There is no question that the popularity of contract staffing has surged since the recession and even more so in the past year. The use of contractors has consistently broken records over the past several months even as the economy finally seems to be on the upswing. What is interesting about this trend is how contract staffing appears to be transforming the traditional workforce model. Employers are no longer using contractors sporadically as a stop-gap measure in limited circumstances. Rather, they are building a blended workforce model that integrates contractors as part of a deliberate business strategy.
In this model, companies typically maintain a small core group of traditional, direct hire employees. These are the key personnel whose experience and longevity drive the stability and growth of the business, making high turnover very detrimental. That core is surrounded by an outer ring of contractors who are often responsible for day-to-day tasks and critical projects. Turnover in this ring is not as disruptive.
The key to this model is that the outer ring can be easily adjusted based on business demands. The outer ring can grow quickly when extra help is needed, which is especially important when the peak is sudden and unexpected. That ring can be reduced just as quickly when the need passes, helping companies avoid the ugly layoffs that typically accompany a reduction in force. Contractors know from the get-go that their assignments are only for a finite amount of time.
Let’s take a look at the blended workforce model in action:
- A company has neglected its computer hardware and/or software while waiting for the economy to improve. Now they need major upgrades. They can bring in contractors to get the work done and end the contracts when the work is complete.
- Manufacturers experience frequent ups and downs in production. Engineers and other highly skilled contractors can be brought in as needed.
- Insurance companies need more adjusters and other workers following major disasters than they do in “normal” times. Contractors give them the manpower to respond to those disasters without permanently adding to their overhead.
- Accounting firms must ramp up for annual crunch times, such as year-end reconciliations and tax season. They can bring in auditors, accountants, and tax experts on a contract basis during those times so they don’t have an over-inflated staff the rest of the year.
These are just a few examples, but there are many other ways this workforce model can be used. In fact, savvy companies are looking at EVERY open position strategically to figure out if it may be better suited to the outer ring of contractors.
So what does this mean to you? Well, if you are already offering contract staffing, you can expect continued growth in your business. Your clients are going to have a consistent need for contractors, and because those contractors are taking on more critical tasks, they need the quality talent that only a top-notch recruiter can provide. This may be a good time to consider expanding your business into additional states and industries, bolstering your recruiting database, and utilizing recruiting software so that you can further capitalize on this trend.
If you are not offering contract staffing, now is the time to start. Statistics show that 80% of contract job orders come from a recruiter’s existing direct hire clients, so the business is there for the taking if you simply let your clients know you can place contractors. And if you utilize a contract staffing back-office, you can start taking job orders NOW with no ramp-up time or upfront financial investment.
The employment landscape has forever changed. Change can be scary, but in this case, it can also be very good. Recruiters who can provide direct hires AND contractors can be very successful in this new environment as companies start seeing them as staffing partners rather than mere vendors.