IT Onboarding Cost Analysis: What's the Cost of Onboarding?
Gregg Davis9 min read
As an IT leader, you probably already know that hiring and training new hires is a significant business expense.
However, you may be curious to know exactly how much money it costs you. You may also wonder if there are ways to reduce these hiring costs.
The true cost of employee onboarding can vary greatly, depending on the training time, required computer resources, and other factors.
Below, we'll analyze the cost of employee onboarding, specifically in the IT sector. In this article, we'll also explore the different types of expenses involved and the factors influencing the total cost.
Why Is It Important to Calculate Onboarding Costs?
Before thinking of reducing IT onboarding costs, you must learn how to compute these expenses.
Doing so helps you manage your IT resources effectively and identify issues before they affect the onboarding experience.
For example, when calculating onboarding costs, you may discover inefficiencies in your current IT hiring process. Addressing them immediately can reduce costly turnover and improve employee retention.
Calculating IT onboarding costs is also important because it helps you plan your budget better. Knowing how much you need to spend on the necessary hardware and software prevents overspending, and it allows you to fund other important areas of your business.
The cost of onboarding can even provide detailed insights into how effective your onboarding process is.
Let's say your IT training costs are expensive, but you still experience high turnover rates. This may indicate that your existing training methods are ineffective.
You can work closely with HR professionals to come up with new ways to train new hires and boost retention rates.
What Are the Different Types of Costs Involved in IT Onboarding?
After understanding the importance of calculating IT onboarding costs, let's look at the various types of expenses involved. Knowing these categories helps you get a clearer picture of where your money goes.
Direct Costs
Direct costs are the most obvious IT onboarding expenses, making them easy to track and quantify. They are usually the first area to examine when analyzing onboarding expenses.
Direct costs include hiring and training expenses. These usually involve conducting technical interviews and assessments, purchasing training materials, and investing in a tech mentorship program.
Computer equipment also falls under direct costs. For example, you need to invest in hardware that the new IT hire will use, such as laptops, desktops, monitors, keyboards, and other peripherals.
You must also consider the cost of buying software licenses like automated onboarding software and identity access management solutions. These programs make the IT onboarding process easier.
Salaries paid to new IT hires during the training period are also considered direct expenses.
Indirect Costs
Indirect costs are less visible but equally important. They include the time spent by existing IT employees to train new hires.
When senior staff spends time on onboarding activities, their productivity in other areas can drop. This lost productivity is also an indirect cost.
The administrative time required to set up workstations, software, and access provisioning can also fall under indirect expenses.
These costs can add up quickly and impact overall staff productivity.
Hidden Costs
Hidden costs are the most challenging to identify. They often come from inefficiencies or overlooked aspects of the onboarding process.
For instance, if a new hire is not adequately trained in system processes, they may make mistakes that need correction. These errors can lead to further costs.
Another hidden cost is the potential impact on team productivity if the onboarding process is poorly managed. If a new IT employee doesn't feel supported from day one, they can take longer to become productive.
High turnover rates due to ineffective IT onboarding can also be considered a hidden cost.
Although these expenses are not always immediately apparent, they can significantly affect the total cost of onboarding.
A Detailed Breakdown of IT Onboarding Cost
Here's a detailed analysis of IT onboarding costs.
Orientation Costs
IT orientation is important to help new employees understand your company's technological systems.
This understanding makes new hires feel supported from day one. Once they know how computer equipment works or how to secure their data, they are more likely to engage with other team members and be satisfied with their work.
Orientation costs include initial training fees, training materials, and communication tools for remote employees.
Training costs vary, while communication tools are either free to use or charge you a hefty fee every month.
The IT management team also prepares and presents the orientation program, which adds to the total orientation cost.
Training Costs
According to a Training Industry report, the average training cost is around $954 per new hire. However, the actual rate of IT onboarding training may be higher due to the specialized knowledge and tools required.
For example, web developers require in-depth training about different programming languages and your company's standards.
Depending on their experience levels, they may spend weeks or months before they can contribute effectively to your team.
Meanwhile, network engineers must be trained on key networking concepts, such as subnetting and network security.
Your company must invest in hands-on learning, which requires purchasing software licenses and preparing technical training documents.
In both roles, the cost of training materials and the time spent in training should be considered.
Workspace Equipment Costs
Workspace equipment includes a laptop, desktop, monitor, keyboard, mouse, and webcam that your new employee will use to perform their job.
Companies can spend around $500 to $1,000 or more for a home or in-office work setup.
Investing in up-to-date equipment is important to improve productivity rates. Avoid outdated or inadequate tools because they can lead to frustration and decreased efficiency.
Onboarding Software Costs
In addition to hardware costs, companies must also pay for the software used in the IT onboarding process. Onboarding software can help reduce administrative tasks and related costs.
Software expenses include the cost of purchasing, implementing, and maintaining onboarding software.
Software vendors typically require a subscription to access their tools. Some charge a small recurring fee of $20 per month, while others demand hundreds of dollars.
While not as obvious, the implementation of software can also cost your business money. You must train your IT employees on how to use the tool effectively.
Lastly, you must consider the cost of maintenance. It's essential to keep the software running smoothly.
Lost Productivity Costs
During the onboarding period, new hires are not yet at full productivity. Meanwhile, experienced employees spend time training and mentoring new hires, which can affect their productivity.
This loss in IT productivity can be considered a business expense. On average, the employee cost is around $1,000.
Although this productivity loss is inevitable, a well-planned onboarding process can minimize the adjustment period. For example, providing ongoing support can help new IT hires ramp up more quickly.
What Factors Affect Onboarding Costs?
According to Forbes, the average onboarding cost is around $1,400 for every new hire. However, the total expenses are difficult to calculate because many factors influence the final amount. Let's take a closer look at each component below:
Company Size
The size of your company plays a major role in onboarding costs.
Larger companies with extensive IT departments often have more resources but also face higher costs due to the volume of new employees.
Meanwhile, smaller companies with fewer IT staff might spend less overall but could feel the financial impact intensely.
Organizational Structure
Your organizational structure also affects new employee onboarding costs.
Having a clear structure can minimize costs because key stakeholders are defined. For example, the IT administrator provides access to network systems, while the IT manager oversees enterprise license management.
The IT department won't waste time determining who handles a specific task.
In contrast, if roles and responsibilities are unclear, you're likely to waste too many resources when onboarding a new employee.
Hours Spent on Onboarding
The amount of time dedicated to onboarding new IT hires is another critical factor.
Longer onboarding periods generally mean higher costs due to extended training and support.
However, rushing the process might mean poorly integrated employees who may not perform well or stay long-term. This can lead to hidden costs, as you try to replace the former employee with a new hire.
It's important to balance the time spent on onboarding with the need to get new hires up to speed efficiently.
Resources Needed
Lastly, the resources allocated to the onboarding process, such as hardware and software, significantly affect costs.
High-quality resources, such as automated onboarding programs, can improve the onboarding experience but come with a higher price tag.
On the other hand, cutting corners on resources can save money upfront. However, they may result in higher IT turnover and additional costs down the line.
You must carefully choose your onboarding resources to ensure long-term success.
How to Reduce Onboarding Costs? 5 Effective Strategies Worth Trying
After analyzing onboarding costs, you're now ready to manage your budget effectively.
Here are some strategies to reduce onboarding expenses without compromising the quality of your onboarding process.
1. Streamline the Onboarding Process
One of the most effective ways to reduce costs is by streamlining the onboarding process. This means creating a standardized approach that can be applied to all new hires.
You can develop an IT onboarding checklist or an employee handbook. It should include all necessary steps and documents to help a new hire get up to speed quickly.
You can also automate repetitive tasks, such as setting up accounts and granting access to systems. Doing so saves time and reduces administrative burdens, which can translate to cost savings.
2. Create Reusable Onboarding Content
Investing time and resources in creating reusable onboarding content can also lead to significant cost savings.
You can develop comprehensive IT training materials, such as videos, manuals, and online courses, that can be used for multiple onboarding cycles. This approach reduces the need for costly live training sessions.
3. Use a Buddy System
You can assign a mentor or buddy to new hires to minimize onboarding costs.
Buddies can answer questions, help new IT employees navigate the company culture, and provide valuable insights from their own experiences. This way, new hires can spend less time on extensive formal training.
4. Consider Role-Specific Training
Instead of a one-size-fits-all approach, you can develop targeted training that focuses on the skills and knowledge required for each position.
This method ensures that employees receive relevant and practical training. It minimizes the time spent on unnecessary topics.
Role-specific training can also lead to faster integration and higher productivity. This saves you money down the line.
5. Implement Onboarding Software
Using onboarding software can significantly cut costs by automating many aspects of the process. These platforms offer features like electronic document management, task tracking, and progress monitoring.
They can also provide a centralized location for training materials and company policies, making it easy for new hires to access information.
While there is an initial investment in onboarding software, the long-term savings in time and administrative costs can be substantial.
Automate IT Onboarding With ezOnboard
ezOnboard automates IT onboarding by seamlessly integrating your existing HR system with Active Directory.
Once connected, it can automate administrative tasks, which reduces the money and time spent filling out paper forms.
ezOnboard also provides new employees with instant access to the necessary programs and resources.
This immediate inclusion in the company’s systems helps new hires feel prepared from day one. It shortens the time it takes for them to become fully productive, which can lead to cost savings.
Check their ROI calculator here to see how much money ezOnboard can save you. Or request a demo.
FAQs About IT Onboarding Cost Analysis
What is the average cost of IT onboarding?
The average cost of IT onboarding is $1,400 per new employee. However, the exact cost can vary depending on your company size, organizational structure, and specific onboarding needs.
Can technology help reduce IT onboarding costs?
Yes, technology can significantly reduce onboarding costs. Using onboarding software automates administrative tasks and other onboarding processes. This can save time and reduce errors down the line.
What are the emotional and mental costs of onboarding a new employee?
Onboarding can be stressful for HR and IT teams, especially in large organizations with high turnover rates. Constantly finding qualified talents, training new hires, and giving them access to the necessary tools can take a toll on their emotional and mental well-being. Having an automated hiring and onboarding system can lift these burdens off their shoulders.