Recruitment Insights

Pros and cons of making both contract and permanent placements

June 12, 2017
Pros and cons to making both contract and permanent placements

Here’s how this global industry trend may affect your recruitment agency

Today more than ever, recruitment agencies in Australia are spreading their placements across both temporary (or contingent), contract and permanent placements.

In short, this means agencies are able to offer a wider range of services and smooth out lumpy cash flow.

However, there is still some – perhaps warranted – resistance to the demand for a contingent workforce. To help bring you up to speed on the industry trend, we’ve outlined our top three cons for combining contract and permanent placements, and the top three pros for diversifying your candidates.

Cons for using both contract or permanent placements

Makes your back office more complex

When you are managing both temps and perms, there’s no doubt your payroll systems will become more complex than if you are making permanent placements only. However, this can be easily streamlined by outsourcing your back office.

Means different insurance and compliance

Compliance on permanent placements is more straight forward because the candidate is employed by your client directly, which means they do a lot of the due diligence. However, for contract placements, you must meet different insurances and compliance requirements, which generally means you need some basic compliance know-how. The key is to tailor your insurance for efficiency and completeness.

Demands funding requirements

Temps demand funding for payroll due to the gap between the time when payroll is due and when the end customer pays. Using a payroll funding facility that provides the funding you need as your business grows, can help.

Pros for using both temps and perms

Hedges against economic cycles

With the global demand for workers trending to non-permanent, now is a good time to spread your risk by adopting varying economic and employment conditions. Remember, providing temps does not necessarily mean short-term placements. In fact, good relationships can often result in further placements being made in the future and the growth of a steady temp book.

Builds value into your business

Having recurring revenues will increase the value of your agency in the long run. Agencies that make permanent placements only often have lower multiple value compared to a contract agency.

Boosts your ability to satisfy client demands

There’s no doubt offering clients a choice between the two placement types can lead to winning more business. Plus, you can provide a wider range of services and even expand into new areas within your industry.

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