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TalentRiver
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TL;DR:
Most companies spend far more on agencies than they need to, often for roles that are straightforward to fill directly.
AI sourcing tools give internal TA teams access to the same candidate databases agencies use, at a fixed monthly cost.
The savings compound: every role filled directly is a fee avoided, and the candidate data stays in your ATS for future hires.
Why agency spend is so high
Recruitment agencies charge a percentage of first-year salary as their fee, typically between 15% and 25%. For a role paying 600,000 SEK, that is 90,000 to 150,000 SEK per hire.
Companies use agencies because they lack the tools or capacity to source candidates themselves. The agency has access to candidate databases, sourcing expertise, and time. The company pays a premium for all three.
The problem is that these fees add up fast. A company hiring ten people a year at average salaries is easily spending one million SEK or more in agency fees annually, on top of internal recruiting costs.
What agencies actually do
Understanding where agency value comes from makes it easier to identify what you can replace. In most cases, agencies provide:
Access to a candidate database built over years of recruiting in a specific market
Time and capacity to run searches, shortlist candidates, and manage outreach
Market knowledge about compensation and availability
Relationships with passive candidates in niche skill areas
AI sourcing tools now provide the first two at a small fraction of the cost. Market knowledge and specialized niche relationships are where agencies still add genuine value, particularly for very senior or highly specialized roles.
Which roles to stop using agencies for
Not every hire warrants the same sourcing approach. A good framework is to categorize open roles by skill scarcity and urgency.
Roles that are common, well-defined, and not time-critical can almost always be filled directly with AI sourcing tools. Sales roles, operations roles, generalist engineering roles, and most mid-level positions fall here.
Roles where a specialized agency adds real value are narrow: executive search, highly niche technical profiles, and situations where an agency has specific relationships that your team simply does not.
Most companies are paying agency fees across the first category when they do not need to.
What AI sourcing tools replace
A modern AI sourcing tool like TalentRiver gives your TA team the ability to:
Search across LinkedIn and your ATS database simultaneously, with AI-ranked results
Find verified contact details for candidates without manual research
Send automated outreach sequences that scale without adding headcount
Keep candidate data organized and accessible for future roles
This is the core of what a mid-market recruiter does. At a flat monthly subscription cost, versus 15 to 25% per hire.
Calculating your potential savings
A simple calculation: take the number of roles you filled through agencies last year, multiply by the average salary, and multiply by the agency fee percentage.
If you filled 8 roles at an average salary of 650,000 SEK at a 20% fee, that is 1,040,000 SEK in fees. If AI sourcing tools could have covered half of those roles, the saving is around 520,000 SEK, for a tool that costs a fraction of that annually.
The compounding effect is also worth noting. Every role filled directly adds to your ATS database. That database becomes more valuable with each hire, making future direct sourcing even faster.
How to make the transition
Switching from agency-led to direct sourcing does not have to be abrupt. A practical approach is to identify your next three to five open roles and attempt to fill them directly using an AI sourcing tool before engaging an agency.
Track time-to-hire and quality of shortlist. For most standard roles, you will find that the results are comparable to agency output, and often faster because your TA team has context about the role that an agency does not.
TalentRiver's customers consistently report cutting sourcing time by 50% or more, which is the core of what makes direct sourcing competitive with agency timelines.
Key takeaways
Agency fees of 15 to 25% per hire add up fast. Most companies overspend on agencies for roles that can be filled directly.
AI sourcing tools replicate the core of what agencies do: candidate search, contact discovery, and outreach.
Start by identifying standard roles and running them directly before engaging an agency.
The savings compound as your ATS database grows with each direct hire.
FAQ
Can AI sourcing tools fully replace recruitment agencies?
For most standard roles, yes. For highly specialized or executive-level searches where relationships and market knowledge are critical, agencies still add value. The goal is not to eliminate agencies entirely but to use them only where they genuinely add something you cannot replicate internally.
How much can companies realistically save?
It depends on hiring volume and average salary. Companies hiring 8 to 15 roles per year through agencies are typically spending between 500,000 and 2,000,000 SEK in fees. Moving half of those roles to direct sourcing with AI tools can generate savings many times the cost of the tooling.
Does direct sourcing take longer than using an agency?
Not necessarily. With AI tools that automate search and outreach, TA teams can move as fast as agencies on standard roles. TalentRiver customers report reducing sourcing time by over 50%, which makes direct timelines competitive with agency timelines for most positions.
What happens to the candidate data when we source directly?
When you source directly, the candidate data stays in your ATS. Every candidate you engage becomes part of your database for future roles. With agency sourcing, that data typically stays with the agency.
How do I get buy-in to reduce agency spend?
Run a pilot on two or three roles and track the results. Time-to-hire, cost-per-hire, and quality of hire are the three metrics that matter to leadership. When direct sourcing matches or beats agency results on those metrics, the business case is straightforward.
