6 Reasons Why you Should Start Contract Recruitment in the US
Contract recruitment has become the focal point of the majority of our high-profile UK recruitment clients operating in the US. Requirements and timeframes to hire in the recruitment world are condensing by the day. It is little wonder why contract recruitment is becoming the growing preference in the US, accounting for over 87% of the US staffing industry’s $177.1 billion in 2021. This article will highlight reasons why you should consider placing contractors in the US recruitment market.
1) A Larger and Less Saturated Market
The US dominates the staffing industry, generating over 30% of total global staffing revenue. Temporary and contract recruitment revenue make up the largest segment of this market, with annual sales totaling a new record high of $157.1 billion in 2021, according to Staffing Industry Analysts.
The UK only generates 9% of global staffing revenue, but surprisingly is more saturated than the leading US market. According to the 2020 figures released by the Office of National Statistics, there were over 32,590+ recruitment agencies operating in the UK, vs approximately 25,000+ in the US recorded from the last available data from ASA. This presents a tremendous opportunity to bring your knowledge of contract recruitment to a less competitive and more receptive market.
By tapping into the US contract market, you have a significantly larger talent pool and deals to chase due to the sheer size of the area. To put it into perspective, California alone produced more gross domestic product (GDP) than the UK in 2020, and that’s just the profitability of one state.
2) Double Your Margins in the US
Everything is bigger in the US, including the margins (or markups as they’re called in the UK). From our experience of working with UK staffing agencies, the average margin in the UK is 15-20%, with some going as low as 8% to secure deals. In the US we have seen margins between 25-45%, with many going in at 35%. So when you compare Uk vs US recruiting, recruiters in the US are doing the same duties they would be doing in the saturated UK market but for double the margins. Why do more work for less?
3) Seize the New Age of Contingent Talent
Contract recruitment in the US has never been more lucrative for agencies, with the number of temporary employees hired by staffing companies totaling 14.1 million in 2021, up from the 13.6 million hired in 2020, according to ASA.
The rise in remote work has accelerated this US contingent workforce expansion. According to Robert Half, 45% of companies use contract professionals as the majority of their staff, and a further 33% forecast that one in three of their employees will be temporary workers by 2023. With the number of contract workers and intentions to hire them only on the rise, the time to get into the US contract market is now.
4) Offer Flexible Solutions
Pay attention to the shifts and trends in the market. When times of uncertainty arise like a financial downturn, often businesses disregard their plans for permanent vacancies and contract demand goes into overdrive. Offering a contract solution in the US alongside your UK offering makes your business not only more adaptable but means you can scale up and down easily to service your client's changing needs. Not forgetting that investors are attracted to and will pay a higher multiple for businesses that can show international experience and the ability to service both permanent and contract recruitment.
5) Recurring Revenue
Placing only direct roles can create fluctuations in revenue. Extending to contract recruitment in the US allows you to build strong and steady recurring revenue and form stronger relationships from constant contact as contracts are often extended.
SIA’S US Staffing Industry Forecast in 2021 shined a light on why contract staffing is a more profitable avenue to explore in the US over direct placement. Revenue generated from temporary help in the US in 2020 equaled $120.8 billion, towering over place and search at $15.2 billion. This again demonstrates how employers rely heavily on recruiters and contract talent to quickly fill openings within their business during times of uncertainty.
6) Growing US Salaries Translates to Higher Margins
If you are a recruiter who has not yet entered the US staffing industry, the rising salaries make the market an even more attractive destination for growth. 73% of recruiters reported candidates negotiating for higher salaries in 2021 in Jobvite's Recruiter Nation Report. The higher salary your candidate receives, the greater margin potential.
Staffing revenue generated from in demand roles in tech, and marketing has consecutively climbed since 2021. Tech is a soaring sector worth focusing on in the US, where salaries have increased across the US by an average of 6.9% according to Dice’s Tech Salary Report.
Furthermore, IT temporary staffing is predicted by SIA to be worth an all-time high and up 5% from the pre-pandemic level in 2019 by the end of 2022. We have witnessed agencies who traditionally specialize in perm, seeking to expand into contract recruitment in these specialized roles to capitalize on consistent growth and diversify their business portfolio. So, if you want to grow your recruitment agency in 2022, contract recruitment in the US could be your answer.
You Find the Candidate; We Sort Out the Rest
It’s easier than you think to start making contract placements anywhere in the US, in fact you can access the US contract market right now from your UK office. How? By using us as your employer of record to compliantly onboard, engage, and provide benefits and payroll to your US contractors. This means all you must focus on is sourcing the contract talent for US clients to seize the higher margins.
At PGC we’ve been helping recruitment agencies set up their contract recruitment solutions in North America for over 20 years. Find out how we can help you start contract recruitment in the US via a free strategy call.
Disclaimer: All information written here is for general informational purposes only and is not intended to be a substitute for professional and/or legal services.