Hiring Models
Why do agency costs rise at scale?
The short answer
Agency costs rise at scale because most fees are charged per successful hire, so total spend increases broadly in line with recruitment volume. There may be negotiated rates, but the commercial model remains transactional. As hiring becomes continuous, a subscription or internal capability can spread cost across a larger annual plan and lower effective cost per hire.
Agency cost is often reviewed one invoice at a time, which hides the shape of annual spend. A company hiring a handful of roles a year sees a proportionate cost; a company hiring dozens through the same commercial model sees costs that outgrow the value delivered.
Per-hire fees compound
The transactional model charges for the outcome of a single search. It contains no mechanism for cost to fall as volume rises, because there is no shared capacity, no reusable market knowledge and no fixed infrastructure to amortise. Every hire begins the fee curve again.
Urgency weakens negotiating power
Scale-ups often approach agencies when a role is already overdue. Time pressure removes commercial leverage, so negotiated rates rarely hold when speed matters most. Structural cost problems compound when urgency becomes a repeat feature of the hiring plan.
Multiple suppliers create duplication
Wider supplier lists feel like a hedge but usually produce duplicated outreach, ownership disputes and inconsistent employer messaging. The total activity increases without a corresponding increase in market coverage, and the company pays for the friction.
Knowledge is repurchased on each search
Nothing about a completed search carries forward. The next assignment begins with another briefing meeting, another market walk-through and another consultant learning the business. The company is buying the same context repeatedly rather than building a compounding asset.
What this means in practice
Compare agency spend with the annual cost and output of a dedicated hiring capability once recurring specialist volume becomes material. The decision is a shape-of-spend question, not a value judgement about individual suppliers.
The Saiyō view
Saiyō sees per-hire fees as the correct model for occasional specialist assignments and the wrong model for continuous specialist demand. The right conversation is not whether agencies are expensive, but whether the commercial model matches the pattern of hiring the company actually has.
Explored in depth
This topic is explored in more depth within Recruitment Agencies at Scale: Where the Model Works and Breaks.
Frequently asked questions
Related questions
When should a company stop relying on recruitment agencies?
A company should reduce agency reliance when external support has become the default for recurring roles rather than a selective response to genuine exceptions. Warning signs include rising annual fees, repeated briefing, inconsistent candidate experience and an internal team that remains unable to build proactive capability. The answer is usually to rebalance the model, not eliminate every agency relationship.
Read the answerAnswerHow many recruitment agencies should a company use?
A company should use enough agencies to cover genuinely distinct specialisms without creating duplicated effort or inconsistent representation. For most specialist hiring, a small panel with clear role ownership is stronger than a large uncontrolled supplier list. The correct number depends on geography, function and whether internal or embedded teams already provide core coverage.
Read the answerAnswerWhen is a recruitment agency still the best option?
A recruitment agency is often the best option for an unexpected vacancy, a genuinely niche requirement, a short-term hiring spike or a market where a specialist consultant has distinctive relationships. It can also be appropriate when annual hiring volume is too low to justify dedicated capability. The flexibility of paying for an individual outcome remains valuable in the right context.
Read the answerRelated guides
The Economics of Technology Hiring
Cost per hire is only one variable. Real hiring economics balance total annual investment, speed, quality and the business cost of vacancies remaining open.
Read the guideAuthority GuideChoosing a Hiring Model for a Technology Scale-up
The right hiring model depends on the pattern of hiring, not the company size. Most mature scale-ups run a deliberate portfolio, not a single provider.
Read the guide