Contract Recruitment: The Definitive Guide

Contract Recruitment: The Definitive Guide

A company's workforce needs are often fluctuating. Whatever industry you're in, your business is usually affected by seasonal demand shifts, forcing you to supplement your staff size.

A tech firm may, for example, need to fill a temporary software engineering role because their current engineer has taken maternity leave. First, the recruitment process is already tricky and complicated. Second, this further increases the workload of an already busy internal recruitment team that also has to deal with meetings and, maybe, other company HR tasks.

Or, a fast-growth tech company or startup may need to hire many employees fast. This is usually a short-term need, which often follows a fundraising event, forcing the company to scale the number of employees quickly. Such a hiring volume needs many recruiters. But once the company hires new employees, hiring tends to slow down, meaning that the company no longer needs the recruiters. So, how does a company deal with this ebb and flow of hiring demand and recruiting resources?

To find the right professionals, it's necessary to take a different approach to recruitment. That's where contract recruitment comes in. A company can hire a contract recruiter to help achieve the best results for its recruitment campaigns, all while focusing on its primary objective. Read on to learn about contract recruitment and its benefits to HR and tech leaders.

What is contract recruitment? 

Contract recruitment is when a company hires an individual or agency part-time or on a short-term basis to help fill positions. In this case, a company can bring on a contract recruiter part-time to solve a hiring problem and develop an effective solution.

Usually, a contract or recruitment agreement is involved between the company and the recruiter. The contract recruiter is expected to work only for the client during this time, and the contract could last anywhere from three months to two years, depending on the project size.  


For example, a tech lead can hire a contract recruitment agency to find software developers for ten urgent positions on a short-term basis. That means the recruiter's job is done once they find ten software developers for the tech company. This effective recruitment process can be beneficial in dealing with periods of intense work volume that are only expected to last for a while. Also, it's ideal for positions that would be hard to fill permanently.

What is a contract recruiter?

A contract recruiter is a person that comes in with the necessary skills to immediately hit the ground running. That is, source candidates, screen, and communicate with them on behalf of the company. These recruitment professionals are also called contingency runners or headhunters, working on a contract basis in the form of hourly wages or fixed build projects for that period. 

Depending on what the contract stipulates, it will end once the contract recruiter fulfills the expected requirements, and they can move on to the next gig. Headhunters usually save their contacts, talented professionals, and qualified candidates in a recruiting system as they shift from company to company.

Also, the final contract's terms and conditions include payment details, schedule, and frequency. Contract recruiters usually receive a retainer upfront, which is a part of the recruitment fee. Another percentage is paid during the recruitment process, and another amount once some candidates have been selected and hired.  

Why you should try contract recruiting

A company would hire contract recruiters for several reasons, including:

  • You have a small budget- Most companies hire a contract recruiter when they have an upcoming project needing employees but lack the budget to employ full-time recruitment professionals. Also, when hiring a contract recruiter with a particular skill set and expertise, there are lesser costs linked to onboarding, training, and professional development.
  • Increased hiring demands- It's common for tech companies to get new funding or grow really fast. A contract recruiter is perfect for a company looking to expand its workforce fast because they have more experience and can quickly jump in and get started in a role.
  • Hiring fluctuations- It's common for organizations to experience seasonal fluctuations, leading to unpredictable hiring.
  • Special projects- A company may use this flexible hiring method for a rare or unique position, for which finding relevant candidates can be hard. Some positions are harder to fill than others, and a headhunter may help a company find the right talent.
  • Temporary back-fill- Employees may take a sabbatical, medical or maternity leave, forcing the company to hire a temp.
  • Corporate consolidation- A relocation, merger, or acquisition could affect a company's hiring needs.

How does contract recruitment work? 

The contract recruitment process involves a few steps:

  1. The company recognizes its needs, determining which positions need contract workers.
  2. It hires a professional recruiting individual or agency like TECLA to help with sourcing, vetting, and recommending the best candidates for the job(s).
  3. The contract recruiters get to work using their candidate database and network to source candidates with the relevant skill set who can work on short notice.
  4. If the chosen candidate passes the interview, they will sign a contract with the company. The contractor can either be paid internally or through the recruitment agency.
  5. The recruiter moves on to new opportunities, following hot leads and getting new business but still keeps in touch with the company and contractor to ensure both parties are satisfied.


The pros of contract recruitment

Here's how your company can benefit from contract recruitment:

  • Saves time- Most companies' tech needs are immediate. Initiatives like customizing a CRM platform, cloud computing services, or software development can't wait. Well-connected, knowledgeable contract recruiters have large databases that can be tapped into whenever hiring needs arise, significantly shortening the response time and increasing the chances of sourcing the best talent.
  • Contract recruiters have the necessary skills and resources- Hiring a contract recruiter gives a company access to their expertise and efficient techniques and capabilities, which have been polished, thanks to the time spent in the game. So, hiring a contract recruiter will help fulfill your recruitment needs quicker than your in-house HR team.

Plus, they have the necessary resources to sort out an enormous number of candidates fast - something corporate HR departments sometimes have a hard time with. Finally, a contract recruiter will likely exceed expectations by finding exceptional candidates an organization may otherwise struggle to find, giving the company access to top talent.

  • Help lower hiring costs - Contract recruiters are updated about the job market with information on average salaries, hiring trends, etc. Since they're actively involved in the job market, they're aware of various hiring principles and requirements for several industries. So, you can count on them to source the best candidates for various positions at the best deals.

For example, if the current average salary for a software engineer Is $150,000 per year, a contract recruiter can work around that figure instead of offering them $200,000 right from the start. This reduces company hiring costs while lowering costs for acquiring the most talented candidates.

  • Helps the company stay focused on core needs - A company hires a contract recruiter whose main function is managing the contingent workforce. This improves efficiency while simultaneously letting managers focus on the core business needs. So, employees maintain high productivity levels while the recruiter locates, screens, and places new short-term employees.
  • Supports long-term company changes - As organizations evolve, so do their needs, especially in the tech department. One year, a website developer may be expected to develop an interactive site. A year later, the company may expect him to move data to the cloud and create various access levels. Years later, he may be expected to create a network with their recently developed sister company. So basically, since tech is constantly changing rapidly, it isn't advisable to be tied to full-time employees with dated tech expertise.
  • Improves business flexibility - Uncertainty is the only thing certain in today's economy. It is tough to adapt your workforce in a rapidly changing marketplace, with shifting customer needs, changing regulations, and an unpredictable labor market. 


Contract recruitment can help firms adapt quickly to the highs and lows of demand, fluctuating workloads, and temporary one-off projects. It can include managing employee absence, staffing up for compliance and regulatory problems, and implementing systems at work. Since the company doesn't have to hire permanent employees, it becomes more flexible, cost-effective, and efficient.



The cons of contract recruitment

While contract recruiting is a flexible hiring option, it has its cons, such as:

  1. High turnover - There's a high chance of contract recruiters taking better-paying contracts or full-time job offers.
  2. Higher rates - Contract recruitment may be an effective way to manage a temporary need. However, hourly rates have increased over the years and may exceed full-time salaries and benefits.
  3. The associated soft costs - Onboarding a contract recruiter often involves IT, managerial oversight, and legal contracts.
  4. A company would have to hire someone with more oversight - because screening for a contract recruiter tends to be more laid-back than hiring a full-time employee.
  5. Even though contract employees aren't employed full time, the company is still at risk for co-employment, workers' compensation, discrimination, harassment, bad performance, security, workplace conflict, and fraud.

Hire a contract recruiter from TECLA

Hiring practices are changing and shaping around the emerging demands and trends of the business world. Recently, big companies, including Twitter and Netflix have begun to experience major changes, laying off up to 30% of their employees and changing their business strategy from a growth-centric business approach to a more stable one. The post-pandemic tech industry is especially confronted with the consequences of an over-promised growth trajectory, excessive hiring, or unrealistic ability to raise that next round. 

 

The current wave of layoffs showed companies the need for short-term planning and proactive business development policies. Now more than ever, scale-ups, startups, and unicorns understand the value of flexible workforce solutions and contract recruitment. While this flexible hiring alternative is thriving, it matches with the current generation and highly skilled workforce demands too. Hire a professional contract recruiter from TECLA to augment your talent acquisition teams.

Gino Ferrand

By 

Gino Ferrand

Gino is an expert in global recruitment having spent the last 10 years leading TECLA and helping world-class tech companies in the U.S. hire top talent in Latin America.

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