What is Contract Staffing and its Benefits

The ever-evolving dynamics of talent management have resulted in an overhaul in the HR landscape of late. Hiring strategies in India are not the same as they were just a few years back. Today, as businesses encounter new challenges to make the dream of digital transformation come true, HR leaders struggle with novel challenges pertaining to acquiring the right talent in a short time while staying cost-efficient. At a time like this, the focus must be on roping in the right talent who has the skill sets demanded by the businesses quickly and sustainably. And we might have the right solution for the same.

What is Contract Staffing?

Contract staffing is also commonly referred to as contingent staffing or temporary staffing. Hiring in this manner can play an instrumental role in maintaining the dynamism of businesses in a hyper-evolutionary business environment. These short-term employment agreements ranging from a few weeks or months to years are different from permanent positions due to their seasonality, project-based nature, consulting engagements, event-based staffing, and so on. Companies usually hire a few people or a team across various domains including Developers, SMEs, Network Administrators, and Manual or Automated Testers.

As skill gaps plague industries and businesses alike, talent acquisition and management become increasingly tricky for organizations. HR divisions often have to go out of their way to spot, screen, and select the right talent at the cost of valuable time and financial resources only for the recruitment process to be successful. Contingent staffing, in such a case, can be a massive relief to employers from a Human Resource Management standpoint as it not only saves time but also cuts down recruitment costs dramatically.

Types of contract staffing services

Part-time contract

Compensated based on hours, these employees receive security and benefits similar to regular employees with fixed pay.

Fixed-term contract

Employees in these types of contracts are signed for a project, upon fulfilling the prerequisites of which, they may be extended under fixed pay.

Agency staff

Staffing contract agencies act as intermediaries between employers and employees in this case. Although the employees work for the company, they are paid by the staffing agencies.

Zero-hour contract

Not based on any specific duration or amount of work, employees under zero-hour contracts are expected to be available whenever required by their employer companies until the contract terminates.

Freelance Contract

These are deemed to be one of the most mutually beneficial contracts for employers and employees. Contracts in this case are usually applicable for the duration of a task or project where requirements like scope of work, deliverables, deadlines, payment terms, etc. are clearly outlined.

Benefits of contract staffing

Let us explore some of the key HR benefits of contingent staffing that enable businesses to keep thriving no matter how volatile the landscape becomes.

Workforce management made flexible

Monitoring the composition and size of the workforce is perennially on the task list of HR departments. The flexibility and adjustability that contingent staffing offers with respect to workforce management are undeniable. Through this approach, HR managers and leaders can adapt to the changing needs of the business by scaling up or down the workforce in a short span of time.

Large talent pool with specialized skills

The talent market today is becoming extremely skill-dependent. As we make this move from experience to skill expertise, contingent workers help bring in the right set of proficiencies required for business success. HR consulting firms use different techniques to tap into the talent pool at their disposal. This enables businesses to focus on the tasks where they experience certain skill gaps and drive their projects and initiatives more efficiently.

Low time and cost-to-hire

As mentioned above, hiring is becoming an expensive affair for businesses across the board. There may be various reasons why HR leaders do not always find the right talent within the stipulated duration and budget. Contingent staffing allows businesses to swiftly fill vacant positions, saving recruitment expenses(cost savings) and enabling businesses to maximize their capabilities seamlessly. Bearing no upfront and hidden costs, contract staffing services can be extremely cost-effective for businesses. Employers here are not obligated to pay until the right person is found.

Training and skill development advantages

As we have seen, contingent workers are bankable resources when it comes to closing positions that demand niche skills. More often than not, they are fully prepared for the projects at hand and require minimum training and skilling. This helps HR leaders to move on to other priorities without spending time and resources on the skill development aspect.

Enhanced performance and productivity

Dealing with employee burnout, dropping retention rates, etc. has become common for HR departments with the rise in competition. Contingent staffing allows the leaders to rope in fresh talent when the requirement arises and thus keep workplace burnout at bay. The flexible distribution of workload offered by contingent staffing also makes it easier on the employees to prioritize their work and stay productive and motivated.

Minimizing business risks and liabilities

By opting for contract staffing services, employers can save valuable time and resources on unemployment benefits, vacation pay, sick leave, worker’s compensation, and more. This also means employers do not end up spending money on screening, training, and managing these employees as they come pre-qualified for their jobs. Hiring through contract staffing services helps businesses to minimize risks and liabilities by giving them more control over their resources.

Difference between Contract Staffing and Permanent Staffing(Full time)

Aspect	Contract Staffing/Temporary Staffing	Permanent Staffing (Full time)
Duration	Short-term, ranging from a few weeks to a few years based on project needs	Long-term, usually with no defined end date
Flexibility	High flexibility; allows scaling the workforce up or down based on project requirements.	Less flexibility; changes to workforce size can be more complex and time-consuming
Cost	Generally lower immediate costs; no long-term/permanent employee benefits or obligations	Higher costs due to permanent employees benefits, such as healthcare, retirement plans, and paid leave
Recruitment Time	Faster recruitment process, suitable for immediate or specialized needs	Longer recruitment process, including extensive interviews and potential training periods
Skill Set	Access to a diverse range of specialized skills for specific projects	Focuses on a broad set of skills suitable for long-term organizational goals
Risk and Liability	Reduced risks and liabilities; contract workers often manage their taxes and insurance	Higher risks and liabilities; include compliance with employment laws, taxes, and insurance
Employee Engagement	Typically project-focused with specific goals and limited organizational involvement	Higher engagement with company culture, goals, and long-term career development
Training and Development	Limited training is provided; contractors are expected to have the necessary skills	Ongoing training and development opportunities for skill enhancement and career growth
Legal and Administrative Overhead	Lower; managed by staffing agencies or the contractors themselves	Higher; involves handling of payroll, taxes, benefits, and other administrative tasks

Contingent staffing: Is it for your organization?

Hiring remains one of the central tasks for HR departments. It can make or break it for business goals. Hence, if you’re on the fence about whether or not contingent staffing is good for your organization, we hope the section below will assist you in assessing the situation and figure out the right strategy. Here are certain ways contract hiring or contingent staffing can play a pivotal role in the success of your HR division as well as the entire business during specific periods.

During a shortage of skills

The goal of digital transformation cannot be pursued without chasing the right skills. As a result, the talent market often undergoes a shortage of the required skills that business success demands. In the wake of the recent pandemic, we have witnessed that only through the right skill sets can we cater to the evolving market needs and leverage new technologies like AI, ML, cybersecurity, data science, cloud computing, and many others. Contingent workers can provide hiring managers and recruiters with the much-needed respite from hunting for the right talent which sometimes takes long periods of time and cost huge chunks of financial resources. It is quick and commitment-free, and it fuels new efficiency into the system by bringing in the right skills that a company is looking for.

During phases of business or economic uncertainty

The business landscape can both become stable or turn volatile in a blink. There are many factors that usher in phases of uncertainty for organizations, be it fears of an impending recession, geopolitical tensions, natural phenomena, or others. For work to continue smoothly amid all this, we need resources who come well-equipped with the requisite knowledge and expertise as well as minimum liabilities. Contingent staffing is a perfect way to tackle such situations as it offers the option to scale up and scale down the workforce based on the workflow.

When piloting a new project

Launching a new project comes with major responsibilities. New challenges are encountered, new solutions are required, new tests & retests are to be done and continuous effort and time need to be dedicated. In such a scenario, it absolutely makes sense to go for contingent workers who can drop in, take end-to-end care of the new project, and not need much training and skill development for the same. This not only keeps the costs under control but also allows business stakeholders to focus on other tasks that may be equally, if not more, important than the pilot.

How to Choose the Best Contract Staffing Agency?

Identify HR needs

Asking the right questions about the number of new employees, their scope of work, tenure duration is the right first step.

Choosing a staffing agency with the right vision

Find out if the agency you are looking at is reliable for recruitment in your industry. Metrics like their experience, success rate, etc. can enable you to evaluate better.

Staffing company location

In what ways will the location of the staffing company impact the hiring process?

Reviewing the staffing agency

Finding out as much information and data as possible about the staffing company will help you make a strong and confident decision.

Reviewing the selection/hiring process

The effectiveness of a recruitment process can be seen in the quality of hire. Make sure you understand the selection mechanism adopted by the staffing agency and that they factor in your requirements.

Assessing retention rates

High retention rates are key to building trust in a staffing company. Go through their previous records to ensure that they are worth partnering with in the long run.

Conclusion

The opportunities contingent staffing provides are endless. Therefore, it is being widely noticed and accepted by business leaders across the world. Known for its tremendous flexibility, contingent staffing may be just the solution your organization needs to keep up impeccable work while building resilience and long-term success through seamless, short-term commitments.

Harshal Goyal

Vice President, Talent Solutions- Staffing, RPO & Perm

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Harshal Goyal

Vice President, Talent Solutions- Staffing, RPO & Perm

Contract Staffing: A Future-proof Approach to Talent Management