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The Ins and Outs of Contract Staffing

Michael Clegg | 05/16/2018

At Q Works, we have been serving the executive permanent placement profile across multiple disciplines and industries for the past 16 Years.  We are pleased to announce that in addition to our permanent placement services, we will now be serving the contract employment sector as well.

It is 2018 and we are living in what many call a “Gig” economy.  You may have heard about this or seen a business headline but what is it?  It’s also called Workforce 2.0.  It may also be referred to as freelance work.  Today, over 40% of the workforce has means to a secondary income.  By 2020, over half of the workforce will be in this group.  Many start their freelance work by doing a Contract or Contract to Hire role.  This is a sector of the workforce that continues to expand annually.  As things evolve, one thing is certain and that is that there is very little “permanent” employment any longer.  The days of retiring after 30+ years in one company is the exception rather than the rule.  Given this shift in employment status, this article is going to clearly define and provide insight into the world of contract staffing.

What is a contractor? 

  • Contractor: a candidate hired for a specified amount of time based on the client’s needs. Typically, this kind of work offers flexibility and variety.  Often, it will open doors connecting them with new employers and great opportunities.  The contractor is usually a 1099 (Independent Contractor) or a W2 employee of a Firm that supplies these contractors.
  • Contract to Hire: a candidate hired for a specified role for a specified amount of time that is intended to end by converting to a full-time employee at the employer

How is contract staffing beneficial to employers?

  1. It provides reduced employment costs.
  2. Flexibility in staffing.
  3. Less risk.
  4. Allows the employer to “try before they buy” a permanent employee.
  5. Allows the employer to fill a need without formally using Headcount.

Hiring an employee permanently is a great expense to an organization.  In many cases over twice their annual salary. Employers costs are tough to calculate.  The salary is the easy part.  The additional taxes on the employer side, healthcare and initial onboarding expenses like training for starters in addition to standard overhead costs.  Hiring a contractor usually eases the burden of onboarding and it allows the employer to “try before they buy”.  They can evaluate if the contract employee is a good fit for their organization.

How is contract staffing beneficial to employees/ job candidates?

  1. It provides potentially higher earnings.
  2. More frequent pay.
  3. Flexibility in time/schedule.
  4. Increases their skill level within a different environment.

Another great reason is large enterprise companies with very recognizable names/logos are major consumers of contract staffing.  In many cases, it can take weeks or months to get hired in large organization.  Partnering with a recruiting firm as a contractor can cut this time significantly.

Additional benefits to the contractors start with the relationship between the recruiting firm and the client.  In many cases, the recruiter has worked with a particular client for many years.  And as such, the recruiting firm becomes an extension of the end client.  The recruiter knows the decision makers and understands their culture and what is important to the client.  Often, these relationships are lost with the larger recruiting firms because they lose the relationships based on the scale of the operation. The larger the client, the further away the relationship gets.  Only a few that have significant tenure can close these gaps.  A recruiting firm with strong tenure and leadership can be a value add to the contractor and help them get placed with an organization that is the best fit for them.

The Global Staffing Industry is over $400 billion industry and over $150 billion in the U.S.  It continues to grow each year.  As there continues to be more uncertainty over government regulation, automation, business intelligence and many other things, companies continue to expand and need a flexible workforce that fits their needs.

The Staffing Index was at an all-time high in April of 2018 since its inception.  The index measures the overall number of employees participating in a contract capacity measured by the American Staffing Association.  Year-over-year, industry revenues are up 7%.  Clinical, Legal and Engineering are experiencing double digit growth year-over-year.  Over the last decade plus, there is over a 90% net growth in temporary employment based on an employment study conducted by Harvard and Princeton.  It is a trend not expected to slow.  In a survey of contract employees, 49% of the recipients agreed that it was their way to a “Permanent Job”.

I am pleased to jumpstart the contract staffing service at Q Works. We have a great team of skilled professionals ready to meet the challenges of the candidate driven market. I have spent the past 20 years servicing this space and I look forward to connecting with you if you have any questions.

Written By: Michael Clegg, Managing Partner