In any business, the key to rising above the competition is to differentiate yourself. Recruiting is no different. You have to show clients why your firm is the clear choice among a seemingly endless sea of recruiters.
One of the best ways to do that is to position yourself as a business partner who can solve all of your clients’ staffing needs. To do that, you must be able to offer contract staffing in addition to direct/perm hires.
This has never been more important than right now. Even though the recession has been over for almost four years, employers are still reluctant to commit to direct hires. There are a number of reasons for this, but they can be summed up with two words: Cost and Uncertainty.
Employers’ costs are increasing rapidly, and they are bracing for what might be the biggest hit yet – the Patient Protection and Affordable Care Act (PPACA), or Obamacare. The healthcare reform law will require employers with more than 50 full-time employees to provide health insurance starting now in 2015 under the law’s “employer mandate.” Those who don’t provide the required coverage will pay penalties. Those who do comply will face increased costs and administrative headaches.
And then there is the uncertainty. The economy is still struggling to get solid footing, and indecision in Washington is not helping. Employers fear additional laws and budget cuts will squeeze them even further. If the recession taught them anything it’s that they don’t want to hire people they will just have to lay off. The continued uncertainty isn’t giving them much reason to take a chance.
But companies still have work and projects to complete. That’s why many are turning to contractors. Contractors lower companies’ costs because a third party (typically a contract staffing back-office) becomes the legal employer. The third party takes on the employment costs and responsibilities, including Obamacare compliance. Contractors also allow companies to get help without commitment. They can quickly ramp up for busy times, projects, and deadlines and end contract assignments when the need passes or the economy goes south.
The recent Randstad Workforce360 Study found that companies no longer view contract staffing as merely a short-term fix, and are instead making it part of their long-term business strategies. According to the study, 67% of companies utilize contractors and 21% planed to increase their contractor population this year. So don’t assume your clients are not interested in contract staffing just because they haven’t asked you about it. They may think you don’t provide contractors and are turning to your competitors to get them.
Become a Sole-Source Provider
If you don’t place contractors, now is the time to seriously consider it. Failing to offer contract staffing is like handing your competitors business on a silver platter. By adding contract staffing to your business model, you can become a sole-source provider to your clients, satisfying all of their staffing needs so they have no reason to turn to other recruiters.
In addition, contract staffing can help you:
- Increase revenue with a steady, predictable cash flow.
- Create an exit plan for selling your firm and retiring, The steady revenue from contracting makes firms more attractive to buyers.
- Overcome client hiring freezes and budget constraints.
- Earn contract-to-direct conversion fees (in addition to the rate you earn for every hour contractors work).
Some recruiters shy away from contract staffing due to the legal, financial, and administrative tasks. But if you utilize a back-office, placing a contractor is essentially the same as working a direct hire job order. You get the job order, recruit the candidate, and negotiate the rates. As the legal W-2 employer for your contractors, the back-office handles the rest, including the legal, financial, and administrative tasks.
There’s no reason to let competitors get contract business you can easily do with the help of a back-office. By offer contract staffing, you can become a valued partner to your clients . . . and the only recruiter they will ever need.