Why Is Hiring So Expensive?
Hiring costs include far more than agency fees. ZipUpp is exploring how AI can reduce both financial costs and the time lost to repetitive recruitment work.
Having spent many years in finance, I have always been deeply interested in how market prices are formed.
Generally, when substantial profits remain in a market, new entrants arrive. As competition intensifies, prices fall, profit margins narrow, and the market gradually moves toward an equilibrium.
Yet when I look at the recruitment industry, something seems unusual.
Despite many years in which new Companies have continued to enter the recruitment and staffing business, the cost employers pay to hire people remains remarkably high.
Put simply,
Are hiring costs simply too high? That is the question at the heart of my concern.
Why should hiring one person cost so much?
Recruitment agencies commonly charge success fees equal to tens of percent of a new hire’s annual salary.
If a Company hires someone on an annual salary of ¥6 million and pays a 30% success fee, that fee alone is ¥1.8 million.
Job advertising and other hiring channels can also require substantial spending before a hire is made.
I am not rejecting this business model. When a service provider and a Company that values the service both willingly agree to a transaction, it is a legitimate business.
But I view this market from another angle.
Could technology fundamentally change this cost structure?
There is enormous room for change
The fact that a high-cost structure has persisted for so long also suggests that significant room for innovation remains.
Realizing both that there was enormous room for change and that this represented a major business opportunity was one of the principal reasons I decided to start ZipUpp.
Could AI and technology make the hiring costs and processes long accepted as normal far more efficient and rational? That conviction became ZipUpp’s starting point.
We believe that by using AI to streamline much of the conventional recruitment process, it may be possible to reduce hiring-related costs by up to approximately 90% compared with traditional methods.
How could a reduction of that scale be possible? I will explain the mechanism in detail in the next article.
Money is not the only cost we can reduce
The costs ZipUpp aims to reduce are not only financial.
There is the time recruiters spend reviewing large volumes of résumés, comparing Candidates, conducting initial screening, and repeating similar questions and checks.
These are also substantial real costs for a Company.
When AI organizes information, compares it, and supports initial screening, HR professionals can spend less time on repetitive work and concentrate on the work that genuinely requires people.
Conversations with Candidates. Final decisions. Developing people after they join. Building the organization.
Creating an environment where recruiters can devote their time to this higher-value work is another of ZipUpp’s goals.
Can we change what hiring takes for granted?
Technology can transform prices and systems that have long been treated as inevitable.
I believe the recruitment market may now be reaching that moment.
Lower cost. Greater speed. And better matches for both Companies and Candidates.
Why can ZipUpp make this possible? The next article will explain how.
We hope you will look forward to ZipUpp’s launch.
ZipUpp is taking on the challenge of changing what the hiring industry considers normal.