Contracting Myth 1: It Takes Time From Direct-Hire Orders

"I barely have time for the searches I already have." That was the objection we heard most often in 2010 when we suggested direct-hire recruiters add contract placements, and it's the myth that kicked off our Contracting Myths series in April of that year.

What we said in 2010

Here's the original myth and our answer, lightly cleaned up:

The Myth: Contract staffing takes time away from working on direct (perm) placements.

The Truth: Contract placements usually take less time to complete than direct (perm) placements because the client is simply looking for someone who can get the job done, even if they are not the best cultural fit. Plus, the steady cash flow from contract staffing can give you the freedom to spend more time on direct placements.

Most of that still holds up. The reasons deserve a closer look, though, because the part of contracting that really eats your time has shifted.

Why contract searches often move faster

When a client opens a direct-hire search, they're choosing someone they expect to keep for years. So they care about culture fit and long-term potential, and they want to know the salary will hold up against a competing offer. A contract order usually starts from a narrower question: can this person do the work on this project, and can they start soon?

That shorter list of must-haves tends to mean fewer interview rounds and a quicker decision. There's often less haggling over compensation too, since the client isn't making a permanent commitment yet. A hard-to-find skill set is still hard to find, of course. But for a lot of roles, especially project work or coverage for a leave of absence, the stretch from job order to start date is shorter than a typical perm search.

Where the time actually goes now

For most recruiters, the bigger time drain was never the search. It's everything that happens after the candidate says yes. Somebody has to be the W-2 employer, run payroll every week, withhold and file payroll taxes, carry workers' comp, and register for unemployment insurance in each state where a contractor works. If you try to handle all of that yourself, contracting really can crowd out your direct-hire desk.

That's why most recruiters who place contractors work with an Employer of Record (EOR). The EOR becomes the legal employer of your contractor and takes on onboarding, payroll, and compliance. You keep the client and the candidate relationship. Your part looks a lot like a direct-hire search, which we dig into in Contracting Myths 5 on how contract placements compare to direct hire.

Contract work can feed your direct-hire desk

There's another side to this myth. Hiring managers bring you problems, and some of those problems call for a contractor rather than a permanent hire. When you can fill the contract need too, you're more likely to be the first call for their next direct-hire search. But if you turn a contract order away, the client takes it to another firm, which now has a relationship with your client and a shot at their perm work.

How to fit contracting into a direct-hire week

• Ask about contract needs on every intake call. When a client mentions a project, a backlog, or someone going on leave, ask whether a contractor could cover it. It's one extra question, and it can surface work your client would otherwise hand to another firm.
• Keep contract-ready candidates in mind. A strong candidate who isn't right for a perm role today may be a great fit for a three-month assignment.
• Offer contract-to-hire when a client hesitates. A trial period can keep a stalled direct-hire deal moving, and a contract-to-hire conversion can still end in a placement fee.
• Hand off the employment work. Let your EOR handle onboarding paperwork, timesheets, and payroll so your hours stay on recruiting.

The point we made in 2010 still stands. A few contractors on assignment can bring in steady revenue that helps cover your overhead in a slow month, and that breathing room lets you go after bigger perm searches with less pressure. Wondering whether that revenue is worth the effort? Contracting Myths 2 runs the numbers on contract staffing income.