Let's Do the Maths First
The conversation about agency fees always stays abstract until you put real numbers on it. So let's do that.
That's real money. And I want to be precise about this: some of that fee is justified. Some of it is not. The problem is that employers rarely know which is which, and the industry has never been motivated to explain the difference.
What the Fee Is Actually Paying For (The Honest Version)
When I managed the agency business, I knew what it cost to run a desk. I knew what our consultants' time was actually worth on an hour-by-hour basis. Here is what a typical contingency placement genuinely involves:
- Briefing and scoping the role: Usually 1–2 hours, sometimes more for a complex brief
- Searching the database and LinkedIn: 3–6 hours, depending on role complexity and supply
- Outreach and candidate qualification: 5–10 hours of calls and messaging to shortlist 4–6 credible candidates
- CV preparation and submission: 1–2 hours
- Interview coordination: 2–4 hours across multiple rounds
- Offer management and negotiation: 2–4 hours
- Post-placement follow-up: Minimal on most contingency desks, honestly
Add it up honestly and you're looking at roughly 15 to 25 hours of actual work for a straightforward placement. On a SGD 150,000 role at a 25% fee — that's SGD 37,500 for perhaps 20 hours of consultant time. That's SGD 1,875 per hour. Even accounting for overheads, management, database costs, and the consultant's salary, that is a significant margin.
💡 I'm not saying agencies provide no value. The good ones provide real value — deep market knowledge, candidate relationships that took years to build, the ability to move fast on hard-to-fill roles. What I'm questioning is whether the fee structure is calibrated to the actual value delivered, or whether it's a legacy pricing model that the industry has never had sufficient pressure to revisit.
Where the Model Actually Makes Sense
I want to be fair here. In my career I've been the agency and I've been the client — at a major bank I was leading talent acquisition and working with agencies as a client. There are situations where the fee is genuinely justified:
Truly niche or confidential searches
When you need a Chief Risk Officer with specific regulatory experience in a narrow sector, or when the search needs to be kept off the market for competitive reasons, a retained executive search firm with genuine relationships in that community is worth serious money. The fee is covering real access and real discretion. This is where the traditional model holds up.
Markets where you have no presence
If you're a London-based firm hiring your first General Manager in Singapore, an established agency with local market knowledge, candidate relationships, and an understanding of cultural expectations is valuable. You are paying for intelligence you genuinely don't have.
Volume hiring with quality control
At a major hospitality group in Asia I was hiring over 650 people a year. For certain categories of hire — junior F&B staff, housekeeping supervisors — working with specialist agencies made operational sense. Not because they were cheap, but because the agency bore the sourcing and initial screening burden that would have overwhelmed an in-house team our size. The RPO model can work well here.
Where the Model Has Lost the Plot
The problem is that agencies have applied the retained-search fee structure to roles that are nowhere near that level of complexity. I have seen contingency agencies charge 22% to place a mid-level software engineer whose CV was found on JobsDB, who applied to the job board themselves, and who needed three Zoom calls to get an offer. The agency's actual contribution was scheduling three Zoom calls and writing a two-paragraph covering note. Twenty-two percent of a SGD 120,000 salary is SGD 26,400. That's not a fee — that's a toll.
The reason this has persisted is straightforward: employers have accepted it. Hiring managers are often not the ones approving the invoice; procurement teams often don't have enough market context to challenge it; and until recently there simply wasn't a credible alternative for many roles.
What Smart Employers Are Doing in 2026
The employers I respect most — and I've worked with some excellent talent leaders in banking and hospitality across APAC — treat agencies as a last resort for non-executive hires, not a default channel. Here's what they do instead:
- Build an internal sourcing capability. Even one dedicated internal recruiter who knows how to use LinkedIn Recruiter, GitHub, and ORCID effectively will pay for themselves on the first hire they make without an agency fee. At the banks I worked in, the best internal TA teams had sourcing specialists who matched the databases of any external agency.
- Use AI-powered tools for initial search. Tools like FreeFindTalent can surface ranked candidates from 40+ global platforms in seconds. This doesn't replace human judgment in the later stages, but it eliminates the part of the process where agency fees are hardest to justify: the initial search and longlist generation.
- Reserve agencies for genuine executive and niche searches. This is where they genuinely earn their fee. Use them strategically, not habitually.
- Negotiate the fee. If you must use an agency, most fees are negotiable — especially for repeat business. Fifteen percent is achievable for most professional hires. Anything above twenty percent for a non-executive role should be challenged.
My Honest Conclusion
I built FreeFindTalent because I spent two decades watching employers overpay for something that — at the non-executive, non-specialist level — has been disrupted by technology. That's not a criticism of the people who work in agencies; many of them are genuinely excellent. It's a statement about a pricing model that hasn't evolved as fast as the tools available to recruiters. The market is changing. Employers who adapt first will have a structural advantage in their cost of hire. The ones who don't will keep writing the same cheques.