Forbes magazine recently predicted that employers will make contract hiring a consistent cost-saving hiring strategy in 2023, stating that “savings arise for companies because contractors generally don’t receive generous health benefits, paid time off, stock grants and other incentives and perks.”
Additionally, a recent LinkedIn report revealed that the number of job postings for contract roles in the technology vertical tripled over the last two years, all while NBC News reported that “white-collar layoffs soar at brand-name companies amid concerns of economic slowdown.”
The prolonged turbulent economy, coupled with a near-constant threat of a recession, means that customers that have never considered non-perm hiring are pursuing this cheaper, faster, and more flexible staffing option. As a result, staffing agencies are deploying multi tier revenue models by adding temp deals to their service offerings to remain competitive during fluctuating market climates.
Perm deals have always offered a lucrative ROI, but with a limited, single profit spike — one significant lump sum. Unfortunately the “one-and-done” invoicing process can also increase financial risk and potential revenue gaps between placements for agencies of every size.
Enter the “IMPROVED” contract (or temporary) staffing model.
Including Temp Deals Can Exponentially Increase Revenues for your Staffing Agency
Unlike perm deals that use salary to generate commission, non-perm hires receive an hourly rate. The staffing agency takes a percentage of that hourly rate (which includes a markup on top of the candidate's pay rate) for every hour the contractor works throughout the contract. As a result, every temp deal initially offers a passive-income opportunity which could last weeks, months, and in some cases, years. Passive often times can become MASSIVE, especially when gross margins exceed the 20/25% charged for perm fees.
Temp Deals Help Staffing Agencies Remain Competitive in Uncertain Job Markets
Nonperm deals can do more than boost your bottom-line profits. Offering temporary staffing services allows recruiters in every vertical to expand their value to the clients they support — particularly in times of uncertainty in the job market. Although perm and temp deal demand ebbs and flows amongst client favorites, all relevant hiring programs must deploy some element of temp hiring to be competitive….and CUSTOMERS EXPECT CHOICES.
An Employer of Record Simplifies The Temp Placement Process for Staffing Agencies
The good news is that adding temp deals to your staffing agency’s services can boost revenue and profit margins. The great news is adjusting your hiring model to include temporary placements doesn’t have to be hard. Partnering with an Employer of Record (EOR) can make temp deals easier than PERM deals for your staffing agency in these five essential ways.
Turnkey Operations
An experienced EOR provider will handle virtually everything except the recruiting on every contract hire. You can continue to do what you do best — source and staff. Your chosen EOR will have everything needed to manage all of the necessary paperwork and processes throughout the length of the contract. Onboarding, payroll, automated profit reporting, tax forms, workers’ compensation, and more — the right provider will manage all the necessary operations to keep your workload to a minimum and ensure your contractor (and you) get paid.
Customized Services
Your EOR provider knows firsthand that not all contract deals are created alike — they also recognize that not all staffing agencies have the same needs. Your partner will work closely with you to understand how to best support your company on non-perm placements. They will use this knowledge to customize their services to ensure the right final fit for your business.
Cost and Time Savings
Some staffing agencies may attempt to handle temp deals internally, only to learn that managing contract hires using internal employees can be both inefficient and expensive. A reputable Employer of Record allows you to outsource the entire process to a trained and experienced team, often at a fraction of the cost of handling it internally. Outsourcing to an EOR also saves you a significant amount of time, allowing you to focus on your core business and top-line growth.
Cutting-Edge Tech Stack (Theirs, not Yours)
Beyond hiring additional employees to manage non-perm deals internally, you also may need to purchase the tech stack required to support contract services. An EOR eliminates this added expense — you'll have access to their state-of-the-art tech stack to automate and process everything needed for a successful contract.
Compliance
Most importantly, an EOR prioritizes maintaining full compliance across every contract with local, state, and federal requirements. They keep your contracts up-to-date with the very latest (and often changing) mandates to eliminate risk entirely for your organization from start date through end date — how easy is that?
Headcount Management Can Make Temp Deals Easy for Your Staffing Agency
Headcount Management creates customized EOR solutions to lower costs, eliminate risk, and protect bottom-line profits on temp deals. Contact us today to learn more about how we make temp deals easy for staffing agencies.
