Future of AI in Recruitment: Bidding Farewell to Traditional Hiring and Embracing Cost-Efficiency

AI will disrupt and change how HR works! We need to acknowledge and be prepared for it.

Traditional recruitment methods can be time-consuming and costly, requiring significant human resources and manual effort. As businesses strive to optimize their operations and reduce costs, integrating AI into recruitment processes presents a transformative opportunity. By leveraging AI, companies can streamline recruitment, minimize bias, and enhance decision-making, allowing HR professionals to focus on high-level strategic tasks. This shift not only improves efficiency but also reduces overall recruitment costs, making it a vital consideration for modern HR practices.

I have spent a considerable time to make a simulation and compare step by step on how AI can add more value to HR recruitment processes, while saving cost and uplifting existing manpower skill requirement. This is how I envision HR recruitment team to be by 2025. Hope you like it!

Basis of the analysis:

Number of vacant roles to fill: 10 per month
Average Monthly Recruiter Salary: PKR 150,000
Initial Number of Recruiters: 3
Total Monthly Compensation (Initial): PKR 450,000 (PKR 150,000 * 3)
Annual Compensation Data (Initial): PKR 5,400,000 (PKR 450,000 * 12)
Initial Process Cost per Role: PKR 45,000 (PKR 450,000 / 10 roles)

How can we incorporate AI to optimise and be more cost efficient?

Lets dig into a recruitment process step by step:

Step 1: Assessing Hiring Needs

Current Process:

In-House HR Involvement: The HR team collaborates with department heads to evaluate workload, team capacity, and business objectives to determine if there’s a need for a new hire. This step involves gathering input from various departments and understanding current and future business needs.
Time Spent: Approximately 10 hours per role.
Cost per Role: PKR 7,500 (PKR 150,000 / 200 working hours * 10 hours).
Cost for 10 Roles: PKR 75,000 (10 roles * PKR 7,500).
This method can be time-consuming and may involve subjective assessments.

AI-Driven Process:

AI Involvement: AI evaluates the need for a new hire by analyzing data on workload, team capacity, and business objectives, using real-time analytics. It also identifies patterns and trends to predict future hiring needs more accurately. It work with the people partner to ensure the right needs are assessed
In-House HR Involvement: People partner vets AI’s findings based on real-time business needs and nuances, ensuring that the data aligns with actual business conditions.
Time Spent: 2 hours.
Cost per Role: PKR 1,500 (PKR 150,000 / 200 working hours * 2 hours).
Cost for 10 Roles: PKR 15,000 (10 roles * PKR 1,500).
Additional Insight: AI’s data-driven approach helps in identifying needs more precisely and quickly.

Step 2: Job Description Creation

Current Process:

In-House HR Involvement: HR drafts job descriptions and aligns them with hiring managers. This includes tailoring the descriptions to accurately reflect the role and requirements, which can be subjective and vary between managers.
Time Spent: 5 hours per role.
Cost per Role: PKR 3,750 (PKR 150,000 / 200 working hours * 5 hours).
Cost for 10 Roles: PKR 37,500 (10 roles * PKR 3,750).
Involves iterative revisions and alignment with multiple stakeholders.

AI-Driven Process:

AI Involvement: AI generates dynamic job descriptions based on company needs and historical data, ensuring consistency and alignment with industry standards. The AI uses templates and data to create accurate and engaging job postings.
In-House HR Involvement: HR reviews and fine-tunes AI-generated descriptions to add a human touch and ensure relevance.
Time Spent: 1 hour.
Cost per Role: PKR 750 (PKR 150,000 / 200 working hours * 1 hour).
Cost for 10 Roles: PKR 7,500 (10 roles * PKR 750).
Streamlines the creation process, reducing time and potential biases.

Step 3: Sourcing Candidates

Current Process:

In-House HR Involvement: HR handles internal and external sourcing, including posting job ads and reaching out to potential candidates. This can involve extensive manual efforts and less efficient candidate targeting.
Time Spent: 15 hours per role.
Cost per Role: PKR 11,250 (PKR 150,000 / 200 working hours * 15 hours).
Cost for 10 Roles: PKR 112,500 (10 roles * PKR 11,250).
Additional Insight: Manual sourcing may not reach the widest pool of candidates and can be time-intensive.

AI-Driven Process:

AI Involvement: AI automates sourcing across multiple platforms, identifying and attracting top candidates using algorithms and data analytics. It can also optimize job ad placements to target the best-fit candidates.
In-House HR Involvement: HR supervises the AI’s sourcing efforts and manages any unique requirements.
Time Spent: 3 hours.
Cost per Role: PKR 2,250 (PKR 150,000 / 200 working hours * 3 hours).
Cost for 10 Roles: PKR 22,500 (10 roles * PKR 2,250).
Increases efficiency in reaching a broader candidate pool and reduces manual effort.

Step 4: Screening Candidates

Current Process:

In-House HR Involvement: HR manually screens candidates through resumes and initial interviews. This process involves evaluating qualifications and fit based on subjective assessments.
Time Spent: 20 hours per role.
Cost per Role: PKR 15,000 (PKR 150,000 / 200 working hours * 20 hours).
Cost for 10 Roles: PKR 150,000 (10 roles * PKR 15,000).
Manual screening can be prone to biases and errors, and is often time-consuming.

AI-Driven Process:

AI Involvement: AI conducts automated screening, including resume parsing and initial ranking of candidates based on fit. AI also analyzes application data to shortlist the best candidates.
In-House HR Involvement: HR reviews the top candidates identified by AI, focusing only on the most promising ones.
Time Spent: 4 hours.
Cost per Role: PKR 3,000 (PKR 150,000 / 200 working hours * 4 hours).
Cost for 10 Roles: PKR 30,000 (10 roles * PKR 3,000).
Additional Insight: Reduces bias and increases efficiency in candidate screening.

Step 5: Conducting Interviews

Current Process:

In-House HR Involvement: HR schedules and conducts interviews, including phone screenings, in-person interviews, and panel interviews. This step involves significant coordination and management of multiple interviewers.
Time Spent: 30 hours per role.
Cost per Role: PKR 22,500 (PKR 150,000 / 200 working hours * 30 hours).
Cost for 10 Roles: PKR 225,000 (10 roles * PKR 22,500).
Coordinating multiple interviews can be complex and time-consuming.

AI-Driven Process:

AI Involvement: AI assists with scheduling interviews and can conduct preliminary assessments using pre-programmed questions. It can also analyze facial expressions and voice tones during virtual interviews to assess candidate responses.
In-House HR Involvement: HR manages final interviews and evaluates cultural fit, based on AI’s detailed candidate profiles and assessments.
Time Spent: 8 hours.
Cost per Role: PKR 6,000 (PKR 150,000 / 200 working hours * 8 hours).
Cost for 10 Roles: PKR 60,000 (10 roles * PKR 6,000).
AI streamlines interview scheduling and provides additional insights into candidate behavior.

Step 6: Assessment and Testing

Current Process:

In-House HR Involvement: HR administers skills tests, personality assessments, and case studies relevant to the job role. This involves creating and evaluating test materials manually.
Time Spent: 10 hours per role.
Cost per Role: PKR 7,500 (PKR 150,000 / 200 working hours * 10 hours).
Cost for 10 Roles: PKR 75,000 (10 roles * PKR 7,500).
Manual assessments can be time-consuming and may not always accurately reflect candidate capabilities.

AI-Driven Process:

AI Involvement: AI administers and grades assessments, including skills tests and personality evaluations. It can also analyze facial expressions during tests to assess candidate responses and honesty. It can also confirm if the right candidate is taking the test
In-House HR Involvement: HR reviews AI-generated assessment results and integrates them into the final evaluation.
Time Spent: 3 hours.
Cost per Role: PKR 2,250 (PKR 150,000 / 200 working hours * 3 hours).
Cost for 10 Roles: PKR 22,500 (10 roles * PKR 2,250).
Enhances the accuracy and efficiency of candidate evaluations.

Step 7: Reference Checks

Current Process:

In-House HR Involvement: HR conducts manual reference checks by contacting previous employers and verifying information.
Time Spent: 1 hour per role.
Cost per Role: PKR 750 (PKR 150,000 / 200 working hours * 1 hour).
Cost for 10 Roles: PKR 7,500 (10 roles * PKR 750).
Speeds up the verification process and reduces manual effort.

AI-Driven Process:

AI Involvement: AI automates reference checks by contacting previous employers and verifying information through integrated databases.
In-House HR Involvement: HR reviews AI-compiled reference data to ensure accuracy.
Time Spent: 1 hour.
Cost per Role: PKR 750 (PKR 150,000 / 200 working hours * 1 hour).
Cost for 10 Roles: PKR 7,500 (10 roles * PKR 750).
Speeds up the verification process and reduces manual effort.

Step 8: Decision Making

Current Process:

In-House HR Involvement: HR evaluates candidates based on interviews, test results, and reference checks to make a final decision. This process involves thorough analysis and may include multiple stakeholders.
Time Spent: 5 hours per role.
Cost per Role: PKR 3,750 (PKR 150,000 / 200 working hours * 5 hours).
Cost for 10 Roles: PKR 37,500 (10 roles * PKR 3,750).
Requires thorough analysis and can involve multiple stakeholders.

AI-Driven Process:

AI Involvement: AI provides data-driven recommendations based on the comprehensive evaluation of candidate data, reducing the time required for decision-making. AI’s insights can enhance the consistency of evaluations and can provide the best 3 candidates with option to compare on each metric
In-House HR Involvement: HR makes the final decision based on AI recommendations and aligns with organizational culture and needs.
Time Spent: 2 hours.
Cost per Role: PKR 1,500 (PKR 150,000 / 200 working hours * 2 hours).
Cost for 10 Roles: PKR 15,000 (10 roles * PKR 1,500).
Accelerates the decision-making process and enhances consistency in evaluations.

Step 9: Offer and Negotiation

Current Process:

In-House HR Involvement: HR prepares the offer, negotiates terms with the candidate, and finalizes the offer letter. This involves creating and discussing compensation packages and negotiating terms.
Time Spent: 4 hours per role.
Cost per Role: PKR 3,000 (PKR 150,000 / 200 working hours * 4 hours).
Cost for 10 Roles: PKR 30,000 (10 roles * PKR 3,000).
Negotiations can be complex and require significant back-and-forth communication.

AI-Driven Process:

AI Involvement: AI assists in preparing standardized offer letters and can facilitate initial negotiations based on predefined parameters. The company can assign job codes and respective reward benchmarks for each position in the company. Based on the ranges, AI can create multiple offers and can do initial negotiation with the final candidate
In-House HR Involvement: HR finalizes and personalizes the offer, managing any remaining negotiations.
Time Spent: 1 hour.
Cost per Role: PKR 750 (PKR 150,000 / 200 working hours * 1 hour).
Cost for 10 Roles: PKR 7,500 (10 roles * PKR 750).
Streamlines the offer preparation and negotiation process.

Step 10: Onboarding

Current Process:

In-House HR Involvement: HR manages onboarding, including introductions, training, and follow-ups. This involves organizing orientation sessions and providing necessary resources.
Time Spent: 10 hours per role.
Cost per Role: PKR 7,500 (PKR 150,000 / 200 working hours * 10 hours).
Cost for 10 Roles: PKR 75,000 (10 roles * PKR 7,500).
Involves multiple steps and continuous engagement to ensure successful integration.

AI-Driven Process:

AI Involvement: AI supports onboarding by providing digital resources and automating training modules. It also tracks new hire progress and integrates feedback systems. It can manage calendars with the relevant employees to bring employees at par.
In-House HR Involvement: HR focuses on personal interactions and ensuring the new hire’s smooth transition into the company culture.
Time Spent: 4 hours.
Cost per Role: PKR 3,000 (PKR 150,000 / 200 working hours * 4 hours).
Cost for 10 Roles: PKR 30,000 (10 roles * PKR 3,000).
Enhances the onboarding experience with structured and automated support.

Additional Costs with Traditional Recruitment:

Office Space: Additional space for recruitment personnel can cost approximately PKR 25,000 per month per person.
Utilities: Electricity, internet, and other utilities for additional staff may amount to PKR 5,000 per month per person.
Engagement Costs: Team-building and recruitment-related activities can add around PKR 10,000 per month per person.

What do we gain out of this shift to AI based recruitment, where a seasoned recruiter plays the role of vetting and personalising only:

Manning and Efficiency:

Current Manning: 3 recruiters, each handling approximately 10 roles per month, equating to 3 roles per recruiter per month.
Post-AI Manning: 1 recruiter managing the same volume, handling 10 roles per month.

Monthly Compensation Data:

Total Monthly Compensation (Initial): PKR 450,000 (PKR 150,000 * 3)
Total Monthly Compensation (Post-AI): PKR 150,000 (PKR 150,000 * 1)
Annual Compensation Data (Initial): PKR 5,400,000 (PKR 450,000 * 12)
Annual Compensation Data (Post-AI): PKR 1,800,000 (PKR 150,000 * 12)

Average Time to Hire reduction:

Current Process: 60 days per role.
AI-Driven Process: 15 days per role.

Potential Cost Savings:

Current Process Total Cost per Role: PKR 101,250.
AI-Driven Process Total Cost per Role: PKR 21,000.
Savings per Role: PKR 80,250.
Total Monthly Cost for 10 Roles (Current Process): PKR 1,012,500.
Total Monthly Cost for 10 Roles (AI-Driven Process): PKR 210,000.
Monthly Savings: PKR 802,500.

Annual Savings: PKR 9,630,000.

Leadership in companies needs to revisit HR recruitment strategies and view the proposed model due to higher efficiency, lower costs and improved talent acquisition. The model is a sample of what we can achieve by optimising our processes and can vary company wise.

Sources

ResearchGate / Academic Study

2025 HR Tech Report (Cited by iSmartRecruit)

LinkedIn Research (Cited by Senseloaf)

Reccopilot Blog / Industry Data

Resume Builder Survey