Cost per hire and time to fill: how to measure and cut both

Two numbers tell you most of what you need to know about a hiring process: what each hire costs and how long each seat stays empty. Cost per hire and time to fill take minutes to calculate, and both are easy to push down in ways that quietly hurt the quality of the people you hire. According to SHRM's 2026 Recruiting Benchmarking, median time-to-fill for nonexecutive roles is 39 calendar days.

How do you calculate cost per hire?

Cost per hire is total recruiting spend divided by the number of hires in the same period. The formula is: cost per hire = (internal recruiting costs + external recruiting costs) / total hires. Internal costs are what your own people and systems spend on hiring. External costs are what you pay outside parties. Use one period, such as a quarter, for both sides.

What counts as internal and external cost?

Internal costs include the share of recruiter salaries spent on hiring, hiring manager and interviewer time, referral bonuses and recruitment software. External costs include job advertising, agency fees, assessments, background verification, candidate travel and joining bonuses. Onboarding and training are better tracked separately.

A worked example (illustrative)

The figures below are illustrative only, not benchmarks. Picture this: a mid-sized Indian services company makes 10 hires in one quarter.

Cost per hire in this example is ₹15,50,000 divided by 10, or ₹1,55,000. The useful part is the breakdown. If two agency hires account for most of the external spend, compare their retention with direct hires before deciding the fees were too high.

How is time to fill different from time to hire?

Time to fill usually runs from requisition approval, or job posting, to offer acceptance. Time to hire starts when a specific candidate enters the process and ends when they accept. SHRM's State of Recruiting 2025 measures time-to-fill from requisition to offer acceptance, which is a sensible internal standard.

A worked example (illustrative)

The dates here are illustrative. A requisition is approved on 1 March. The eventual hire applies on 20 March and accepts the offer on 10 April. Time to fill is 40 days and time to hire is 21 days. With a 60-day notice period, the person joins on 9 June, which is 100 days after approval.

That last number, sometimes called time to start, is the one the hiring manager actually feels. In India it can be far longer than time to fill, so report both. Our guide to notice periods and offer dropouts covers how to protect that final stretch.

What are the benchmarks for time to fill?

Published time-to-fill benchmarks range from about 39 to 71 days, depending on the source, year and definition. None of them is an Indian benchmark, and none includes an Indian notice period. Use them as a sanity check, not a target. Employ's 2025 data, reported by HR Dive, shows an average of 63.5 days, down from 67.7 days in 2024.

The Gartner figure is old but useful because it runs to the start date. According to the same TechTarget report, that 2019 figure was 30 days longer than in 2010.

What does an empty seat cost?

An empty seat costs the output the role was meant to produce, plus the extra load on the people covering it. That figure is called the cost of vacancy. There is no standard benchmark, so calculate a conservative floor for your own roles. Using annual CTC as the baseline is simple and defensible, because the business expects a role to return at least what it pays.

Here is an illustrative calculation. A role carries an annual CTC of ₹24,00,000. Spread over roughly 250 working days, that is about ₹9,600 per working day. If the search takes 20 working days longer than planned, the floor cost of the delay is about ₹1,92,000.

For revenue roles, the real cost is usually far higher. A sales manager's empty territory or a delayed product release does not show up in a recruiting budget, but it shows up in the quarter's results.

What does a bad hire cost?

A bad hire costs far more than the fee or the salary paid. In a CareerBuilder and Harris Poll survey from December 2017 of 2,257 US hiring managers and HR professionals, 74% of employers said they had hired the wrong person for a position, at an average cost of $14,900 per bad hire. The figures are US and dated, but the causes still apply.

The same survey points to where things go wrong. The top reason, cited by 35%, was a candidate who lacked the skills but whom the manager expected to learn quickly. Next, at 33%, was a candidate who lied about qualifications. The main effects were lower productivity (37%), time lost recruiting a replacement (32%) and lower work quality (31%).

Both top causes are process failures. A clear scorecard catches the first. Proper verification catches the second.

Why is the cheapest hire often the most expensive?

The cheapest hire is often the most expensive because cost per hire measures what you spent to get someone in the door, not what they cost once inside. A hire made quickly through the lowest-cost channel, without a proper screen, can turn a modest saving into a replacement search, lost output and a damaged team. The CareerBuilder 2017 survey found that 32% of respondents named time lost recruiting a replacement as an effect of a bad hire.

The defensible position is to treat cost per hire as one of three numbers, alongside time to fill and quality of hire (for example, retention at 90 days and the manager's rating at six months). Optimise all three together. Any one of them alone can be gamed.

How do agency fees fit into cost per hire?

Agency fees are an external recruiting cost and belong in the calculation. In India, most permanent placements are billed as a percentage of annual CTC. A GoodSpace industry blog from 2026 puts typical fees at 8.33% to 12.5% for junior and mid roles, 15% to 20% for senior and hard-to-fill roles, and 25% to 33% for executive search.

Those are industry blog ranges, not audited data. According to a Hyring industry blog from 2026, 18% GST is added on agency fees. As a simple illustration, a fee of 8.33% equals one month of CTC, so on the ₹24,00,000 role above it would be ₹2,00,000 before GST.

Compare that with the cost of vacancy for the same role. A month is roughly 21 working days, and 21 days at ₹9,600 is about ₹2,01,600. So if an agency shortens the search by a month, the fee and the vacancy floor it saves are of similar size (still illustrative, and before GST). Our page on how recruitment fees work in India explains models and replacement terms in detail.

How can you reduce cost per hire and time to fill?

The bigger savings usually come from removing waiting time and rework. Switching to a cheaper channel matters less. Delays tend to sit between stages, when a resume waits for review or an offer waits for approval, so fix those gaps first. Employer brand helps as well. The LinkedIn Talent Blog reported in 2015 that companies with a strong talent brand spend on average 43% less per hire.

Use this checklist:

• Agree a one-page scorecard, with a salary band, before sourcing starts.
• Approve the budget and offer range at requisition stage, not at offer stage.
• Book interview slots for the panel in advance for the first two weeks.
• Cap the process at a set number of rounds and stick to it.
• Give candidates feedback within one or two working days.
• Track referrals as a channel and reward them properly.
• Screen for notice period and intent at the first call.
• Start background verification as soon as the offer is accepted.
• Measure days spent waiting between stages and fix the longest wait first.
• Review agency use by retention and time to fill, not fee alone.

Outsourcing can help at volume. A Morgan McKinley RPO case study for an Irish commercial bank in 2017 reported cost per hire down 17% for direct hires. That is a vendor's own single case study, not a market norm. Our explainer on what recruitment process outsourcing is covers when RPO makes sense, and the recruitment process steps guide shows where each delay usually sits.

When do these metrics mislead?

Cost per hire and time to fill mislead when they are tracked alone or compared across very different roles. A senior hire will always cost more and take longer than a graduate hire. Averages that mix the two hide what is really happening. Report them by role level, location and channel, and always alongside a quality measure.

They also mislead when the period is short. A quarter with two senior hires and three junior hires will look very different from one with the reverse mix. Look at rolling six or twelve-month figures before drawing conclusions.

Finally, a low time to fill can simply mean the bar dropped. If early attrition rises as time to fill falls, the process got faster at hiring the wrong people.

What should you measure first?

Pull your last ten hires and calculate cost per hire, time to fill and 90-day retention for each one, split by channel. That small table usually shows where the money and the days go. If the answer points to sourcing or screening, our permanent recruitment service is built around interviewed shortlists, and you can share your hiring brief to compare options.