This article compares the costs of outsourcing the hiring process to a staffing firm versus managing hiring internally.
As Ted Hughes wisely said, "Nothing is free. Everything has to be paid for." So of course when a staffing company approaches you about a potential partnership, it's only natural to question the costs involved.
And just like every cringey car insurance commercial tells you, it's because "we'll save you time and money!" It is important, however, to ask the right questions to ensure you are making the best choice for your company. So please, don't take it from us (you know... the staffing company). Rather, let the data and numbers guide your decisions.
According to the Society for Human Resource Management (SHRM), hiring one employee costs a staggering $4,700 on average. But wait, it gets worse. Many employers state that this number can increase as the salary increases, up to three to four times the salary amount. How is this possible? There are many indirect costs associated with hiring that employers often overlook.
These are considered "soft costs," which can accrue very quickly. They encompass the salaries of HR staff, department managers, and other decision-makers who spend time reviewing resumes, crafting job listings, conducting interviews, etc. Additionally, each day that remains understaffed results in lost revenue (Navarra, 2022).
If those numbers aren't surprising you yet, hold my beer—let's refer to Forbes next. Forbes discusses how the costs associated with a poor hiring choice can cause significant financial fallout. Using information gathered from Career Builder, 74% of employers report an average of $14,900 loss per bad hire. This takes into consideration recruiting efforts, onboarding costs, staff training, etc. (Ignacio, 2023). I'll give you a moment to pick your jaw up off the floor.
Next we will look at the costs associated with training your new hires. The chart below depicts the average training expenditure budgets for small, midsize, and large companies. In this article, total training spending is defined as "All training-related expenditures for the year, including training budgets, technology spending, and staff salaries." (Freifeld, 2023).
Training expenditures increased in 2022 and include costs associated with training facilities, travel, internal training development, and equipment. Companies will spend an average of 16% of their budget on these types of technology and learning tools.
Companies invest significant amounts of money and resources in staff training, which is essential for setting their employees up for success. This investment can become very costly if employee turnover is high and you're not selecting the right candidates. Forbes discusses how 20% of new employees will leave their jobs within the first 45 days of hire (Ignacio, 2023).
Before you panic and start a GoFundMe, let's examine how the costs associated with outsourcing to a staffing company compare.
Staffing companies will take care of some of these training costs. The cost to onboard employees is one cost you can offload onto your staffing company. Additionally, staffing companies screen candidates to ensure their experience matches the job requirements, resulting in less training needed.
Staffing companies already have a pool of qualified talent. Many companies struggle to target the right candidates, which can delay the hiring process. This results in lost revenue when there is employee turnover (Maurer, 2023). Further, they could lose preferred candidates during the interviewing process to competitor offers, resulting in another time delay (Navarra, 2022).
Hiring temporary employees allows companies to verify if they are the right cultural fit. Think of temporary staff assignments as an extended working interview. You will end up saving money with a more productive and dedicated staff that are good cultural fits, rather than hiring permanent employees immediately and hoping for the best (Houseman, 2000).
Some staffing companies offer healthcare insurance and other benefits. According to Staffing Industry Analysts from a 2008-2019 study, 70% of staffing firms offer healthcare insurance and more than half offer other benefits like dental insurance, vision insurance, etc. (Osborne, 2019). By offering benefits, staffing companies alleviate that financial burden from your company.
We will leave you with some final thoughts and considerations. It's important to be selective about which staffing firm you choose to partner with; it's your investment after all. The pioneering firms will offer employee benefits, a continued physical presence for both company and employee, non-binding agreements over contracts, and additional incentives just to name a few. Now with more information and data uncovered, go forth and find the hiring solution that's right for you!
Here are some of the benefits that Infinity Staffing Solutions provides to remain trailblazers in the industry:
Healthcare Insurance
Additional benefits, including Vision insurance and Dental insurance
Service-based agreement, rather than a contract. Our agreements are only based on the service and placement we provide. Infinity Staffing will not charge your company if you do not select our candidates. This means there are ZERO upfront costs or commitments associated with our staffing company.
Numerous additional incentives
Employee of the month including gift cards
Water/sports beverages on warm summer days
Employee holiday gifts ($20-$30 per employee including a scratch lottery ticket and personalized holiday card)
Employee birthday cards and balloons delivered to them on their birthday
Ensure there is a physical presence including check-ins if desired. Staff members will walk the company floor, follow up with our associates weekly via phone calls, email, and text messages, weekly client visits to meet with leads/supervisors/managers.
Of our total client base, 85% have reported a lack of physical presence from other agency representatives.
Lower-than-average employee turnover
2024 YTD for Infinity Staffing Solutions employee involuntary turnover is 27% (excludes factors like company layoffs, permanent hires, assignments completed), which is 2% under the industry average. The 2021 Bureau of Labor Statistics reported a 29% national average of involuntary turnover.
"Did we just become best friends?" If so, please reach out to us at sales@staffindy.com.
Literature Cited
Bureau of Labor Statistics (2021, March 11). Job Openings and Labor Turnover—2021. Bureau of Labor Statistics. https://www.bls.gov/news.release/archives/jolts_03112021.pdfÂ
Freifeld, L. (2023, November 14). 2023 Training Industry Report. Training Magazine. https://trainingmag.com/2023-training-industry-report/Â
Houseman, Susan N. 2000. "Why Employers Use Flexible Staffing Arrangements: Evidence from an Establishment Survey." Upjohn Institute Working Paper No. 01-67. Kalamazoo, MI: W.E. Upjohn Institute for Employment Research. https://doi.org/10.17848/wp01-67
Ignacio, A. (2023, December 18). The True Cost of a Bad Hire and How to Avoid Them: Self Management Group. Forbes. https://www.forbes.com.au/brand-voice/uncategorized/defining-a-bad-hire-more-than-just-poor-performance-a-bad-hire-is-not-limited-to-an-employee-who-simply-underperforms-in-their-role-it-encompasses-individuals-who-fail-to-align-with-the-company-cu/
Maurer, R. (2023, April 19). Job Advertising: Missed Opportunities and Easy Fixes. Society for Human Resource Management. https://www.shrm.org/topics-tools/news/talent-acquisition/job-advertising-missed-opportunities-easy-fixesÂ
Miller, S. (2022, April 11). SHRM HR Benchmarking Reports Launch as a Free Member-Exclusive Benefit. Society for Human Resource Management. https://www.shrm.org/topics-tools/news/benefits-compensation/shrm-hr-benchmarking-reports-launch-free-member-exclusive-benefitÂ
Navarra, K. (2022, April 11). The Real Costs of Recruitment. Society for Human Resource Management.  https://www.shrm.org/topics-tools/news/talent-acquisition/real-costs-recruitment
Osborne, J. (2019, December 6). North American Staffing Company Survey 2019: Insights Into Staffing Companies’ Attitudes, Practices and Strategies & Cumulative Index to 2009-2018 Surveys. Staffing Industry Analysts. https://mytalentlaunch.com/wp-content/uploads/2019/12/North-America-Staffing-Company-Survey-2019-Full-Report-20191206-1-1.pdfÂ
Congratulations New Employees
Latest Staffing Industry Trends and Statistics:
2025 Federal Business Changes
Tax policy expirations
Many tax policies from the Tax Cuts and Jobs Act (TCJA) of 2017 are set to expire in 2025, including the 20% deduction for qualified small business income.
Corporate Transparency Act
This act requires certain businesses to file information about their beneficial owners with the Financial Crimes Enforcement Network (FinCEN).
Tax brackets
The IRS has announced new tax brackets for 2025, including:
10%: $0–$11,925
12%: $11,926–$48,475
22%: $48,476–$103,350
24%: $103,351–$197,300
Qualified transportation fringe benefit
The monthly limit for this benefit increases to $325 in 2025, up from $315 in 2024.
Per diem rates
The standard lodging rate for federal travelers increases to $110 in 2025, up from $107 in 2024. The M&IE reimbursement rate tiers are also revised.Â