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Recruitment ROI calculator

Compare the return on agency hiring against building it in-house, and see what each hire really earns you.

Your numbers

Market range is typically 15 to 25%
Use the Cost per Hire calculator to estimate this
Agency vs in-house
 
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How is recruitment ROI calculated?

Subtract your recruiting cost from the value the hires deliver, divide by the recruiting cost, then multiply by 100. A positive figure means your hiring is returning more than it costs. Comparing agency and in-house paths shows which delivers the better return.

How we calculated this

We cost two ways of making the same hires. The agency route is your hires a year, multiplied by the average salary, multiplied by the agency fee percentage. The in-house route is your hires multiplied by your internal cost per hire. The saving is the difference. It is a cost comparison rather than a full return calculation: it assumes both routes produce the same person, and that is the assumption to test hardest. The number stands for the fee you would keep by hiring directly at your current volume, before you allow for what the agency's screening was doing for you. The working, the assumptions and the sources are below.

New to the term? Read the plain-English definition of cost per hire in the HR Glossary.

Your working
Assumptions
  • One agency fee applies to every hire. Real fees vary by role and seniority; the default 18% sits inside the commonly quoted market range of 15 to 25% of first-year salary, which has no single primary source. Replace it with the rate in your own terms of business.
  • Internal cost per hire is your input. If it came from the cost per hire calculator with interview hours counted, it is realistic. If you typed a round number, the saving is overstated by whatever you left out.
  • The routes are treated as all or nothing. Most employers run a mix: in 2025, 13% of Australian employers who recruited used a recruitment agency or government employment service, and 20% did for hard-to-fill roles against 8% for easier ones. Your realistic saving is on the roles you can fill directly, not on the whole volume.
  • Quality is held equal. A cheaper hire who leaves inside a year wipes out the saving several times over, so if bringing hiring in-house means less rigour on selection, the number above is the best case rather than the expected one.
Sources
  • Jobs and Skills Australia, "Methods and Successful Methods of Recruitment", REOS spotlight (PDF) (13% of recruiting employers used a recruitment agency or government employment service in 2025; 20% for difficult-to-fill roles against 8% for easier ones; online job boards were the method behind 40% of successful hires), February 2026
  • SHRM, "SHRM Releases 2025 Benchmarking Reports" (US cost per hire of US$5,475 non-executive and US$35,879 executive as a reference for the internal figure; only 20% of organisations track quality of hire), 15 October 2025
  • Agency fees of 15 to 25% of first-year salary, and the default of 18%: the commonly quoted market range, with no single primary source. Your own agency terms are the source that matters.

What to do about it

The saving above is real only if in-house hiring finds the same person the agency would have found. So the decision is which roles genuinely earn a fee, and how you keep selection rigorous on the rest. These steps are for whoever manages the recruitment budget or the agency relationships, whether or not they approve the headcount.

1

Sort last year's hires by how they were filled and how they turned out

One line per hire: agency or direct, days to fill, still employed at 12 months, manager rating. If agency hires are no better and no faster, you are paying a fee for convenience. If they are better, the fee is buying something and the honest saving is smaller than the number above.

2

Write the agency rule down

Agencies for genuinely scarce skills, confidential searches, new locations, and roles you have failed to fill directly within an agreed number of days. Direct for everything else. Get it agreed by the people who currently pick up the phone to an agency, and put it in the hiring manager guide so it holds when someone is under pressure.

3

Cost the in-house route properly before you promise the saving

Recruiter time, hiring manager hours, job boards, assessments, referral bonuses and the system that holds the process, plus any screening the agency used to do that you will now do yourself. Present the saving net of all of it. Finance will believe the next number you bring them.

4

Renegotiate the fee on the roles that stay with agencies

Fees are a percentage of first-year salary, and volume, exclusivity, a defined shortlist deadline and a longer replacement guarantee are all worth points. A couple of points across your annual agency spend is often worth more than moving one more role in-house.

5
Where a tool helps

Replace the agency's screening deliberately

Part of what the fee bought was a filtered shortlist. Rebuild it: structured interviews with the same questions for every candidate, the same scoring sheet, a validated fit read alongside the skills screen, and reference checks that ask how the person works rather than whether they turned up. Direct hiring that skips this turns a fee saving into a bad-hire cost.

In-house only wins
if the fit holds.

Compono Hire is an applicant tracking system (ATS) that measures fit before you make the offer. It runs the pipeline, scheduling and offers you would expect from any ATS, and adds the part an agency's shortlist used to give you: a validated work personality and culture fit read on every candidate, scored the same way every time. For reach, idibu, Compono's job distribution tool, posts your roles to job boards from one place.

That is step 5 done inside the process. The saving above assumes the people you hire directly are as good as the ones the agency found. Hire is how you make that assumption true, and how you show finance that it held.

See how it works
Compono Hire
400+
stores on one standard process

Common questions

Is it cheaper to hire through an agency or in-house?

Agencies charge 15 to 25% of first-year salary per placement, so at volume they are usually the more expensive path. Referred and in-house hires cost 40 to 60% less, though in-house only wins if you maintain hire quality.

What costs should I include for in-house hiring?

Count recruiter time, hiring-manager hours, advertising and job-board spend, assessment tools, and any referral bonuses. Leaving these out makes in-house look cheaper than it is and skews the comparison against the agency route.

How does idibu fit in?

idibu is Compono's job-distribution tool. It posts your roles across 450+ agencies and job boards in 17+ countries from a single place, giving you agency-level reach while you keep hiring in-house and hold down your cost per hire.

This page is general information, not legal advice. We check figures annually and update them on a best-efforts basis, but employment rules change and we cannot promise everything here is current or complete. Before you act on it, confirm the detail with the relevant authority in your country or your own adviser. Last reviewed July 2026.

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