There is no doubt that contract staffing is continuing to increase in almost all technical and professional sectors. As a reminder, the top five industries for contract staffing in 2014 were:
- IT (consistently a strong field)
- Healthcare (degreed professionals)
- Accounting and Finance
- Business Professionals
Are you considering adding contract staffing to your business model? If so, you have probably wondered if you should hire new staff to work solely on contracting. There are essentially two pieces of a contract staffing business:
1) The FRONT-OFFICE job order and candidate recruiting tasks
2) The BACK-OFFICE administrative, legal and financial requirements
The good news? You don’t have to hire someone to handle the back-office tasks if you outsource them to a full service back-office provider. Additionally, the ramp-up time is significantly less if you outsource the back-office. You can place a contractor in a matter of hours instead of the months it would take to establish your own Workers’ Compensation, payroll funding, legal contracts, payroll processing, taxes, insurance, etc.
Even MORE good news… Since 1992, we have worked with recruiting firms who have added contract staffing to their business model without hiring any additional recruiting staff. We have also worked with firms who have decided to add a recruiter who focuses exclusively on contract placements.
In the end, there is no right or wrong answer. It comes down to your firm’s unique requirements and aims. Let’s consider the pros and cons of both avenues.
Using Existing Staff/Recruiters
The biggest “pro” of utilizing your existing staff (or doing it yourself if you are a one-man show) is keeping your overhead low. Moreover, our statistics show that 80% of a firm’s contract staffing business comes from their existing direct hire clients. Many firms and clients already have a strong working relationship entailing a great deal of trust, so it is easy to transfer that relationship to contract staffing.
The potential con here lies in the learning curve. Thankfully, it isn’t that steep. For recruiters new to contract staffing, learning how to set the rates is a common challenge, but it is not nearly as complicated as it looks. If you are working with a contract staffing back-office, they can lead you through the entire process to make certain you are quoting fair and reasonable rates with the maximum amount of recruiter profit.
Hiring Contract Staffing Recruiters
The “pro” in this situation is that the recruiting firm can hire someone who already has experience with contract staffing. That way, the recruiter hits the ground running with little to no training. If you are looking to aggressively build the contract staffing side of your business, it is also helpful to have someone who is completely focused on contract job orders.
Of course, unlike your current team, this new recruiter won’t have an established relationship with your clients. This could initially be a stumbling block, and your clients may not like having to work with different recruiters for direct hire and contract.
What’s Best for YOUR Firm?
Again, there is no definitive right way. We have seen great success using both approaches. And in some cases, a recruiter has started doing contract staffing with existing staff and it became so successful that he/she had to hire additional recruiters to handle the large volume of contract job orders. It ultimately comes down to what is best for your firm.
Perhaps statistics will also factor into your decision. We analyzed the data of recruiters making contract placements with our back-office: Only 11% hired additional staff, while the other 89% started offering contracting by doing it themselves or using their existing staff.
Rest assured that no matter which choice you make, you have already increased the value of your firm simply by adding contract staffing.