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Why You Should Focus on Reducing Recruitment Agency Costs in 2023

29 March 2023

Businesses have long used temporary workers to help with workforce challenges, and demand for them is higher than ever.

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Many businesses understand the importance of reducing recruitment agency costs, together with other expenses to save money and boost profitability in 2023, as well as to guard against the impact of a recession. Businesses of all sizes can lower their operating expenses and keep a healthy bottom line by employing the proper strategies. It can be difficult to manage agency workers, especially if you have numerous suppliers and locations but if effectively managed, you can have direct cost savings can all be attained by managing labour expenditure effectively.

It is no secret that more contract and temporary workers are being used in the UK. In fact, the UK has the largest contingent workforce in Europe, accounting for 5% of the total workforce.

Despite the fact that 81 percent of businesses use recruitment agencies to help them find temporary workers, 59 percent of those businesses do not have a process in place to evaluate the agencies' performance. It is impossible to ensure that your temporary workforce is legally compliant or that you are being charged the correct amount of money without routine assessment and auditing of recruitment agencies.

It's impossible to manage and control money if you don't know how much you're spending with recruitment agencies and to understand the breakdown of their costs. You will receive multiple invoices and see management information presented in a variety of ways if you work with multiple agencies.

When agency margins are not properly managed, they can quickly spiral out of control, resulting in overcharging. This can lead to a lack of pay parity, conflict, and inefficient spending, as well as worker pay rates that are not visible.

A neutral vendor managed service provider could produce direct cost savings annually of between 6 percent and 12 percent of your total spend through the proper standardisation of pay rates and margins, managing employers national insurance, and managing holiday pay.

The bottom line

The key to surviving in 2023 is cutting expenses. If you're not careful, you might overspend on recruitment costs and lose money that could have been used for other parts of your business or saved. Recruitment costs can be very expensive.




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