure REALLY mean?
- Benchmarking: Is that number good, bad, or average? Industry stats would help you compare against similar companies (we'll find some of those later to weave in!).
- Breakdown: Could that $4,000 be lowered? Maybe a chunk of it was on job boards that weren't yielding great candidates.
- The Bigger Picture: If you need to hire 20 more people next year, that $4,000 figure helps you forecast your budget needs.
However, while we're here, cost-per-hire isn't just about the dollar amount. It's a tool for making savvy decisions:
- Streamlining Success: Maybe you discover your in-house team rocks at interviews, so you shift away from expensive agencies.
- Quality Counts: If a low cost-per-hire means rushed hiring and bad fits, that hurts the company MORE in the long run.
- Getting Ahead of the Game: Cost-per-hire, tracked over time, lets you spot trends. Is it getting more expensive to find top talent? Time to rethink your strategies!
And with all this data, you can maximise your spending, identify any sinks, bottlenecks, or problems in your process, and ultimately get the most bang for your buck - again, while keeping everyone happy along the way.
The High Cost of Hiring Tech Talent
Now, let's make this tech-relevant, because in today's cutthroat world where all the top contenders of million/billion companies are seeking out the top talent, and there's a global shortage on trained unicorns, hiring great tech is quite the opposite of finding a bargain in the clearance aisle.
The tech world moves at light speed, and the price tag for top-tier developers and IT specialists reflects that.
Let's look at the numbers:
IT Specialists: Your Support System Doesn't Come Cheap
At the low end of IT specialists, you MIGHT get lucky and snag a talented IT expert for around $15,000 (all costs included). But that's the starting point.
Most companies are likely looking at $20,000 or MORE to fill that critical role. Why? Because the best IT folks know their worth, especially if they're young, motivated, and excited to be trained and nurtured for years to come.
Developers: The Stars of the Show (With Salaries to Match)
Be prepared to shell out for developers too, with a ballpark figure for hiring a skilled developer around the $30,000. Yes, that's per person.
With big tech and startups all vying for the same pool of talent, salaries, benefits, and even fancy signing bonuses get pushed sky-high. If you want the best, you must pay for it by standing out from the crowd and giving people what they want.
If you don't, they'll simply see straight through you.
These aren't numbers to scare you; they're numbers to empower you. Understanding this reality lets you:
- Forecast Like a Pro: Need to hire five new devs next year? That's a hefty chunk of your budget; better start planning now!
- Focus on Retention: Losing a great tech employee is expensive. Making sure they're happy and challenged can be cheaper than constantly re-hiring.
- Get Creative: Can't compete on salary alone? Think flexible hours and amazing projects; those perks matter, too!
Comparison to Other Industries
Ever compare notes with a friend who recruits in, say, HR or sales and feel a pang of jealousy? Yeah, tech hiring is a whole different ball game. Here's a quick reality check:
- "Average" Doesn't Apply: That mid-level manager who costs $10,000 to hire? Forget it. A decent dev will probably run you double that.
- Specialists = $$$: Think niche skills like cybersecurity or machine learning – those folks can practically name their price.
And for clarity, if you're interested in what's driving up these costs,
- It's a Seller's Market: Way more awesome tech jobs exist than there are people to fill them. You're not just hiring; you're competing.
- Big Tech Sets the Pace: Google and Amazon can throw insane perks at people. Even if you're a startup, you're affected by the standards they set.
- Skills Have a Shelf Life: Tech changes fast. Finding someone who knows the hottest new framework? That's gonna cost you big time. Then say a new AI company comes out the woodwork and hits a good investment streak, they might just snatch up dozens of the best.
- Location, Location... Doesn't Matter: Remote work is the norm in tech. That means top talent could be ANYWHERE, forcing you to compete globally.
The bottom line here is that tech innovation is amazing... but fueling it with the right people isn't cheap! Understanding these unique costs is the first step to:
- Realistic Budgeting: No more getting blindsided by how long it takes to fill that critical dev role.
- Rethinking "Must-Haves": Can you train someone in-house on that niche skill instead of paying a premium for outside experience?
- Retention is King: Losing a great employee hurts more in tech. Invest in keeping your stars happy!
Strategies to Optimise Hiring Costs
Okay, it's time to get strategic about those tech hiring costs. The goal isn't to become a cheapskate; it's to get the biggest bang for your recruiting buck! Here's how:
Candidate Experience is Your Secret Weapon
A good candidate experience is like free advertising. Happy candidates (even those who didn't get the job) are more likely to recommend your company, saving you money down the line.
Think fast replies, clear communication, and even helpful feedback to those who aren't the right fit this time. No ghosting. You're valuing people's time, and you're showcasing that you're the best at what you do.
Remember, for many people, you're the first impression and only line of contact with your company, so make sure you're setting the standard in every interaction.
Your Employees Are Headhunters in Disguise
There's no reason why you can't tap into your existing team to maximise the hiring process. After all, they spend a lot of time online, on social media, attending networking meetings, and so on.
Offer referral bonuses and make it EASY for employees to suggest great people they know. Referred candidates are often higher quality, meaning fewer wasted interviews and less time spent on job boards.
Ditch the Pricey, Find the Niche
Yes, LinkedIn is great, but don't forget about tech-specific hubs and platforms like We Are Developers, GitHub, or industry forums. You'll find passionate candidates, often at a fraction of the cost of general job boards.
Bootcamps are Your Farm Team
Partnering with coding boot camps or tech schools is a win-win. You get access to eager, up-to-date talent before anyone else. Host a workshop, sponsor a project... it's great for your brand AND your hiring pipeline.
Promote from Within
Upskilling your current rockstars is cheaper than finding new ones. Clear promotion paths, training opportunities, and challenging projects keep people engaged and save you from those hefty senior-level hiring costs.
Smart hiring in tech isn't about cutting corners. It's about using every tool at your disposal – referral programs, tech-savvy sourcing, building your brand as a great workplace – to get the best talent at the best possible price.
The Role of Technology in Reducing Hiring Costs
You're hiring in tech, so you, of all IT recruiters, need to be savvy to what technology is out there to help you hire fast and efficiently. And you need to - old-school recruiting tactics just won't cut it.
The right tech tools can save you time, money, AND your sanity when finding those elusive devs and IT pros.
Let's dive in.
The Smarter Way to Source: Forget endless job boards and generic resumes. Tech-savvy platforms use AI to understand what "React expert" ACTUALLY means, matching candidates to your open roles with laser focus.
Automate the Tedium, Free Up Your Team: Screening resumes by hand? Ain't nobody got time for that. Automated tools can handle those first rounds while scheduling platforms take the back-and-forth out of setting up interviews.
Introducing Your New Recruiting Sidekick: WAD
Think of WeAreDevelopers as your inside source for top tech talent. Here's why it's a game-changer:
- WAD Speaks Your Language: It's tuned in to those specific tech skills – frameworks, libraries, the whole geeky toolkit your devs need.
- Show, Don't Tell: WAD plugs into GitHub and the sites where devs actually showcase their work. See the code, not just the resume.
- Smarter Hiring = Lower Costs: WAD's data tracking helps you see what's working (and what's not), letting you refine your process to lower that cost-per-hire over time.
Tech hiring doesn't have to be a budget drain. By investing in platforms like WAD, you gain efficiency, better hires, AND save serious cash in the long run.
Conclusion
Hiring top tech talent ain't cheap, that's a fact. But being smart about cost-per-hire isn't about cutting corners; it's about unlocking your full potential as a recruiter. Remember:
- Happy Candidates = Your Best Ad Treat every applicant with respect, even those who don't get the job. Word of mouth matters in tech!
- Your Team is a Talent Goldmine Referral programs tap into hidden networks of amazing devs and IT folks.
- Niche is Nice Don't just throw money at generic job boards. Get targeted with those tech-specific platforms.
- Train, Don't Drain Can you upskill someone in-house rather than paying top dollar for an outside expert?
And we're here to help.
Platforms like WAD aren't a luxury; they're an investment in efficiency. Think less time wasted on unqualified candidates, faster time-to-hire, and data that shows you what's WORKING so you get even better over time.
Ready to Level Up Your Hiring Game?
Don't let those rising tech costs slow you down. Embrace these strategies, explore tech solutions, and become a lean, mean recruiting machine! If you're ready to see how WAD can specifically transform your hiring process, get started with us today.
The future of tech talent is out there, and now you've got the tools to find it.
If you're a tech recruiter, the phrase "cost-per-hire" probably keeps you up at night.
After all, every time you need to fill a developer role or find that elusive IT specialist, it's like a little countdown starts in your head – tick, tick, tick – that's the sound of money going out the door, a budget emptying, a manager on your back.
But here's the thing: understanding cost-per-hire isn't about getting stressed; it's about getting smart. Think of it less like a budget drain and more like a strategic lever you can pull to optimise your whole hiring process.
In this guide, I'll break down exactly what goes into your tech recruitment costs. We'll cover how to calculate cost-per-hire, why those numbers are often higher in tech than other industries, and, most importantly, what you can DO about it.
Sound good? Let's dive in.
What is Cost-Per-Hire?
Forget fancy business jargon – think of cost-per-hire like your "new employee price tag." It's not just the salary they'll make but all the little (and sometimes not-so-little) expenses that add up on the path to getting them settled at their new desk.
Understanding this is your key to getting people in the door quickly, maximising your budget, keeping everyone happy, the process smooth, and your business thriving. It's how you become one of the best recruiters in the business.
But let's start at the top - what's actually in that "price tag"?
- The "Help Wanted" Sign: Job boards, social media ads... getting the word out about that awesome developer role you need to fill isn't free.
- Headhunters on Speed Dial: Agencies can find amazing talent, but naturally, their services come at a cost.
- Your Team's Time is Money: Every interview, every resume reviewed – that's your HR team's valuable hours, which factor into the bottom line.
- Techie Testing Tools: Any specialised software used for assessments or skills checks adds another line item.
Why Tech Recruiters Should Obsess Over Cost Per Hire (in a Healthy Way)
The tech world is a wild ride. You're not just competing on salary; you're competing on perks, culture, and the promise of working on cutting-edge projects... and this takes resources.
Understanding your cost of hire figure isn't about penny-pinching. It's about:
- Efficiency: Are you wasting time/money on methods that don't yield great candidates?
- Budgeting Brilliance: Can you accurately forecast how many hires your budget really allows?
- Staying Competitive: If your costs are out of control, amazing talent could slip right through your fingers.
As mentioned above, cost-per-hire isn't a monster under the bed. It's a powerful tool that, once you understand it, can help you hire top tech talent without blowing your budget.
How to Calculate Your Cost-Per-Hire
Okay, let's get a little nerdy. Calculating your cost-per-hire (CPH) is like levelling up in a strategy game. The more data you have, the smarter moves you can make to optimise your hiring.
Here's the breakdown;
Step 1: It's All About the Inventory
- Inside Costs: This is your HR team's time. Figure out their hourly rate based on salary, then multiply by how many hours they spend interviewing, screening resumes, etc. Don't forget those sneaky "hidden costs" like training and any fancy recruiting software you use.
- Outsourcing Expenses: Every time you use a job board, hire an agency, run background checks – there's a price tag. Tech hiring might mean niche sites like GitHub – those fees definitely add up!
Step 2: Who Made the Team?
Count up how many folks you hired in the time period you're measuring (maybe it's a month, a quarter, or a whole year).
Were they full-time devs? IT experts? Even interns-turned-employees count. The point is to be consistent so you can compare your CPH over time.
Step 3: Time for the Tally
Add up ALL your costs from Step 1. This is your total recruiting spend for that time period.
Step 4: The Magic Formula
Ready for some super simple maths?
Total Recruiting Costs / Total Number of Hires = Cost-Per-Hire
Boom. Now, you've got an average cost for bringing each new team member on board.
Note: It's helpful to break this analysis down by the type of tech role - CPH for a senior software engineer versus a help desk specialist might be wildly different, and knowing that lets you budget smarter!
Here's an example of what this looks like in the real world.
Imagine you're a tech startup that spent $120,000 on recruiting last year and ended up hiring 30 amazing devs and IT folks. Crunching the numbers, your cost-per-hire comes out to $4,000 per person, which is the tech average.
Okay, but what does that $4,000 cost of hire figure REALLY mean?
- Benchmarking: Is that number good, bad, or average? Industry stats would help you compare against similar companies (we'll find some of those later to weave in!).
- Breakdown: Could that $4,000 be lowered? Maybe a chunk of it was on job boards that weren't yielding great candidates.
- The Bigger Picture: If you need to hire 20 more people next year, that $4,000 figure helps you forecast your budget needs.
However, while we're here, cost-per-hire isn't just about the dollar amount. It's a tool for making savvy decisions:
- Streamlining Success: Maybe you discover your in-house team rocks at interviews, so you shift away from expensive agencies.
- Quality Counts: If a low cost-per-hire means rushed hiring and bad fits, that hurts the company MORE in the long run.
- Getting Ahead of the Game: Cost-per-hire, tracked over time, lets you spot trends. Is it getting more expensive to find top talent? Time to rethink your strategies!
And with all this data, you can maximise your spending, identify any sinks, bottlenecks, or problems in your process, and ultimately get the most bang for your buck - again, while keeping everyone happy along the way.
The High Cost of Hiring Tech Talent
Now, let's make this tech-relevant, because in today's cutthroat world where all the top contenders of million/billion companies are seeking out the top talent, and there's a global shortage on trained unicorns, hiring great tech is quite the opposite of finding a bargain in the clearance aisle.
The tech world moves at light speed, and the price tag for top-tier developers and IT specialists reflects that.
Let's look at the numbers:
IT Specialists: Your Support System Doesn't Come Cheap
At the low end of IT specialists, you MIGHT get lucky and snag a talented IT expert for around $15,000 (all costs included). But that's the starting point.
Most companies are likely looking at $20,000 or MORE to fill that critical role. Why? Because the best IT folks know their worth, especially if they're young, motivated, and excited to be trained and nurtured for years to come.
Developers: The Stars of the Show (With Salaries to Match)
Be prepared to shell out for developers too, with a ballpark figure for hiring a skilled developer around the $30,000. Yes, that's per person.
With big tech and startups all vying for the same pool of talent, salaries, benefits, and even fancy signing bonuses get pushed sky-high. If you want the best, you must pay for it by standing out from the crowd and giving people what they want.
If you don't, they'll simply see straight through you.
These aren't numbers to scare you; they're numbers to empower you. Understanding this reality lets you:
- Forecast Like a Pro: Need to hire five new devs next year? That's a hefty chunk of your budget; better start planning now!
- Focus on Retention: Losing a great tech employee is expensive. Making sure they're happy and challenged can be cheaper than constantly re-hiring.
- Get Creative: Can't compete on salary alone? Think flexible hours and amazing projects; those perks matter, too!
Comparison to Other Industries
Ever compare notes with a friend who recruits in, say, HR or sales and feel a pang of jealousy? Yeah, tech hiring is a whole different ball game. Here's a quick reality check:
- "Average" Doesn't Apply: That mid-level manager who costs $10,000 to hire? Forget it. A decent dev will probably run you double that.
- Specialists = $$$: Think niche skills like cybersecurity or machine learning – those folks can practically name their price.
And for clarity, if you're interested in what's driving up these costs,
- It's a Seller's Market: Way more awesome tech jobs exist than there are people to fill them. You're not just hiring; you're competing.
- Big Tech Sets the Pace: Google and Amazon can throw insane perks at people. Even if you're a startup, you're affected by the standards they set.
- Skills Have a Shelf Life: Tech changes fast. Finding someone who knows the hottest new framework? That's gonna cost you big time. Then say a new AI company comes out the woodwork and hits a good investment streak, they might just snatch up dozens of the best.
- Location, Location... Doesn't Matter: Remote work is the norm in tech. That means top talent could be ANYWHERE, forcing you to compete globally.
The bottom line here is that tech innovation is amazing... but fueling it with the right people isn't cheap! Understanding these unique costs is the first step to:
- Realistic Budgeting: No more getting blindsided by how long it takes to fill that critical dev role.
- Rethinking "Must-Haves": Can you train someone in-house on that niche skill instead of paying a premium for outside experience?
- Retention is King: Losing a great employee hurts more in tech. Invest in keeping your stars happy!
Strategies to Optimise Hiring Costs
Okay, it's time to get strategic about those tech hiring costs. The goal isn't to become a cheapskate; it's to get the biggest bang for your recruiting buck! Here's how:
Candidate Experience is Your Secret Weapon
A good candidate experience is like free advertising. Happy candidates (even those who didn't get the job) are more likely to recommend your company, saving you money down the line.
Think fast replies, clear communication, and even helpful feedback to those who aren't the right fit this time. No ghosting. You're valuing people's time, and you're showcasing that you're the best at what you do.
Remember, for many people, you're the first impression and only line of contact with your company, so make sure you're setting the standard in every interaction.
Your Employees Are Headhunters in Disguise
There's no reason why you can't tap into your existing team to maximise the hiring process. After all, they spend a lot of time online, on social media, attending networking meetings, and so on.
Offer referral bonuses and make it EASY for employees to suggest great people they know. Referred candidates are often higher quality, meaning fewer wasted interviews and less time spent on job boards.
Ditch the Pricey, Find the Niche
Yes, LinkedIn is great, but don't forget about tech-specific hubs and platforms like We Are Developers, GitHub, or industry forums. You'll find passionate candidates, often at a fraction of the cost of general job boards.
Bootcamps are Your Farm Team
Partnering with coding boot camps or tech schools is a win-win. You get access to eager, up-to-date talent before anyone else. Host a workshop, sponsor a project... it's great for your brand AND your hiring pipeline.
Promote from Within
Upskilling your current rockstars is cheaper than finding new ones. Clear promotion paths, training opportunities, and challenging projects keep people engaged and save you from those hefty senior-level hiring costs.
Smart hiring in tech isn't about cutting corners. It's about using every tool at your disposal – referral programs, tech-savvy sourcing, building your brand as a great workplace – to get the best talent at the best possible price.
The Role of Technology in Reducing Hiring Costs
You're hiring in tech, so you, of all IT recruiters, need to be savvy to what technology is out there to help you hire fast and efficiently. And you need to - old-school recruiting tactics just won't cut it.
The right tech tools can save you time, money, AND your sanity when finding those elusive devs and IT pros.
Let's dive in.
The Smarter Way to Source: Forget endless job boards and generic resumes. Tech-savvy platforms use AI to understand what "React expert" ACTUALLY means, matching candidates to your open roles with laser focus.
Automate the Tedium, Free Up Your Team: Screening resumes by hand? Ain't nobody got time for that. Automated tools can handle those first rounds while scheduling platforms take the back-and-forth out of setting up interviews.
Introducing Your New Recruiting Sidekick: WAD
Think of WeAreDevelopers as your inside source for top tech talent. Here's why it's a game-changer:
- WAD Speaks Your Language: It's tuned in to those specific tech skills – frameworks, libraries, the whole geeky toolkit your devs need.
- Show, Don't Tell: WAD plugs into GitHub and the sites where devs actually showcase their work. See the code, not just the resume.
- Smarter Hiring = Lower Costs: WAD's data tracking helps you see what's working (and what's not), letting you refine your process to lower that cost-per-hire over time.
Tech hiring doesn't have to be a budget drain. By investing in platforms like WAD, you gain efficiency, better hires, AND save serious cash in the long run.
Conclusion
Hiring top tech talent ain't cheap, that's a fact. But being smart about cost-per-hire isn't about cutting corners; it's about unlocking your full potential as a recruiter. Remember:
- Happy Candidates = Your Best Ad Treat every applicant with respect, even those who don't get the job. Word of mouth matters in tech!
- Your Team is a Talent Goldmine Referral programs tap into hidden networks of amazing devs and IT folks.
- Niche is Nice Don't just throw money at generic job boards. Get targeted with those tech-specific platforms.
- Train, Don't Drain Can you upskill someone in-house rather than paying top dollar for an outside expert?
And we're here to help.
Platforms like WAD aren't a luxury; they're an investment in efficiency. Think less time wasted on unqualified candidates, faster time-to-hire, and data that shows you what's WORKING so you get even better over time.
Ready to Level Up Your Hiring Game?
Don't let those rising tech costs slow you down. Embrace these strategies, explore tech solutions, and become a lean, mean recruiting machine! If you're ready to see how WAD can specifically transform your hiring process, get started with us today.
The future of tech talent is out there, and now you've got the tools to find it.
