In the initial few years of your professional life, you’d definitely have come across this dialogue,
“Hi, I’m calling from <name of HR Agency>. Are you looking for a job or a job change?”
On positive confirmation, they proceed to tell you about one of the Unicorn Companies or the Fortune 500s that have an opening. But, there’ll be a sub-clause about you being on the HR agency’s payroll. Now, to a newbie, this can get a little confusing.
How does this work? What is the point of this? What’s in it for the HR agency? Read on to know.
Business 101: If you can get someone else to do something better and/or cheaper, don’t do it yourself.
That’s the principle the Fortune 500s are following. This concept is called contract staffing.
Contract employee: A worker who is employed by or through a recruiting firm or a staffing company – but works at, and is supervised on a day-to-day basis by that firm’s client.
How it works?
One company works with many HR agencies. Whenever the company has any staffing requirements, it specifies the number of openings, the job profile and its candidate requirements to all its partner HR agencies. These agencies now get working on these requirements and start scraping job portals and talent networks for suitable candidates, meaning you. They submit yours and other suitable profiles to their client company.
Since all the HR agencies ultimately are searching on the web and submitting the profiles, there are bound to be duplicates. The client intimates the HR Agency about the duplicates and selects some of the non-duplicate profiles for further rounds.
If you’re shortlisted, the HR agency calls you up, tells you about the role, and schedules the written test or interview as need be.
Your interview usually happens on the client premises and the client’s HR or/and Hiring Manager takes it.
If you’re selected, the client company informs the HR Agency, and they break the happy news to you. If you accept the offer, you join the HR Agency. Yes, even the letter head on your offer letter reads the HR Agency’s name. In fact, they are the ones who credit your salary, maintain your attendance and even handle your appraisal. Although in most cases you go to the client company’s office and work there for them as per their project requirements.
What’s in it for the client:
Spend lesser time and cost on recruiting
Reduced effort on onboarding
Trial – They can offer a permanent job to high performing candidates.
Need/project based staffing
Broader talent pool due to multiple channels
What’s in it for the HR Agency:
A cut out of your salary, at least for the first year
Commission based jobs for its permanent employees (the people who contacted you)
Increased brand image and visibility due to having lots of “employees” on its payroll
For this liasoning, there are Client Account Managers who represent the HR Agency and convince the client companies to give them more and more contractual vacancies to fill. Now, there’s a catch! If one client has 20 HR Agencies and is giving 100 positions per week, all 20 of them are fighting for those 100 positions. By the time Agency X sends 10 profiles, Agency Y has already sent 15 profiles to the client and Agency X will be told 4 out of the 10 profiles were duplicates.
Keep in mind that the client only pays the HR agencies a fixed commission, so for the client, there’s barely any incremental cost of having more such agencies on board. This is a business of absolute time crunch.
So what works? Relationship marketing! HR Agencies pay their Client Account Managers (also called Key Account Managers or Executive Client Managers) handsomely for the same. The end goal: ensure that the client loves the HR Agency X so much that they give the agency exclusive vacancies to fill. Another option is to perhaps give receive a little insider info about a possible recruitment and a rough candidate profile before the vacancies are officially released to all the other agencies. This buys HR Agency X an invaluable head start ranging from a few hours to even a few days!
Now that you know how it works, should you go for it if you’re contacted by such an agency for a job opening with their client?
At times, contract staffers out of desperation of sending enough candidates even lower their considerations. If you’re low on qualifications or have a poor academic record but are a diligent worker, this could be the perfect foot-in-the-door technique for you to get a chance to at least make your case.
Sometimes, you even get called for profiles which would ordinarily require more experience, or for a role that’s more evolved than what you’re currently working on. In such a case, even if the increment in your salary isn’t considerable, the opportunity could provide a steep learning curve for you.
Here’s a quick comparison chart by Zyoin
However, do keep in mind that often the salary provided to contract employees is lesser than that of direct employees. You may miss out on permanent-employee benefits and this recruitment might be project-based, meaning short term. But, if you really want a “job or job change” or are getting your dream profile, this option is actually worth considering.
Have you ever taken up a contract-to-hire job before? What was your experience like? Would you recommend it to others? Do let me know in the comments.