Over the past couple of years, the financial markets have been anything but stable. Between inflation concerns, interest rate hikes, and geopolitical uncertainty, volatility has become the norm — and many experts are warning that a broader economic downturn could be looming.
Sound familiar? It should — because that same unpredictability exists in the world of recruiting.
Recruiters know the highs and lows of the business cycle all too well. One quarter, clients are hiring like crazy; the next, requisitions dry up overnight. When the “downs” start to outweigh the “ups,” a reactive strategy isn’t enough — you need a balanced plan.
Just like financial advisors recommend diversifying across stocks and bonds to protect against market drops, recruiting firms need to diversify their service offerings. Relying solely on direct hire is like putting all your eggs in one basket. When full-time hiring freezes, so does your revenue.
The risk? That economic headwinds will slow hiring pipelines and cut into your bottom line.
Building a recruitment desk that includes both direct hire and contract staffing reduces that risk and creates a more resilient business model — one that can adapt, flex, and grow through market uncertainty.
Navigating Economic Uncertainty with Recruitment Desk Balance
Let’s be real: whether or not we’re officially in a recession, many businesses are feeling the effects of an economic slowdown right now. Companies are tightening budgets, delaying hiring decisions, and taking a more cautious approach to growth. If you’ve been in recruiting for any amount of time, this isn’t your first economic wobble — and it won’t be your last.
That’s why building a balanced recruitment desk is more important than ever.
Just like a diversified investment portfolio can protect investors from volatility, a recruitment strategy that includes both direct hire and contract staffing can help agencies weather economic ups and downs. Why? Because when permanent hiring slows, contract staffing often accelerates.
In times of uncertainty, companies may hit pause on full-time hires — but the work doesn’t stop. Project deadlines, deliverables, and operational needs continue, and contingent labor gives employers the flexibility they need without long-term commitment. Recruiting firms that can provide that flexibility have a major advantage.
Contrast that with agencies that rely solely on direct hire revenue. When full-time hiring freezes, so does their income.
While the current economy hasn’t been officially labeled a recession, the warning signs are hard to ignore: persistent inflation, fluctuating interest rates, corporate layoffs in key sectors, and a growing sense of caution among decision-makers. Economists are split on whether we’re already in a mild recession or just skimming the surface — but either way, the smart move is to prepare as if the slowdown is here.
This isn’t about fear — it’s about strategy. The firms that thrive through economic turbulence are those that plan for it. And one of the most powerful tools in your playbook is contract staffing.
Here are five ways contract staffing can help bring balance to your recruitment business during uncertain times:
#1—Off-set the loss of direct hire business.
As mentioned above, direct hire placements typically take a dive during a recession. However, contract assignments often increase due to the fact that companies still need to get work done. If you offer contract staffing solutions to your clients, then your contract income gives you enough to at least cover your overhead.
You can even make up lost direct hire placement income by taking on more contract placements. Over the years, countless recruiters have told us that contract staffing kept them in business during recessionary times.
#2—Make placements even with a hiring freeze.
Just because a client has instituted a hiring freeze, that doesn’t mean you can’t still make placements with that client. Once again, as mentioned above, companies still have deadlines to meet and projects to complete. If there’s a hiring freeze, how are they going to do that? They’ll do that by hiring contractors for a specified amount of time because traditional contractors come out of a different budget than direct hire employees.
#3—Close more deals by offering contract-to-direct candidates.
In some instances, a company might be hesitant about bringing a candidate on board on a full-time basis. Perhaps they’re not 100% sold on the candidate. Maybe due to budgetary constraints, they absolutely want to make sure that this candidate is the one they want. Whatever the case, offering to place candidates on a contract-to-direct basis could be the answer your clients are seeking.
This will give the client the opportunity to “try before they buy.” In this type of deal, you’ll earn hourly income during the contract period. Then, if the client decides to hire the contractor on a full-time basis, you can also earn a conversion fee. More companies are choosing this option because if the contractor isn’t a fit, they can simply end the assignment.
#4—Make contract placements with the same client base.
The good news is that you do NOT have to market your contract staffing services to an entirely new client base. That’s because you can just use your existing client base (even if they’ve instituted a hiring freeze)! The only thing you really have to do is let your clients know that you can place contractors. Since you already have a relationship with them, it will increase the chances that they’ll also turn to you for their contract staffing needs.
#5—Build more cash flow consistency and flexibility into your recruitment desk.
Have you considered the advantages of more cash flow consistency and flexibility on your recruitment desk right now? How much more could you use them during a recession? Not only can you make a substantial amount of money by adding contracting to your recruitment desk business plan, but you can also earn it in a steady fashion. You continue to earn money each hour that your contractors are working, and since most clients pay invoices on a weekly basis, you’ll be able to enjoy weekly cash flow.
Recruitment desk business plan for an uncertain future
The days continue to pass, and your business continues to run. However, have you been proactive about preparing for whatever uncertainly might lie ahead?
This is the perfect time to conduct an audit of your recruitment desk business plan. What would you do if direct hire job orders started to dry up? Are you in a position to offer contract staffing to your base of clients? If not, what steps do you need to take?
One day in the near future, a recession will be here. It’s an economic and historical certainty. Don’t get caught flat-footed. Reduce risk and vulnerability by building a fully balanced recruitment desk with both direct hire and contract staffing.
Contract staffing helps recruiters balance their desks . . . and it could help you, too.
