By Mark Berger

 

Staffing firms and independent recruiters wishing to expand into contract services commonly face a significant barrier when it comes to the financial burden of funding payroll and the administrative work load of serving as employer of record. This is why so many small staffing firms and independent recruiters outsource these services from other vendors as opposed to absorbing the cost and risk themselves. And as a record number of recruiters launch their independent staffing firms, the demand for such services has also undergone a corresponding surge.

 

For several years, HireAbility has evaluated vendors of various products and services created for the staffing industry and they recently concluded an evaluation of several providers of contract back office services. At the conclusion of their evaluations, HireAbility launched a partnership with TFI Resources out of Houston, Texas. TFI Resources is available to serve as the employer of record, provide the payroll funding, and all back office services required when placing temporary or contract workers anywhere in the United States or Canada for their customers – typically independent recruiters and staffing companies.

 

Utilizing TFI Resources can be a valuable asset in a variety of situations. With requests for “temp-to-perm” placements becoming more frequent, a recruiter’s ability to accommodate these requests can generate additional fee income as well as a recurring, reliable revenue stream. Also, as the demand for contract placements continues to grow, accepting these requests allows staffing companies to diversify their business while becoming more full service to the client companies.

 

Additionally, many recruiters find value in developing a temporary/contract dimension to their business as a means to create value or equity in the business that may be saleable to others. As many of you know, most direct-hire placement firms have no real value since a resume database, desks and a few recruiters are just not worth that much. By adding contract services however, your venture has a recurring revenue stream, and therefore a value to investors or larger firms seeking expansion through acquisition; a valid exit strategy for owners of many staffing enterprises.

 

What can you expect to make from your new contract placement business unit? Well, for those of you new to contract placements, you should know that having a bill rate of $60 to your client and a pay rate to the candidate of $40 per does not yield you a $20 hourly profit. You must calculate workman's compensation insurance, payroll taxes and a myriad of other hourly expenses at the local, state and federal level. And if you have your own internal staff handling the administrative side of your business, you must incorporate the fixed cost of your office space and the variable costs of your internal payroll and other related expenses. Or, you can go with a provider like TFI Resources who is better equipped to handle the administrative tasks and can also bundle the expenses together. And best of all, your business can actually make more profit from outsourcing these services than internalizing this process if your volume of placements is relatively low.

 

To give you an idea of the level of revenue you might expect, let's assume the pay rate to your average candidate at $40 per hour and an average bill rate of to your clients of $60 per hour. Furthermore, let's assume you have an average of 10 contractors on billing over a period of one year. This is moderate goal, even for junior to mid-level recruiters at a typical staffing agency. After factoring in the various overhead expenses (perhaps even bundled and paid to TFI Resources), your business could realize as much as an additional $200,000 in that year, in addition to your normal direct-hire placement fee revenue.

 

Due to HireAbility's recent partnership with TFI Resources, you can receive monetary credit with HireAbility for every dollar processed by TFI Resources So, not only are you increasing your revenue, building equity in your business and better serving your clients; you can also receive completely free membership to HireAbility's recruiter network for years to come! It's quite easy to earn an entirely free HireAbility membership, complete with their member discounts, split placement exchange, free job posting services and more. To learn more about the services offered by TFI Resources or to learn more about how you can gain a free membership to HireAbility, contact a HireAbility representative.

 

 

About the author: Mark E. Berger has been in recruiting and staffing since 1979. He is currently the proprietor of Swat Recruiting (www.swatrecruiting.com), a firm supporting the technology needs of the recruiting and staffing industry. He is also a partner in Ramsey Fox, Inc., an IT services firm, and its predecessor, M.E. Berger & Associates, since 1986. He has been heavily involved in Internet recruiting and has become an expert on recruiting and sourcing products and services available to the recruiting industry and also has a high level of expertise in recruiter databases (ATS’s), including how these products add to the bottom line.