In this current economic climate, clients are reluctant to increase their company headcount due to having a large fixed cost on their books so look to use contractors to perform the same work. When large companies announce redundancies you will often see the same companies offering contract positions to ensure continuity of service to their customers. This has meant in recent times that there has been a large shift towards contracting as companies require the skill set without having a permanent member of staff on the payroll.
There are a number of advantages for agencies to move into the contract market:-
- On-going profit and turnover – Contract recruitment enables you to have a steady income stream every month even when you make no on-going permanent placements. This means that even when you are on vacation you will still be generating profit every day your candidate works.
- Stronger relationships with clients and candidates – Speaking to your candidates and client managers on a regular basis during the contract placement can give you inside knowledge of other contract and permanent positions available within the company allowing you to service your client’s needs.
- Makes your agency more saleable – An agency with a large turnover and a number of long term contract placements can be viewed as more valuable than a permanent only recruitment business
- Increased chance of longer rewards – Most contract positions will renew at least once during their lifetime meaning that you could generate greater profits for a longer period for only a small amount of renewal contract paperwork. Some contract placement will be renewed on more than one occasion depending on the client’s requirements and the candidate’s effectiveness on site.
- Invoice Finance and Funding is not expensive – Using invoice finance and other funding solutions such as “Fund My Contractor” means that agencies do not have to use their own funds to place contractors making it a viable option without affecting the agency cash-flow.
- Increases the Versatility of your Agency – By offering contract placements you are able to present a fully comprehensive recruitment solution to your clients and can often open up new introductions.
- Contract Agency Fees can be higher than Permanent Recruitment Fees – Most contractors’ hourly/daily rates are much higher than their permanent counter parts and as the margins are often the same the rewards are much higher. However, ensure you take the funding fees into account when calculating the profit margins.
Contract recruitment can open up new possibilities for your agency to your clients and the rewards can be extremely beneficial, both with profits and the expansion of services offered by your agency.
Fund My Contractor offers a fully comprehensive back office and funding solution to recruitment agencies looking to move into the UK and International contract markets. TBOS offers a full outsource services for contract and permanent recruitment agencies incorporating invoicing, payments, credit control, book keeping, management reporting and end of year statutory work to ensure that agencies concentrate on what they do best… sell!
