The True Cost of Hiring Technical Talent: A Comprehensive Analysis

Attracting and retaining technical talent is proving difficult by the day for very specific reasons. While much emphasis is placed on offering enticing compensation packages, the hidden costs associated with hiring a single technical candidate are often overlooked. These costs can have a significant impact on a company’s budget, making it essential to understand the components that drive them. Lets delve into the detailed breakdown of expenses incurred in hiring one technical talent, with an average cost-to-company (CTC) of ₹15 lakh per annum (LPA).

Breaking Down the Cost of Hiring Technical Talent

To analyze the cost of hiring, let us first look at the spends documented by businesses alike, and make assumptions agreed upon by the industry leaders. In doing so, we consider the following key variables:

1. Platform Fee for Sourcing Candidates Many companies rely on platforms such as Naukri and LinkedIn to source technical candidates. The monthly aggregate subscription fee for these platforms is approximately ₹50,000 on average for businesses hiring a minimum of one candidate per month. Since this cost is constant, regardless of the number of candidates sourced, it forms the baseline expense for recruitment activities.
2. HR Team Costs for Candidate Screening The HR team plays a pivotal role in the initial screening of candidates. Assuming a minimum of 600 candidates are screened per position, each requiring 25 minutes of HR time, the total time spent amounts to 250 hours. With two HR personnel involved, earning ₹420/hour, the cost for screening rounds is as follows: ₹420/hour × 250 hours = ₹105,000 per HR personnel. For two HR personnel: ₹105000 × 2 = ₹2,10,000.
3. Engineering Head Costs for Technical Interviews The technical interview process requires the expertise of engineering heads. Out of 600 screened candidates, 24 progress to the engineering round, where each candidate is interviewed twice for one hour each. This results in 48 hours of interview time. Engineering heads are compensated at ₹1050/hour, leading to the following cost: ₹1050/hour × 48 hours = ₹50400.
4. HR Head Costs for Final Round Interviews Assume after the engineering round, 12 candidates proceed to the final HR round. Each interview lasts for one hour, conducted by HR heads earning ₹250/hour. The cost for final round interviews is: ₹420/hour × 12 hours = ₹5460.
5. Background Checks and Pre-Joining Verifications Background checks and verification processes are essential to ensure the credibility of selected candidates. In order to establish a neutral ground, BGV is passed on to external audit vendors, who charge a minimum of Rs.2450/candidate for identity, educational, postal address, employment, and legal background checks. totally to 2450*12 = ₹29400
6. Technical Assessment Platform Costs To evaluate technical skills, many companies subscribe to assessment platforms, costing approximately ₹15,000 per month. Like the platform fee for sourcing candidates, this is a fixed cost.

Calculating the Total Cost of Hiring One Technical Talent

Let’s compile the individual cost components to determine the total cost of hiring a single technical candidate:

1. Platform Fee for Sourcing Candidates: ₹50,000
2. HR Team Screening Costs: ₹2,10,000
3. Engineering Interview Costs: ₹50,400
4. HR Head Final Round Costs: ₹5460
5. Background Check Costs: ₹29400
6. Technical Assessment Platform Costs: ₹15,000

Total Cost: ₹360,000

Cost Per Candidate Hired

Given that the entire hiring pipeline leads to one successful hire, the total cost of ₹360,000 is attributed to hiring that single technical talent.

Percentage of Candidate’s CTC Spent on Hiring

The CTC of the hired candidate is ₹15,00,000 per annum. To determine the percentage of CTC spent on hiring: (3,60,000/15,00,000)*100 = 24%

Key Insights and Implications

1. Significant Hiring Costs: Companies spend approximately 24% of a candidate’s annual CTC on the hiring process alone. This percentage highlights the need for efficient hiring practices to minimize costs without compromising quality.
2. Role of Fixed Costs: The platform fees for sourcing candidates and technical assessment platforms constitute a significant portion of the overall hiring expense. Streamlining these costs or leveraging alternative platforms may help reduce expenditure.
3. Optimizing HR and Engineering Efforts: With HR and engineering heads contributing heavily to the recruitment process, optimizing their time allocation could further reduce costs. Leveraging automation tools and AI-driven screening systems can enhance efficiency.
4. Cost-Effective Background Checks: The expense associated with background checks, though comparatively small, could be reduced by partnering with cost-efficient verification agencies.

Zelevate addresses such high costs and inefficiencies of traditional hiring processes with a cutting-edge, AI-driven platform designed to streamline recruitment. This is how Zelevate solves the challenges highlighted above:

• Reduced Hiring Timelines: Zelevate delivers pre-Interviewed, qualified candidates within 48 hours, enabling businesses to hire within 5 days—a 3X faster process compared to traditional methods.
• Minimized Resource Drain: By leveraging a network of 700+ industry experts to conduct technical interviews, Zelevate eliminates the need for in-house engineering leaders to divert their time from core projects. These provide an unbiased, neutral perspective to how well a candidate/applicant fits into any company based on the job requirement/description posted by the company, ensuring a one-to-one match between candidate and hiring company.
• Comprehensive Candidate Insights: Employers receive a thorough 360-degree evaluation, including skillset reports, interview playback, and expert feedback, ensuring an unbiased and informed hiring decision. The report is crafted to give hiring managers all the information they readily need to make an informed recruitment decision.
• AI-Powered Precision: Using cutting bleeding-edge technologies to complement hiring decisions, Zelevate’s advanced AI matching engine aligns candidates' technical expertise, experience, and job preferences with employer requirements, reducing mismatched hires and costly re-evaluations.

Collectively, with Zelevate, organizations achieve a 60% reduction in hiring efforts, making the process not only cost-effective but also efficient and reliable. Let Zelevate transform your recruitment strategy and help you secure top technical talent with unparalleled speed and precision.

Reach out to us for your hiring needs.