The Association of Professional Staffing Companies (APSCo) has encouraged permanent-only recruitment agencies to add contractor recruitment to their repertoire to secure a raft of significant commercial advantages.
Many professional-sector agencies concentrate exclusively on making permanent placements. The chief reason is that this is a simple and straightforward business system with mild compliance requirements. Funding arrangements aren’t needed, and administration takes little time and effort. Every time a placement is made, a profit is also.
A number of permanent agencies operate on a profit-only or margin-only basis, wherein the end client deals directly with the candidates’ pay, leaving the agency to receive pure profit. For many agencies, this is as close as they get to placing contracting professionals.
However, APSCo’s advice is that while there are additional steps involved in placing contractors, none are onerous or complex, and the benefits are numerous.
APSCo cites the following advantages of contractor placement:
Boosting company turnover
Recruiters placing permanent candidates receive only the invoice value for the placement, but if they place contracting professionals, then they’ll receive information on the amount charged for pay as well as the profit margin on the placement. From a bookkeeping perspective, this is a significant advantage, as it makes agencies look larger and appreciably enhances the prospects of selling the agency at a premium price if desired.
Continuing (and growing) income streams
Permanent-only agencies will have zero profit coming in if they close down for a one- or two-week summer break. Contractor placements, by contrast, generate profit every day that the contracting professional works. Such profits may be relatively modest to begin with, but a well-received placement often ends with a contract extension. That can and often does mean increased long-term profit.
Strengthening client relationships
With a contracting professional on site, recruiters automatically have a link to the client, which can be used to make more placements of permanent and contracting professionals. By offering a choice of both types of candidates, agencies frequently find that they are approached for more work.
Maximising company value
For agency owners who are considering selling, a top priority is ensuring that the company has as high a value as possible. Again, contract placements can make a big difference here. Professional contractors will typically bring two to three times the value of each permanent placement. PSL agreements, along with particularly long contracts, will boost company value appreciably further.
Funding isn’t a problem
Numerous funding providers are available to take care of the administration for contract placements. There is need for a big back-office-system overhaul.
In short, placing contracting professionals is simple, advantageous and profitable.