Within the next decade, contract workers will make up 50% of the American workforce. The COVID pandemic will only exacerbate these trends, as employers seek fewer risks when hiring due to erratic markets. Employers need help, but given the sometimes-shaky economy, it’s easy to see why a contract workforce makes sense.
For staffing companies, taking advantage of these trends is a smart way to capitalize on these trends. But there are other benefits to staffing contract workers. Here are three you should take note of:
Best Reasons to Supply Contract Workers
Companies are turning to the contract workforce to meet gaps in demand. This is true in every industry, from healthcare to transportation, manufacturing to finance. The contract workforce is a type of temporary employee that is usually hiring by the staffing company.
There are complexities inherent in these models for the staffing firm. For example, unless the staffing agency engages with an employer of record (EOR) like FoxHire, they handle all the legalities surrounding HR, benefits, taxes, and hiring in general. It’s an area laden with complexities; if you aren’t an expert in these areas, there is massive risk that you will run afoul of compliance rules.
However, there are huge benefits that come with staffing contract workers, if you know how to do it well:
- Technically, the worker is not an employee of your organization. When the contract is over, you are not responsible for the employee. Too, if the employee is classified as an independent contractor, they pay their self-employment taxes. Your company will save money by not offering benefits or other perks that go to full-time employees.
- Contractors are revenue generators in every sense of the phrase. In most cases, you make revenue off of every hour the contractor works. Some companies will pay a fee to place the contract workers plus a percentage of income from the hours worked. This is commonly in a residual form that follows the pay period of the contracted worker.
- There is a great deal of flexibility inherent in these models. With more workers interested in these types of positions, and more employers understanding these models’ benefits, adding contracting to your staffing agency model could take advantage of a win/win for candidates and employers. You can add as many of these positions as you can come up with; or slow down if needed. That’s the beauty of contracting—it is a flexible form of work that can and does benefit employers and workers.
There are many benefits to staffing contractors as part of your recruiting firm’s portfolio. The biggest difficulty for most agencies is that the complexities of managing taxes, HR, and benefits for contractors on top of the other candidates they place is a little daunting. That’s why many staffing agencies turn to FoxHire.
Partner With the Top EOR!
We are an EOR specializing in taking the administrative burden off of staffing agencies by handling the variances in hiring, benefits, and tax compliance rules. This is a particularly valuable service if your agency is staffing contingent workers across state lines. As an EOR, we are legally able to handle all HR administrative tasks no matter where you’re doing business. Talk with our team. Our service pays for itself and lets you focus on revenue generation and building your business.