The staffing and recruiting industry has many variations. Some of the terms in the industry can be confusing if you’re not an insider. Even if you do recruitment, you may not know all the terms associated with the industry. Contract Staffing is one of those terms that many, when they hear it for the first time, are unfamiliar with. Contract Staffing is an arrangement between a staffing agency and a client, where the agency finds talent and then provides that talent to the client on a short term or project basis. The key to this arrangement is that the candidate is not a full time employee of the client, but rather an employee of the staffing agency. This difference is one of the biggest compared to traditional recruitment or “direct hire” recruiting.
How do contract agreements work?
Typically an agency agrees to provide temporary or contracted talent to a client for a certain period of time. Once the talent is secured, the agency will “mark up” their pay rate in order to cover their expenses and make a profit. The employee would then work for the client for the duration of the contract, or on an as needed basis, until the client hired them full time or let them go. The staffing agency tracks each hour the employee works and then bills the client. Once those bills are paid, the agency makes a profit. As clients pay bills consistently, the agency begins to generate recurring revenue.
What industries use contract staff the most?
The most established industries for temp and contract talent are the below three, manufacturing, clerical, and healthcare. However, IT has grown in recent years and you can offer contract staffing in almost any industry or position niche.
There are thousands of staffing firm offices in strip malls all over the US that place and manage workers for manufacturing clients. This industry has long been one of the most common for contract and temp labor. As such the pricing in this industry is very competitive, and there are very slim margins. However, there is usually very high volume for these types of workers, so that is how most firms make their profit (high volume, low margin).
Over the last 3 years healthcare temporary and contract staffing has boomed. The industry was already strong before, with traditional travel nursing, but COVID-19 just exasperated the need for temporary staffing. So this industry has become one of the most common for staffing and recruiting agencies to target. In fact, thousands of healthcare staffing firms were started during the COVID pandemic in order to meet the need.
Clerical and IT
Finally, another long standing industry for temporary staffing has been clerical. In the past “temps” were provided to fill in for people out of parental leave, or for project work. However, as IT needs boomed there has been growth in the need for temporary and contract staffing for project based needs as well. This has given rise to freelance management platforms like Fivrr and Upwork, as well as helped many recruiting and staffing agencies find new forms of revenue.
How to offer contract staffing
The biggest challenge holding recruiting agencies back from offering contract staffing is the infrastructure. Things like payroll, insurance, benefits, timesheets, and more are things you will need to have in order to place contract workers. Without those things, clients will not work with you for those services. Some agency owners decide to build that infrastructure, while others look for different options like employer of record (EOR) services. FoxHire works with thousands of recruiting agencies in order to help them place contractors without worrying about the back office needs.