Key takeaways

• Recruitment Fees are usually calculated as a percentage of the hired candidate’s first-year salary, a percentage of the candidate’s total compensation package, or a flat fee.
• Typically, recruiting agencies in Malaysia charge between 15% to 30% of the gross annual salary.
• Recruitment fees can increase based on the complexity, level of expertise, urgency and volume of positions, etc.

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Recruitment fees are a necessary cost for companies looking to hire new talent.

In Malaysia, there are a variety of options available for companies seeking recruitment services.

Recruitment agencies, headhunters, and recruiters all offer different services and charge different fees for those services.

Understanding the costs and benefits of each option is essential for companies looking to make the best use of their resources.

Recruitment agencies are a popular option in Malaysia.

These agencies act as intermediaries between companies and job seekers, providing services such as job advertising, resume screening, and candidate matching.

Recruitment agencies typically charge a fee based on a percentage of the hired candidate’s first-year salary.

The advantage of using a recruitment agency is that they handle much of the hiring process for you, saving your company time and resources.

If you need a more detailed explanation about “Recruitment Agency“, then our research team has previously written a comprehensive guide on what recruitment agencies do and the top tips to choose the best one.

Headhunters, on the other hand, are typically used for more specialized or high-level positions.

These recruiters actively seek out candidates who are not actively looking for new job opportunities.

They often have a network of contacts and use their expertise to identify and approach potential candidates.

Headhunters typically charge a higher fee than recruitment agencies, often a percentage of the candidate’s total compensation package.

However, their specialized knowledge and network can be invaluable in finding the right candidate for a high-level position.

Recruiters are similar to recruitment agencies but operate on a smaller scale.

They may work independently or as part of a smaller firm, and they typically charge a flat fee or a fee based on the candidate’s salary.

Recruiters may offer more personalized service than larger agencies and can be a good option for smaller companies or those with more specialized needs.

Factors that can affect recruitment fees include the level of expertise required, the urgency of the position, and the current job market conditions.

It’s important for companies to be aware of these factors and to negotiate recruitment fees accordingly.

Understanding the cost of recruitment fees in Malaysia and the pros and cons of each option can help companies make informed decisions about their hiring needs.

By doing so, they can find the right recruitment service provider to meet their needs and budget while ensuring the best possible outcome for their hiring process.

Before we venture further into this article, we like to share who we are and what we do.

About 9cv9

9cv9 is a business tech startup based in Singapore and Malaysia with a strong presence all over the world.

With over six years of startup and business experience, and being highly involved in connecting with thousands of companies and startups, the 9cv9 team has listed some important learning points in this overview of recruitment agencies’ fee structure in Malaysia.

If your company needs recruitment and headhunting services, you can use 9cv9 headhunting and recruitment services to hire top talents and candidates. Find out more here, or send over an email to hello@9cv9.com.

Recruitment Fee in Malaysia: What you need to know

1. What are Recruitment Fees?
2. Why is it important to know the cost of recruitment fees?
3. Brief Look at the Recruitment Industry in Malaysia
   • What are recruitment agencies like in Malaysia versus other countries?
4. How to Calculate the Recruitment Fees?
5. Recruitment Fees in Malaysia (Updated in 2023)
6. Factors Affecting the Recruitment Fees

What are Recruitment Fees?

Recruitment fees are fees charged by recruitment agencies, headhunters, or recruiters for their services in finding and placing suitable candidates for a job opening.

These fees are typically paid by the hiring company and are charged either as a percentage of the hired candidate’s first-year salary, a percentage of the candidate’s total compensation package, or a flat fee.

Recruitment fees are a necessary cost for companies looking to hire new employees.

In a competitive labor market, it is efficient to engage a recruitment partner to help in finding the best-fit candidate for your organization.

By using recruitment services, companies can save time and resources in finding suitable candidates for their job openings.

According to some sources, by not using an agency to help with your recruitment, the hiring process will take your team at least 10 weeks of man-hours in screening and finding the best-fit candidates.

Recruitment agencies, headhunters, and recruiters offer different services and charge different fees for those services, so it’s important for companies to understand the costs and benefits of each option.

Factors that can affect recruitment fees include the level of expertise required, the urgency of the position, and the current job market conditions.

Overall, recruitment fees are an important consideration for companies looking to hire new talent.

By understanding the cost of recruitment fees and the options available, companies can make informed decisions about their hiring needs and find the right recruitment service provider to meet their needs and budget.

Why is it important to know the cost of recruitment fees?

Knowing the cost of recruitment fees is important for several reasons:

1. Budgeting: By understanding the cost of recruitment fees, companies can budget and plan accordingly for their hiring needs. Recruitment fees can be a significant cost, so it’s important for companies to know what they’re getting into before they start the hiring process.
2. Comparison: Understanding the cost of recruitment fees for different service providers allows companies to compare and contrast the pros and cons of each option. This can help companies choose the recruitment service provider that best fits their needs and budget.
3. Avoiding surprises: Recruitment fees can vary depending on the service provider and the type of service offered. Knowing the cost of recruitment fees upfront can help companies avoid surprises and unexpected costs later on in the hiring process.

Knowing the cost of recruitment fees is important for companies looking to hire new talent.

By understanding the costs and benefits of different recruitment service providers, companies can make informed decisions about their hiring needs and budget, negotiate fees, and avoid surprises.

Brief Look at the Recruitment Industry in Malaysia

The recruitment industry in Malaysia is a dynamic and growing sector that plays a crucial role in the country’s economy.

With a population of over 33.5 million people, Malaysia has a diverse and multicultural workforce, and the demand for skilled talent continues to grow.

The recruitment industry in Malaysia is primarily made up of recruitment agencies, headhunters, and recruiters who provide a range of services to both job seekers and employers.

These services include job advertising, resume screening, candidate matching, interviewing, and background checks.

The recruitment industry in Malaysia is heavily regulated by the government, and all recruitment agencies are required to be registered with the Ministry of Human Resources.

This helps to ensure that recruitment agencies operate in a fair and ethical manner, and that job seekers are not exploited or taken advantage of.

The recruitment industry in Malaysia is also influenced by the country’s economic climate, with periods of economic growth leading to increased demand for talent, particularly in industries such as technology, finance, and healthcare.

In recent years, the recruitment industry in Malaysia has also been impacted by the COVID-19 pandemic, with companies reducing their hiring and job seekers facing greater competition for available positions.

Despite these challenges, the recruitment industry in Malaysia continues to be an important and growing sector.

As companies look to expand and hire new talent, the demand for recruitment services is expected to remain strong.

Additionally, with the rise of digital technology, the recruitment industry in Malaysia is likely to become increasingly digitized, with more recruitment agencies and job boards moving online to reach a wider audience.

Some of the top recruitment agencies and HRtech companies in Malaysia are 9cv9, Reeracoen Malaysia, RecruitFirst, Randstad, AJobThing, etc

What are recruitment agencies like in Malaysia versus other countries?

Recruitment agencies in Malaysia operate similarly to recruitment agencies in other countries, with the primary goal of matching job seekers with job openings.

However, there are some key differences that set recruitment agencies in Malaysia apart from those in other countries.

One key difference is the focus on diversity and inclusion.

Malaysia is a diverse country with a range of ethnicities and cultures, and many recruitment agencies in Malaysia prioritize diversity and inclusion in their hiring practices.

This includes promoting equal opportunities for candidates of all backgrounds and providing training and support to help companies create inclusive work environments.

Another difference is the emphasis on local knowledge and expertise.

Recruitment agencies in Malaysia often have extensive knowledge of the local job market and can provide valuable insights into hiring trends and candidate preferences.

This local expertise can help companies make informed hiring decisions and ensure that they are able to attract top talent.

Finally, recruitment agencies in Malaysia may also offer specialized services to meet the unique needs of local businesses.

For example, some agencies may specialize in recruiting for specific industries, such as healthcare or technology, while others may offer services to help companies navigate local employment laws and regulations.

Overall, while recruitment agencies in Malaysia share many similarities with those in other countries, their focus on diversity and inclusion, local expertise, and specialized services help set them apart and provide valuable support to businesses in the region.

How to Calculate the Recruitment Fees?

The calculation of recruitment fees can vary depending on the service provider and the type of service being offered.

However, there are several common methods used to calculate recruitment fees, including:

1) Percentage of the hired candidate’s first-year salary

This is one of the most common methods used to calculate recruitment fees.

The fee is typically a percentage of the candidate’s first-year salary, with the percentage ranging from 10% to 30% depending on the service provider and the complexity of the position.

For example, if the hired candidate has a first-year salary of RM 60,000 and the recruitment fee is 20%, the fee charged by the recruitment agency would be RM 60,000 * 20% = RM 12,000.

(First-year salary) * (Agency Fee as a percentage of first-year salary) = Recruitment Fees

Percentage of the hired candidate’s first-year salary calculation

Another variation is to take a multiplier on the hired candidate’s first month’s salary. This is usually easier to visualize in mathematics.

For example, if the first month’s salary is USD 10,000 and if the recruitment agency charges 2 months as its service fee, then the recruitment fee is USD 10,000 * 2 = USD 20,000.

2) Percentage of the candidate’s total compensation package

In some cases, recruitment fees may be based on the candidate’s total compensation package, which includes the base salary as well as other benefits such as bonuses and commissions.

This is the same calculation as the first method except the first-year salary would include other forms of compensation such as bonuses, perks, and all other quantifiable benefits.

For example, if the basic salary is RM 60,000, and there will be a 13th-month bonus, a sign-on bonus of RM 10,000, and an annual mobile allowance of RM 300, with the same agency fee of 20% of the gross annual salary, then the calculation will be:

[RM 60,000 + (RM 60,000 / 12) + RM 10,000 + RM 300] * 20% = RM 15,060

If the monthly multiplier is used, then the annual compensation package will be prorated to a monthly value for computation.

3) Flat fee

Some recruitment service providers charge a flat fee for their services, which is negotiated upfront with the hiring company.

The flat fee may vary depending on the service provider and the complexity of the position.

For example, the agency can charge a flat fee of RM 10,000 per successful hiring.

It’s important for companies to understand the calculation method used by the recruitment service provider and to negotiate the fees accordingly.

Factors such as the level of expertise required, the urgency of the position, and the current job market conditions can all impact the cost of recruitment fees, as will be elaborated on in the sections below.

It’s also important to clarify with the recruitment service provider whether the fees are payable only if the candidate is successfully placed in the position, or if they are payable regardless of whether the candidate is ultimately hired (which in this case is a retainer model).

Typically, fees are usually one-time and paid upon a hiring event.

Recruitment Fees in Malaysia (Updated in 2023)

The typical recruitment fees charged by recruitment agencies and headhunters are between 15% to 30% of gross annual salary.

Typically, recruitment fees in Malaysia are between 15% to 30% of Gross Annual Salary

– 9cv9

This is translated into a multiplier of 1.8 to 3.6 times the candidate’s gross monthly salary.

For example. 9cv9, Malaysia’s leading recruiter and HRtech company, charges 15% to 23.3% of gross annual salary, one of the lowest and most competitive in the market.

Factors Affecting the Recruitment Fees

Recruitment fees can vary depending on several factors, including:

1. Complexity of the position

The complexity of the position can impact the cost of recruitment fees.

Positions that require specialized skills or experience are generally more difficult to fill and may require a more extensive search process, resulting in higher fees.

For example, usually for tech developer roles, the agency might ask for 5-10% extra.

2. Level of expertise required

The level of expertise required for the position can also impact recruitment fees. Positions that require higher levels of expertise or experience may require a more specialized search process, resulting in higher fees. For example, finding a C-level executive might cost up to 30-40% of gross annual salary as compared to an intern, which might cost up to 10-15% of gross annual compensation.

3. Urgency of the position

The urgency of the position can also impact the cost of recruitment fees. If the position needs to be filled quickly, the recruitment process may need to be expedited, resulting in higher fees.

4. Location of the position

The location of the position can also impact recruitment fees. Positions in remote or hard-to-reach locations may require a more extensive search process, resulting in higher fees.

5. Volume of positions

If a company is looking to fill multiple positions, it may be able to negotiate lower recruitment fees with the service provider.

6. Type of service provided

The type of service provided by the recruitment service provider can also impact the cost of recruitment fees. For example, services such as executive search or headhunting may be more expensive than standard recruitment services.

7. Current job market conditions

The current job market conditions can also impact the cost of recruitment fees. In a competitive job market, recruitment fees may be higher as there is greater competition for skilled candidates.

It’s important for companies to understand these factors when negotiating recruitment fees with service providers.

By understanding the factors that impact recruitment fees, companies can negotiate fees that are fair and appropriate for their hiring needs.

Conclusion

Recruitment fees can be a significant cost for companies looking to hire new employees in Malaysia.

Understanding the cost of recruitment fees and the factors that impact them can help companies make informed decisions when selecting a recruitment service provider in Malaysia.

Recruitment fees can vary depending on the type of service provided, the level of expertise required, the urgency of the position, the location of the position, the volume of positions, and the current job market conditions.

By understanding these factors, companies can negotiate fair and appropriate fees with their recruitment service provider.

It’s also important to consider the benefits of using a recruitment service provider in Malaysia.

Recruitment agencies, headhunters, and recruiters in Malaysia can help companies save time and resources by handling the hiring process and identifying qualified candidates.

That’s why most companies use 9cv9 Headhunting Services to help them get the best talents in Malaysia at a very affordable rate.

Just check some of our testimonials below

They can also provide expertise and insights into the job market, helping companies make informed decisions about their hiring needs.

Ultimately, the cost of recruitment fees should be weighed against the potential benefits of using a recruitment service provider.

By understanding the cost and value of recruitment fees, companies can make informed decisions about their hiring process and ensure that they are getting the best value for their recruitment budget.

In Malaysia, the recruitment industry is thriving, with a range of recruitment service providers offering a variety of services to companies across industries.

By understanding the cost of recruitment fees and the factors that impact them, companies can make informed decisions when selecting a recruitment service provider and ensure that they are getting the best value for their recruitment budget.

If you find this article useful, why not share it among your recruitment, human resource business partner, and talent acquisition counterparts hiring in Malaysia, and also leave a nice comment below?

We, at the 9cv9 Research Team, strive to bring the latest and most meaningful data, guide, and statistics to your doorstep.