Top 7 Ways To Reduce Recruitment Costs In 2023

Top 7 Ways To Reduce Recruitment Costs

Recruitment can be expensive and it is no wonder why agencies and in-house teams are constantly searching for ways to reduce recruitment costs.

Every HR professional is under the same old pressure when it comes to cutting costs. We are sure we all agree that cutting costs is a good thing, but knowing you should and knowing how are two very different things.

Well, fear not, we have compiled 7 actionable ways that can help you reduce recruitment costs in 2023:

  1. Increasing staff retention
  2. Improving hiring processes
  3. Increasing direct hires
  4. Building your employer brand
  5. Hiring more freelance talent
  6. Considering recruitment process outsourcing
  7. Utilizing the power of recruitment software

And don’t worry. For each of these 7 tips, we have written in-depth explanations and actionable steps on how you can go about them.

Enjoy reading and reduce your recruitment costs now!

1. Increase Staff Retention

Use Recruiter Apps - Recruiteze

This has to be the first on our list because it’s such a no-brainer. In marketing terms, the cost of acquisition is five times higher than the cost of retention. The exact same applies to recruitment marketing (recruitment is marketing, after all).

The logic is simple.

If you keep more of your staff on board for longer, you need to recruit fewer new people in. Sure, retention does take investment too, but much less than acquisition does.

So, how do you increase your staff retention? Here are some suggestions.

Create a Beacon Culture

The first step to hiring these right people is creating the right culture. Your workplace is a beacon; you draw in what you radiate.

Create a profile of who you’re looking to attract. That’s your starting point. Then work out what is attractive to those people. That’s where you need your culture to be. If you’re looking to attract razor-sharp techs into a start-up environment, you’re probably going the wrong way about it if your culture is super strict, suited, and booted.

If you hire the right people, they’re infinitely more likely to stay with you longer-term because they buy into what you’re offering. There’s no right or wrong culture – you can be whoever you want to be – but there is a right and wrong culture for you.

Additional read: 4-Day WorkWeek: Pros, Cons, and Hidden Costs 2023

Develop your Training Offering

Score Candidates - Recruiteze

Progression is one of the most significant factors influencing candidate decision-making, but HR professionals and other business leaders are still glossing over it. In fact, studies have shown that career progression is the number one reason staff leave a role.

If you’re not offering exceptional training and development, your employee retention is probably suffering.

An obvious way to improve, and reduce recruitment costs, is to invest in training. You could employ a full-time in-house trainer or invest in external training or online learning platforms.

You need to send your employees the message that you invest in them, or they’re likely to find someone who will.

Embrace Flexibility

Thanks to COVID19 global pandemics, flexible working is a major trend that will definitely continue in 2023 too. Meaning, people are increasingly looking for opportunities that can be more flexible than the traditional 9 – 5.

This might mean allowing late starts and late finishes, or it might mean a four-day week. It might mean considering part-time options or job-sharing. The possibilities to increase your flexibility are endless. Using good online recruiting software, like Recruiteze, can also increase your flexibility and bandwidth.

Ultimately, the more flexible you can be, the wider the pool of candidates who want to work with you.

Your candidate retention is very likely to increase, as candidates who would leave to work in a more flexible environment find they can stay instead. Plus, this isn’t even really a business cost. It might seem counterintuitive, but multiple studies have shown that flexible workers are actually more productive.

Increase Salaries

Measure Results - Recruiteze

It might seem like an expense too far, but if you work out what you’ll be saving on recruitment costs if you can increase your employee retention… increasing salaries is often an obvious move.

Just don’t see it as a fix-all solution. Sticking a zero on the end of it might work in the short term, but long term, you’re going to need to look at the more holistic factors above. Your aim should be to ensure your salaries are market competitive – to minimize the risk of an employee jumping ship for a quick increase. Introducing a bonus system could be a very cost-effective option to consider.

Food for thought.

2. Improve Your Hiring Process

Create A Target Candidate Profile - Recruiteze

Cost-per-hire is a ratio, right?

How much you’re putting in vs. what you get out. In other words, if you can get more out, then your recruitment is more cost-efficient. With that in mind, an excellent way to reduce recruitment costs is to increase the number of hires your recruitment process can yield… pushing cost-per-hire right down.

So how do you increase your candidate yield?

It’s about identifying mistakes in your process, mistakes that push good candidates away and could easily (and cheaply) be avoided. If you can minimize these errors, you’ll find you’re getting more qualified candidates through.

A better-qualified pool of candidates means you’re more likely to find the right candidate more quickly – which will also improve your employee retention. It’s a double whammy.

Here are some common elements of the recruitment process to consider overhauling.

Barrier to Application

  1. How long does an application take?
  2. Can candidates submit their details straight from LinkedIn?
  3. Can candidates just send you a resume, or do they have to fill in loads of forms?

The recruitment process is about balance.

How do you find the best people but also provide an optimum candidate experience? At the application stage, you should be aiming to lower your barrier to the application as much as possible.

We’re in a candidate-driven market at the moment, so the onus is on you to convince people to apply. If you make it difficult to do so, they simply won’t. Do you really want to risk losing the perfect candidate because you made it complicated to get in touch?


Nothing more quickly undermines the candidate experience than a lack of transparency. Employers can get away with a multitude of sins if they’re honest about them. Build-in appropriate processes to ensure your candidates are always kept in the loop.

This means sending acknowledgment messages when you receive resumes, suggesting clear timelines, and delivering the news that applicants have been unsuccessful. Consider putting an FAQs section on your website to ensure candidates always know what to expect from you.

Don’t go quiet on your candidates – this is an easy way to improve your process, increase your candidate yield and therefore reduce recruitment costs.


You’ve almost definitely heard this one before, and we know the apparent objection. “Our hiring process takes a long time because we want to be sure we’re getting the right person.”

There are ways you can ensure the same rigor of interviewing process while still cutting the time down. And if you increase your transparency simultaneously, candidates are much more likely to bear with you.

To shorten your process without compromising, look at things like how many stages you have and how to spread out they are. For instance, if you want candidates to go through a first, second, and third stage interview – why not put all three on the same day?

If you need your candidates to meet a whole series of managers, why not get everyone together in the same interview rather than running hundreds of separate interviews? Using technology like video interviewing can also cut down the first interview stages, as can running group interviews and open days.

One of the biggest challenges for the discerning HR professional can be internal hoops you‘re expected to jump through.

If your management team is taking a week to give you feedback on a 30-minute interview, you’re fighting an uphill battle.

Your role is to secure buy-in across the business for HR – explain why speed is so important and introduce processes to facilitate that, from grassroots to CEO level.

Without business buy-in, your job is more difficult than it needs to be. Another way to speed up your hiring processes is by using our free online recruiting software.

Recruize helps you remove a few of the redundant processes you have to deal with each day. Keep reading to learn more.


OK, so this isn’t so much an aspect of your recruitment process so much as something that can really help you improve every aspect.

Knowledge is power in the digital age, more so than it’s ever been. This is for you if you really want to improve your process, increase your candidate yield, and reduce recruitment costs.

If you don’t survey your candidates with the best will in the world, you’re guessing what their experience was. You might think you’re losing out because your process is slow when in reality, you’re doing something that makes candidates feel rushed, for instance.

You should survey both unsuccessful applicants and successful new hires to find out as much as possible. By asking for direct feedback, you’re allowing yourself to get right to the heart of what you might be doing wrong – so you can implement change.

3. Increase Direct Hires

Utilize Smarter Phone Screening - Recruiteze

As an HR professional, it’s likely that one of your largest recruitment costs is your spending with external agencies.

External recruitment agencies can be absolutely amazing, but many of us are too reliant on them and can see costs spiral as a result. With many agencies charging fees of up to 20% of first-year salary, increasing direct hires is an obvious way to reduce recruitment costs.

Which all sounds very obvious, we know. In practice, though, it’s undoubtedly easier said than done. If you’re short on ideas, here are some ways you can start to increase your direct hires:

  • Social media – if you’re not active on social media yet, you really, seriously need to be. This is without a doubt a valid place to be investing your recruitment budget, and can result in a 50% reduction of recruitment costs! Here’s our guide on social media recruitment and social recruiting strategies.
  • Better job adverts – if your job adverts aren’t doing you justice, you’re missing out on direct candidates. Invest a little more time and effort (or money into hiring a copywriter), and you’ll make sure your marketing materials are working as hard as they can for you. It’s about assessing why agencies can find candidates if you can’t – they emphasize the right things, and exceptional job descriptions tend to be one of them.
  • Increase referrals – Referrals are one of the highest quality and lowest cost sources of hire. If you haven’t already, seriously consider developing an internal and external referral incentive program and marketing it proactively. You can keep track of these referrals within your recruiting systems.

4. Build Your Employer Brand

Implement Creative Recruitment Strategies To Weed Out Candidates For You

We’ve written before about building your employer brand, and that’s because it’s an absolutely critical part of your recruitment strategy.

Many companies get stuck in the rut of short-term hiring strategies, particularly if their intake needs are high.

That’s a mistake.

Short-term campaigns can be marvelous, but they should always be complemented by a long-term strategy to build your employer brand.

Bluntly, the stronger your employer brand is, the less hard you have to work to attract candidates, the more brand-aligned the candidates you’ll attract (seeing your retention increase), and the more you’ll reduce recruitment costs.

Imagine – a world where candidates come to you, instead of you having to go to them…

Here are a few critical points you should note down about employer brand and how it can help you reduce recruitment costs if you are too busy to read the whole piece:

  • Secure senior buy-in – Work with your leadership team to ensure you’re all on the same page, and you might find you can get budget when and where you need it.
  • Develop your employer value proposition – Go back to the very beginning, and nail down your proposition. Go to market and research what other people think your brand is. We discuss this more in the article.
  • Embrace content marketing – Content marketing is the most important thing your business can be doing, both from a recruitment and a commercial perspective. Build your employer brand, increase your reach and improve your visibility – it’s a no-brainer.
  • Think multi-channel hub – We live in an increasingly multi-touch, multi-channel environment. While the consumer industry has been quick to pick up on this, recruitment lags behind. If you want to build your employer brand, it’s not enough to target one channel.

5. Hire More Freelance Talent

This might seem like a strange suggestion in an article suggesting ways to reduce recruitment costs. After all, freelance talent is traditionally seen as a major expense next to permanent talent – the rates they command are certainly higher.

Hiring permanent staff can seem like a no-brainer when you put it like that: why pay someone more to do exactly the same job?

Except, that’s not quite the whole story.

The major advantage of freelance talent is that you can hire flexibility on a need-only basis. Freelancers have a significant role to play in helping to reduce recruitment costs for that reason because this flexibility allows you to better weather the storms of economic change.

We don’t live in an era of market stability, so having access to talent that allows you to reign in costs when needed is valuable. Rather than setting yourself up to endure potentially costly redundancies, freelance talent can ‘plug a gap’ when you need them without draining your resources when you don’t.

Here are some ways to ensure freelancing works well for your business.

Inclusion is Key

One of the significant objections to hiring more freelance talent is that they sit ‘outside’ the business and aren’t privy to the same information, subject to the same roles.

Instead, companies should be aiming to integrate and include freelance talent as much as possible. This will earn loyalty and ensure a better standard of work while ensuring streamlined workflows between freelance and permanent employees.

Consider setting up virtual meetings and include freelancers in any company or team progress meetings you’d expect their permanent counterparts to attend.

It’s also critical to embed them in your culture. Where possible, inviting freelancers to spend time on-site or attend a company induction of sorts can go a long way. Likewise, including invitations to team drinks, annual parties, and the like.

Your freelancers are and should feel, like part of the team if you want to get the best out of them.

Assign a Manager

Assigning your freelancers a clear manager will increase accountability, which is vital to drive optimum performance. One of the reasons you might not be getting the best out of your freelance talent is that they feel they stand somewhat outside the normal structures.

By assigning a manager and giving clear positive and negative feedback, you’re setting up a system of accountability. Freelancers are unlikely to give their best work if they never receive praise for doing so and unlikely to fear turning in shoddy work if they don’t feel accountable. Build that link.

Improve Communication & Transparency

The success of your freelance relationships will depend on the ability to return to good freelancers time and again. Just as you wouldn’t hire a freelance who had let you down when you first worked with them, a freelancer isn’t going to prioritize you for no reason.

Treat your freelance talent with respect, not like the talent on tap.

Aim to build a long-term relationship and build in as much transparency as possible. Popping across an email every few weeks and letting your freelancers know how things are going can count for a lot, even if you don’t have work for them.

Think of it as a simple progress report, updating them on when you think you might need them (if at all) and reassuring them that you’ll be staying in touch. Treat your freelancers well, and they’ll be much more likely to treat you well.

It’s common courtesy, but it also makes good business sense.

6. Consider Recruitment Process Outsourcing

This might contradict what we have written about in the sections above, but hear us out.

Sometimes it is better to outsource some of your processes than do them in-house. It’s simple, and you can do the calculation yourself. Just work out how much it will cost you to hire freelancers on in-house recruiters to do the job. Then calculate how much agencies would bill you.

And there you have it.

That is how you will know which option is better for you and which one helps you reduce recruitment costs.

However, we do advise you to read our guide on recruitment process outsourcing for better understanding and context.

7. Utilize the Power of Recruitment Software

Recruitment software can help you a lot in terms of reducing recruitment costs. We won’t go much in-depth on how recruitment software can help you cut down the recruitment costs since we have already written in great detail about the ROI of the applicant tracking system.

However, we will mention a few key points for those busy recruiters that can’t manage to go through the whole article:

  1. If your HR teams need 30 hours per week for recruiting, and the rate is on average $20 per hour, then that is $600 per week. However, with good recruitment software, this can drop down to only $37 per week. Meaning, you can save $437 per week!
  2. Recruitment software also helps you make better decisions, reducing the probability of bad hires and consequentially removing any cost of bad hires.
  3. Reversely, you will be making better decisions, and the financial reward of a good hire can increase your budget tremendously.
  4. Recruiting software eventually frees up labor hours which the recruiters can use for other productive tasks such as marketing and revenue generation.
  5. With software, you can build talent pools, which allow you to save tons of dollars in job marketing and recruitment advertising. And, having a great talent pool will mean a faster filling of roles.

If you are already using recruitment software, but you don’t quite feel like it is getting a job done, then you might consider switching to another, more effective one that can help you reduce recruitment costs even more.

Luckily, our recruiters have analyzed in-depth the most popular and widespread recruitment software on the markets and found the best alternatives for each of them based on the use case. Here are the recommended alternatives for each one:

  1. Workable Alternatives
  2. Breezy HR Alternatives
  3. RecruiterBox Alternatives
  4. JazzHR Alternatives
  5. SmartRecruiters Alternatives
  6. ZohoRecruit Alternatives
  7. BambooHR Alternatives

Final Thoughts

From reducing churn to improving hiring process, from leveraging freelance talent to cementing your employer brand, there are many ways you can reduce recruitment costs. It sounds deceptively simple, and the reality is often much more challenging.

Still, nonetheless businesses are rarely taking all the steps they could be to reduce recruitment costs… despite cost reduction almost always being a stated priority. It’s time to demystify the process and take action!