Managing recruitment spending has become a critical priority for Human Resource (HR) and Talent Acquisition (TA) Teams. As hiring needs grow, recruitment costs can quickly spiral out of control, especially when companies work with multiple search firms. 

Finding the right balance between cost control and attracting top talent is a common challenge. However, vendor management software can provide a comprehensive solution. How? In short, it can help you gain better visibility and control over your recruiting efforts while maximizing cost efficiency.

In this blog post, we'll explore the true cost of recruitment, the challenges of managing multiple vendors, and how a VMS like Aquent Scout can optimize spending throughout the hiring cycle. 

Understanding your recruitment costs

Recruiting expenses often include more than just salaries and job postings. When broken down, recruitment costs fall into two main categories: hard and soft factors. 

• Hard costs include the more obvious expenses—job board fees, recruiter commissions, background checks, etc. According to the Society for Human Resource Management (SHRM), these comprise about 40% of a company's recruitment spending. SHRM's latest data estimates the average cost per hire is about $4,700, but this figure can rise significantly for executive roles, often exceeding $28,000. However, these totals don't account for soft factors, which are much tougher to quantify.
  
• Soft costs include the time and resources your HR Team and other departmental leaders spend on administrative tasks like vendor onboarding, compliance checks, screening applicants, and invoicing. These costs may not be as visible but can quickly add up, especially when spread across multiple search firms and candidates. 

Given these additional expenses, experts tell SHRM that the true cost of recruiting can be three to four times the position's salary. Without an automated solution, tackling both hard and soft costs can seem impossible. Fortunately, that's what a smart VMS is designed to do. 

The challenges of managing multiple vendors

Working with multiple search firms can complicate recruitment efforts, leading to inefficiencies and rising costs. While having access to various recruiting partners may seem beneficial—and indeed, it is—it often creates administrative headaches that slow down the hiring process.

Here are some of the common challenges HR teams face when managing multiple vendors:

• Lengthy onboarding processes: Each recruiting firm requires separate onboarding, contract negotiations, and compliance checks. This time-consuming process delays recruitment, which means critical roles go unfilled and productivity declines.
• Multiple contracts with different terms: Juggling different contract terms, payment schedules, and vendor expectations can create confusion and increase the risk of compliance issues. Also, hidden administrative or pass-through fees can significantly inflate recruitment costs—and spotting them is much more difficult when bouncing between different agreements. 
• Lack of visibility: It's challenging to tell how much you spend on each engagement without a centralized system automatically tracking expenses. Likewise, you can't effectively monitor vendor performance, which prevents you from making informed decisions. 

Ultimately, these obstacles can lead to poor cost control, wasted resources, and inconsistent hiring outcomes. Here's the good news: A VMS system can simplify the process from start to finish. 

A smart VMS that drives cost savings

What is a VMS? Simply put, it's a cloud-based software platform that centralizes and streamlines the process of managing recruitment vendors. With vendor management software, you can coordinate all your professional recruiters through one interface rather than disparate systems and manual processes. 

The result? Greater control, visibility, and efficiency. A smart VMS goes a step further, providing unique capabilities for optimizing recruitment spending and driving cost savings. 

Here are three ways a smart VMS can help you save on recruitment:

The 5 best VMS platforms for recruiters in 2024.

By: Aquent Scout

1. Comprehensive visibility and cost control

A smart VMS provides talent acquisition teams with rich visibility into the entire recruitment process. Its benchmarking tools and granular analytics enable HR professionals to track key metrics, evaluate performance, and make informed, data-driven decisions. Whether you want to filter insights by business unit, geography, or job type, a smart VMS offers a comprehensive view of your recruitment efforts to help uncover hidden inefficiencies.

With full control over cost, you can set placement fees at the requisition level, ensuring your budget is optimized for each role. Plus, it allows you to monitor key performance indicators (KPIs) like:

• Submission volume.
• Acceptance rates.
• Interviews resulting from acceptances.
• Placements vs. posted positions.
• Time-to-fill.
• Average placement fees.

By tracking these KPIs over time, you can identify trends and evaluate vendor performance, ensuring you only work with top-tier recruiters. A good VMS Customer Success Team will also assist you by providing quarterly business reviews and ongoing guidance to help you achieve the best results.

This level of transparency allows you to identify opportunities to cut costs, focus on high-performing vendors, and ensure that recruitment efforts remain efficient.

2. Streamlined processes

One of the main contributors to high recruitment costs is the administrative burden of managing multiple suppliers. A smart VMS addresses this by accelerating and automating vendor onboarding, eliminating the need for lengthy manual processes. The platform handles procurement for both existing and future vendors on your behalf. Each recruiting firm completes a brief onboarding process and agrees to standardized terms—superseding your prior contracts. This standardized approach simplifies vendor management, freeing up your HR Team to focus on more strategic initiatives rather than administrative tasks.

Additionally, a smart VMS makes it easy to choose the best recruiters for your specific hiring needs. First, you can choose from a list of preferred suppliers you know and trust. Or, you can leverage AI. AI recruiter matching capabilities connect you with the search firms most likely to fill your roles successfully—that way, you don't have to worry about qualified candidates falling through the cracks.

Centralized communication tools further streamline the process by consolidating all correspondence with recruiting firms, allowing your team to manage candidate feedback, coordinate interviews, and share job announcements within a single platform.

Together, these features shorten time-to-hire, which directly impacts cost-per-hire. In fact, research shows companies with a time-to-hire of under three weeks see a 50% reduction in recruiting costs.

3. Simplified billing and risk management

Managing multiple invoices from various vendors can be a financial and administrative burden. A smart VMS simplifies this by consolidating all billing into one concise invoice, streamlining financial management, and allowing for better budget tracking. 

A guide to choosing the best vendor management system. 

By: Aquent Scout

A centralized billing system ensures you only deal with one point of contact for administrative support, saving your team time and eliminating confusion. This also improves financial planning, as all recruitment costs are organized under one set of payment terms.

In addition, a smart VMS ensures compliance by managing onboarding documents, tracking certifications, and maintaining a centralized record of candidate interactions. This adherence to company policies and regulatory requirements minimizes the risk of compliance violations, further reducing potential costs like monetary fines or legal fees.

Achieve cost savings with a smart VMS like Aquent Scout

In today's competitive labor market, recruitment isn't just challenging—it's increasingly expensive. The good news? Vendor management systems can help you reclaim control of your expenses. 

From unprecedented visibility over costs and performance to streamlined and simplified processes, Aquent Scout is the smart VMS system that optimizes your spending from top to bottom. Best of all, it's 100% free to use. With our platform, your company can streamline vendor management, reduce administrative burden, and, ultimately, lower costs. 

Ready to unlock the savings your team needs to succeed? Contact Aquent Scout today to schedule a demo and discover how our VMS can help your business optimize recruiting.