ROI of technology investments in the Hiring Process
ROI of technology investments in the Hiring Process

“Nothing we do is more important than hiring people. At the end of the day, you bet on people, not strategies.”

-Lawrence Bossidy

As very succinctly pointed by theex-CEO of General Electric (GE), the key contributor to the success of any organisation is its people, not just the strategies or the technology. But choosing the right people who fit in the culture of the organisation is greatly enabled by the hiring strategy and the underlying technology that eases the hiring process.

Calculating the return of investment or to say the value delivered by a recruitment software is not as easy as in case of a CRM platform or automation software. There are several non-quantifiable factors at play such as you can’t quantify the value that should be generated by a candidate for any role. But there are multiple factors to justify the investments made with recruiting software via identifying the benefits accrued.

For calculating the ROI, let’s take two companies – Company A & Company B. Both are identical in every possible way barring Company B uses Vega HR – an end-to-end Recruitment management suite, whereas Company A uses excel/spreadsheets and emails to manage their recruitment.

Time Spent with and without an Applicant Tracking System (ATS)

Before we dive into the numbers, we need to make some assumptions:


  • No. of people involved: In any hiring process there are multiple professionals involved from your team. On average there are 3 rounds that every hire has to go through. Let’s say it comprises of 1 HR, 1 Requisition Manager & 1 of his subordinates & 1 Senior executive from your company.
  • Time spent by an HR on hiring & related activities: Typically taking any organisation, the work duration is 8 hours (use the template if you want to come up with exact numbers). Let’s assume the HR Professional dedicates 5 hours of his time in hiring-related tasks.

Company A: The recruiter here must go through a series of mail chains to collate the requisitions raised, deal with cumbersome emails.


No. of hours spent each week = 5X5 = 25 Hours

Hourly cost to company = $20

Total cost of hiring = 20X25 = $500

Company B: The recruiter here has a platform where all the information is stored in a single place. Most of the processes are automated, and he is not exhausted by the repetitive tasks. With Vega HR, recruiters are guaranteed to save more than 40% of their time.


No. of hours spent with RMS software = 25 X 0.6 = 15

Hours Total Cost of hiring = 15 X 20 = $300

Cost of the RMS Platform = $25 (Vega HR – Earth cost)


Total Savings = 500 – (300 + 25) = $175/month

This is the savings when you consider just one recruiter if yours is a large organisation the savings could be HUGE.


Annual Savings = $2100/recruiter


The value associated with a Good Hire Vs a Bad Hire

Hiring is a cumbersome process, it is like fishing, sitting on the bank of the river doesn’t guarantee you a good catch. Fishes have great nutritional value but not all are great (like catfish). Feeling confused?


To make matters worse, unlike fishing, there are multiple fishers (read recruiters) operating in the same space at the same time.


Finding the right fish is analogous to finding the right candidate for the job. Putting the opportunity to a prospective bright candidate at the right time, at the right place has the highest probability of conversion.


Coming back to our examples of Company A (without an RMS) and Company B (with an RMS).


Company A: With manual handling and screening of candidate profiles, the HR with Company A can go through only so many CVs. Comparing profiles and creating hotlist of candidates is bound to have some biases due to mental fatigue. Another challenge with this approach is with the sourcing of candidate profiles. Owing to the limitation of manual handling of profiles, the HR professional will only source CVs from 2 or 3 sources at max.


Company B: The HR Professional with Company B, uses Vega HR. The system offers ML-based CV parsing making life easier for the HR professionals. Besides, it uses AI algorithms to ranks CVs, eliminating any biases and making sure the process is as objective as possible. With integrations to leading job boards and social media channels, Vega HR offers a reach second to none. With Vega HR you can cast a wider net (reach) and hence gives a significant boost to the possibility of hiring the best candidate.


Cost of a Bad Hire: As per the US Department of Labour - the cost of a bad hire can reach up to 30% of the employee’s first-year earnings.

Putting this into perspective, let’s assume if the cost a company is paying to an employee is $20/hour (which could be way higher).

Calculating the annual cost to company = 20 ($/hour) x 8(hours/day) x 5 (days/week) x 4 (weeks/ month) x 12 (for a year) = $ 38400/ year

Net Loss on a bad hire = 38400 x 0.30 = $11520/year With Vega HR, a comprehensive recruitment suite, with a cost of just $25/month/user you can save a lot.


How Vega HR helps you avoid a bad hire

The Vega HR platform offers a very comprehensive set of suits to make sure you are hiring the best candidate. Let’s dig a bit deeper into how it reduces the bad hire probability:


  • With its advanced ML-based candidate profiling and resume ranking, it sets the first level of filter towards reducing a bad hire
  • Pre-interview tests can be easily created through the ever-growing question bank of the platform. At the same time, a recruiter can create any new module of questions to assess whether the candidate will fit into the work culture and contribute positively to the environment
  • You can tweak your recruitment strategy in terms of the number of screening and interviews any candidate must go through. The interviewers share their assessment feedback through the platform so that the next interviewer can reflect and assess the candidate accordingly
  • The platform makes it easier for the recruiter to timely follow up with the candidates. The powerful and insightful analytics feature of Vega HR predicts the joining probability of any candidate using which recruiters can take a more proactive approach towards a hire
  • The learning and development module of the platform makes sure employee quickly adapts to the company’s culture & new position and hence delivers as desired

These factors are very critical for any organisation to make sure they are following a good hiring strategy and identify any hiring bottlenecks. The recruiters at Company A will find it difficult to monitor each of these aspects related to a good hire.


Whereas, the recruiters at Company B, who are using a recruitment management system that offers capabilities like Advanced CV Parsing & Ranking, Interview Assistant, Job Portal and Social Media integration, CVs Database management (Blacklisted Candidate log) and much more, have significantly higher chances of landing a good hire.

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