What’s the True Cost of Staffing Agency Spend?
- coledavisbusiness
- Jun 23
- 2 min read
The Numbers
Many companies pay a 20%-30% fee on a new hire's salary for agency fees. When a new hire costs $100,000 that could be $20,000-$30,000 for just one hire.
The staffing industry in the US in 2024 was worth $189B. A large part of that $189B was
12-13 million temporary workers that have a markup of anywhere from 25%-75% on their hourly rate due to agencies. This can mean that the average software engineer hourly rate of $70.92 could lead to an extra $17.73-$53.19 extra for each hour a temporary worker works. Over the course of a year, the normal $70.92 would equate to $147,513.6 (assuming 2080 working hours). If that worker is placed through an agency that could lead to an extra $36,878.4-$110,635.2 of spend on one worker.
The Problem
Why do so many small to medium sized companies turn to staffing agencies?
It is not strategy - it is survival.
Many SMBs turn to agencies for a few reasons:
Lack of Internal Hiring Infrastructure
Urgency to Fill Roles
Limited Candidate Pipeline
Perceived Expertise or Convenience
Avoiding Bad Hires
While these reasons are understandable, they’re expensive — and more importantly, avoidable.
The Solution
Most of what agencies provide can be built internally and for a significantly reduced price. The right systems, strategy, and process design is crucial to avoiding potentially massive amounts of extra spend.
Assuming that a medium sized company hires 10 new employees each year, even a 20% reduction in the need for outside agencies can save $40,000-$60,000 for that year. Over time the amount of savings increases considerably based on hires.
This is where HighPoint Advisory comes in. We work with SMBs to build efficient internal systems that lead to significant cost savings over the companies lifetime.
Here is how we help:
Process Mapping - We analyze current hiring workflows and identify any and all waste. This is the foundation of creating a better process.
Time-to-Hire Reduction - Through better forecasting, structured intake, and simplified approvals, we help you cut days off the hiring timeline.
Quality-of-Hire Improvement- We help define job roles and criteria, assist with structured interview implementation, and consistent evaluation that lead to better-fit hires.
Waste Elimination - Whether it's duplicate systems, unclear roles, or time-draining approvals, we root out inefficiencies that slow down your team.
If your business is growing and you're relying on staffing agencies to keep up, you're likely spending more than you need to — and moving slower than you should.
At HighPoint Advisory, we help you take back control of your hiring process with lean, data-driven strategies tailored to your team.
Book Your Free Hiring Process Audit
We’ll review your current process, uncover waste, and identify quick wins to improve speed, quality, and cost.
Or reach out directly: cole@highpointadvisoryllc.com
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