Recruiters say AI now handles much of the screening work, so employers may start asking what a fee of a share of a new hire's salary actually pays for.
Artificial intelligence is taking over parts of hiring, and recruiters say that could change how agencies charge. Many agencies bill employers a percentage of a new hire's first-year salary. As software does more of the work, some clients may ask what that fee covers.
David Berwick runs Adria Solutions, a recruitment agency in Stockport, England. He told CNBC that if an agency is only finding resumes and forwarding them, AI makes that service harder to justify. In his words, businesses can already automate much of that work themselves.
Adecco, a Swiss staffing company, said in February that it had six AI recruitment agents running in the U.K. and France. Across the group, AI has supported more than 2.5 million candidate interactions, around half outside normal working hours. Niki Turner-Harding, a senior vice president there, said the tools do not make hiring decisions. A human recruiter does, and candidates can ask to speak to a person.
Recruiters disagree. Matt Collingwood of VIQU Group in Birmingham says he sees reasons for fees to hold or even rise if the value delivered grows. He said VIQU's turnover has grown 47% in 18 months, partly because of its focus on relationships. Paddy Lambros, CEO of AI recruitment platform Dex, argues fees are high because the process is slow and inefficient, and that AI may eventually push costs down.
Collingwood predicted only a third of today's agencies may survive the next five years. James Wright of Velocity Leadership said AI lets him do work that once took a team of five. He believes 60% to 70% of staff at the big executive search firms could lose their jobs. That is his opinion, not a measured outcome.
Employers who pay a recruiter can ask what the fee covers beyond finding resumes. Chris Stirling of Stirling Q&R put it this way: AI makes the easy part faster, so the fee now has to be earned on the hard part, such as judging whether a candidate has truly done the work.
If you pay a recruiter a percentage fee, ask what the money buys beyond finding resumes, since software now handles much of that.
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