IT Contract Staffing: A Lucrative Niche

Dear Barb,

I want to begin to add contract staffing to my executive search firm and have several questions. Do I need to operate under a separate name? What is the best way to fund the payroll? Do I have to provide benefits for the contractors? My niche is IT; do I place contractors in my same niche? Sorry about all the questions, but I’ve only done executive search for over 20 years.

Dave G.
Baltimore, MD

 Dear Dave,

I’ll try to address all of your questions. IT contract is one of the most lucrative niches, so I would place contractors in your same niche, which probably means you can keep your name. Many of your current clients are probably hiring direct candidates from you and contractors from someone else. Offering these additional services to your current clients is the most effective way to enter the contract segment of our profession.

You might want to add the word “contract” to your current name to specify that this is your contract division. Talk to your accountant about the possibility of putting your contract business in a separate entity if there are tax advantages in having multiple entities.

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There are many funding companies that handle the entire back office for you, take their cut and then send you a check. Most contractors are paid benefits. This is something you should also do to be competitive. These funding companies are informed of the insurance requirements of the Affordable Care Act, which is another benefit to using a funding company vs. hiring an additional employee to handle your back office. This recurring revenue model will definitely enhance the value of your business.

Barbara J. Bruno, CPC, CTS

Barb Bruno, CPC, CTS, is one of the most trusted experts, speakers, and trainers in the Staffing and Recruiting Professions. If you want to receive FREE training articles from Barb, sign up for her NO BS Newsletter! Barb has spent the last twenty years focused on helping Owners, Managers, and Recruiters increase their sales, profits, and income.

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