4 Benefits of Having a Contract Solution as a Staffing Agency

Many of our clients are start-up or SME staffing agencies. They are specialists and the go-to recruiters in their industry. Often, they’re founded by staffing professionals with a lot of experience working for large agencies who have decided to take the exciting step to branch out and set up their own business.

A natural first step for these businesses is to focus on permanent (direct hire) placements. As their business grows, it’s common for them to start to seek solutions to enable them to place contract workers with their clients. But, why? What are the benefits of having a contract solution to offer your clients? Here are 4 reasons why having a contract solution as a staffing agency is beneficial for many businesses.

4 Benefits of Contract Staffing

One: There is good money to be made

Let’s be honest, one of the key drivers for staffing agencies is profit. Staffing is arguably one of the purest profit-making service businesses there is. According to Staffing Industry Analysts, in 2019, contract/temp staffing was valued at $130 billion of the total revenue made by staffing agencies ($150 billion+ when combined with direct hire revenue). This highlights the huge profit making opportunities within the contract space in the US.

Two: It adds real value to your business and recurring revenue

Chasing one-off perm fees is great, but building a book of contract business provides you with the ability to add value to the business and create recurring revenue from the contractors you have placed with your clients. Once you have done the groundwork of building a book a business – clients who need contractors and a pool of contractors – you’ll have a stream of recurring income.

Are you interested in seeking investment or selling in the future? If so, investors are more inclined to be attracted to a business that has generated revenue from contractors. Typically, the advice is to aim for 80% of your revenue coming from contract business to make your business as attractive as possible to prospective investors.

Three: Clients want flexible talent solutions

Particularly in uncertain times, many hiring companies want flexible talent and are keen to avoid liability by keeping workers off their books. Therefore, waves of uncertainty are often the perfect time to offer flexible solutions. You’ll be mitigating risk/responsibility for the contract workers away from your clients, improving their speed to hire, keeping costs/effort of hiring permanent employees down – and you can charge a healthy margin for this service.

Four: You can start and run a contract business today with the right strategies and partners

There is no doubt that they’ll be a learning curve if you’ve only ever focused on direct hire placements and it is important to be aware of the risks of engaging contract workers. However, don’t be put off. With the right strategy and partners in place, you can cut that learning curve significantly and avoid the pitfalls of running a contract business.

Interested in Learning More About the Benefits of Having a Contract Staffing Solution?

If you are interested in learn more about the benefits of having a contract staffing solution, you can download our free guide to find out how to start placing contractors. Alternatively, you can reach out and we will happily take you through how you can set up a contract solution for your staffing business in the US or Canada.