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Recrutiment & Employment Confederation

What does the cost of recruitment look like in 2022?

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Guest blog by Simplicity

As the current cost of living and inflation is on the rise, the recruitment industry is following suit. Since Covid, the UK job market has substantially changed. Some sectors in the market can benefit from the change; the others, however, will encounter challenging times. Right now, recruiters are in the best position possible due to the continuous strengthening of the labour market. The market is extremely candidate-driven, owing to a skills shortage. Therefore, recruiters are in demand by businesses needing candidates, more specifically, highly skilled candidates. But before you can start recruiting, you must set up your business.

Setting up your business

Initially, setting up a recruitment business doesn’t cost a lot. The first cost will be registering your business, which is around £12. Next, you will require the cost of creating the company’s presence (website, phone/contact number, ads). Depending on what you settle for, this amount can range from a small fee to thousands. Then, once you have set up your business, it is time to move on to the most critical part – placing candidates.

In recruitment, it is well-known cash is King! Typically, recruiters set up their business from their own assets. Therefore, cash flow will be tight once your recruitment business is first up and running; consequently, managing cash wisely is essential. In addition, candidates you put forward may not get the job, resulting in a cash flow pause. Thus, even if the market is booming and recruiters can benefit from this, your business cannot grow into a success if you aren’t placing candidates.

What rates can recruiters charge?

There are sectors certainly struggling to fill vacancies with skilled people. Additionally, many knock-on effects are occurring due to the current skills shortage. For example, the current skills shortage in tech jobs is resulting in recruiters competing for the best talent. Moreover, prices are rising due to this shortage, putting further strain on business owners. However, despite it being an unfortunate time for the firms, recruiters are prospering with the chance to improve their cash flow by charging more for their service.

However, finding and placing the right candidate for a job could get harder and harder as the market grows. With the highest record for vacancies, candidates could become even pickier with where they work. However, with their large built-up talent pool, this will not be the case for established recruitment agencies.

Nevertheless, there are many benefits recruiters can take advantage of right now. Firstly, recruiters can vastly improve their profit margins. This is because of the high demand for staff, allowing recruiters to charge premium fees for the right candidate.

Useful reports

Looking to improve your profit margins? Download our most recent Margin Index report here to get the latest insight on UK recruitment profit margins during Q1 2022 compared to the previous quarter (Q4 2021).

This is a guest blog contribution for the REC website. The views expressed by guest writers reflect the individual's personal opinions.

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