Cost per hire is the average total recruiting cost to fill one position, calculated using the SHRM-ANSI standardized formula, one of the few genuinely standardized metrics in HR measurement.

The formula, and what counts

Cost Per Hire = (Total Internal Costs + Total External Costs) ÷ Total Hires

Internal costs cover recruiter and sourcer time allocated to hiring, interview-panel and coordinator time, and ATS or recruiting-tech cost amortized per hire. External costs cover job board and portal spend, agency or placement fees, background verification, assessments and any relocation or sign-on costs. A company spending ₹1,80,000 in internal cost plus ₹3,20,000 in external cost across a quarter, making 10 hires, works out to (₹1,80,000 + ₹3,20,000) ÷ 10 = ₹50,000 per hire. There’s no single reliable India-wide average to benchmark against, published figures online vary enormously depending on role level and source, so it’s far more useful to track your own cost per hire over time than to chase an external number. One figure that is more consistently repeated: Indian recruitment agency contingency fees commonly run around 8.33% of annual CTC, close to one month’s salary, with retained executive search running considerably higher.

Frequently asked questions

Is cost per hire the same as an agency’s placement fee?

No, the agency fee is just one external-cost line item. Cost per hire totals every internal and external cost, not just what you pay a third party.

Does cost per hire include onboarding costs?

No, the standard formula stops at the hire itself. Costs after that point fall under a broader cost of turnover calculation instead.

Should cost per hire be compared across companies?

Carefully, if at all, since what counts as an internal vs external cost varies by how rigorously each company tracks it, making cross-company comparisons unreliable.

Calculate your own with the Cost Per Hire Calculator, and see our guide to staffing and recruitment agencies in India.