7 Ways Contract Staffing Can Benefit Your Firm

There are many advantages to adding contract staffing to your business model. Most of them are geared toward what it can do for you and your firm financially.

And as companies continue to build their workforce models around contract staffing, these services are becoming more essential to keeping recruiters competitive in today’s market.  Still on the fence?

Consider the following seven advantages of contract staffing to your recruiting business:

#1—Increase your profit.

There is a common misconception held by many direct hire recruiters that there isn’t enough money in contracting. In reality, contract staffing can be very lucrative. For example, it is common for recruiters running a blended desk (direct hire AND contract staffing) to have 10 active contractors working at any given time. Let’s say you make an average of $12 per hour on each of those contractors. That’s $120/hour. Over the course of a year, those contractors would earn you $249,600. And that doesn’t even include overtime. Contractors get paid for every hour they work, and consequently, so does the recruiter who placed them.

#2—Enjoy steady cash flow.

It’s not just the amount that is impressive. It’s also the fact that you earn that money consistently. As a result, you can offset the peaks and valleys typical of direct hire recruiting. When you only make direct hire placements, your chances of making money pretty much stop when you leave your phone. As mentioned above, contracting generates income for you each hour your contractors are working. Most clients pay invoices on a weekly basis, so you’re provided with a predictable, regular income. This allows you the freedom and flexibility to actually take a day off work, or maybe even a full-fledged vacation . . . and you’ll still make money.

#3—Meet all of your clients’ needs.

Again, companies are increasingly adopting a blended workforce model that includes both direct hires AND contractors. That means they have a consistent need for contractors. If you cannot provide them, your clients have no choice but to go to other recruiters for that service. Contract staffing allows you to satisfy ALL of your clients’ needs, setting you up as a “sole-source provider” so they will have no reason to go anywhere else.

#4—Improve your direct hire business.

Another common misconception about contract staffing is that it takes away from direct hire business, but the opposite is actually true. Companies like the convenience of having one point of contact for all of their staffing needs. So if you are a sole-source provider as described above, you may find that clients who initially come to you to fill their contracting needs may also give you their direct hire business.

#5—Save deals with contract-to-direct.

In a contract-to-direct situation, the candidate works for a period of time as a contractor with the intention that they will eventually be converted to a direct hire. This is a viable solution for some common problems that often kill direct hire deals. For instance, if you think you have the perfect candidate for a client, but the client isn’t sold, you can allow them to try the candidate on a temp-to-direct basis. If the person proves to be the star candidate you believe them to be, the client can then extend a direct hire offer.

If the candidate does not meet expectations, they can end the contract and try someone new. Another situation is when a hiring freeze crops up while you are in the middle of a search. You can offer a candidate on a temp-to-direct basis. Contractors come out of a different budget than direct hires. As a result, companies can use them during a hiring freeze and then convert them to a direct hire when the freeze lifts.

#6—Build new revenue with the same client base.

Statistics show that 80% of contract job orders come from a recruiter’s existing direct hire clients. That means you don’t need to do additional marketing in order to drum up “contract clients.” The business is there for the taking. All you have to do is tell your clients you can place contractors. You will likely be surprised by the positive response.

#7—Retire from recruiting with something to sell.

When the owner of a small direct hire firm decides to retire, there usually isn’t much to sell except a client list. However, what if those direct hire recruiters had added contract staffing to their business model? Then they’d have something to sell and they’d be able to retire comfortably. The value of contracting is in the contractors themselves and the money that those contractors generate.

You can reap these benefits without any upfront investment of cash or additional staff. But only IF you utilize a recruitment back-office solution such as Top Echelon Contracting. The back-office becomes the employer of your contractors, handling all of the legal, financial, and administrative tasks of the contract placements.

All you have to do is your normal recruiting tasks . . . and collect the income checks. If you are ready to experience the above benefits, give contract staffing serious consideration.

(Editor’s note: This article is intended for informational purposes only and should NOT in any way be construed as legal advice.)

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