In a competitive and fast-evolving recruitment landscape, agencies that focus solely on permanent placements may be missing out on a steady, scalable revenue stream. Contract recruitment offers not only consistent income but also increased business value and deeper client relationships. Unlike permanent roles, which are often subject to delays and unpredictable start dates, contract placements generate revenue from day one and provide financial stability. Additionally, offering both permanent and contract solutions positions your agency as a more flexible and strategic partner to clients.
Below are some of the main benefits of offering contract placements:
MAKING MONEY EVERY DAY THE CONTRACTOR WORKS
One major drawback of permanent placements is that revenue is tied to a candidate’s start date, which depends on client timelines and notice periods. This can lead to a “feast or famine” situation when it comes to generating profit.
By contrast, contractors generate revenue every day they’re on-site. With multiple contractors working daily, agencies can build a consistent and predictable income stream that helps cover operational costs and stabilise cash flow.
INCREASE THE VALUE OF YOUR RECRUITMENT AGENCY
Having a contractor desk can significantly increase your agency’s valuation.
Whereas a permanent-only agency might be valued at a 1–2x multiple, a business offering both contract and permanent recruitment services can attract a valuation of 3–6x, depending on factors such as average contract length, client diversity, and preferred supplier status.
OUTSOURCING MAKES CONTRACTING EASY
One of the biggest concerns permanent-focused agency owners raise is the perceived complexity of administering and funding contract placements. In reality, there are many specialist providers in the market that offer fully outsourced pay-and-bill services and invoice finance management, removing the administrative and financial burden entirely. This allows agencies to offer contract placements without needing to overhaul their internal infrastructure.
STRENGTHEN CLIENT RELATIONSHIPS
With permanent placements, contact with the candidate usually ends once they start the job. The relationship remains with the client, but it can become static over time.
Contract placements, however, create ongoing interaction. Contractors on-site often provide valuable insights into upcoming projects, organisational changes, and new hiring managers, opening the door to additional placements. By offering both permanent and contract services, agencies can deliver a more comprehensive and strategic solution to clients.
MAKE YOUR BUSINESS MORE ATTRACTIVE TO BUYERS
Contract revenue doesn’t just boost current income; it also adds value at exit.
Buyers are typically more interested in businesses with ongoing revenue streams. If you’re generating income from contract placements at the time of sale, the buyer inherits future cash flow. In contrast, a permanent-only agency is more dependent on the goodwill of client relationships and the pipeline of future deals, which is harder to quantify.
Any recruitment agency focused solely on permanent placements should seriously consider diversifying into the contract market. Doing so offers substantial benefits: improved profitability, increased business valuation, and a more valuable service offering to clients.
MAYACHI supports agencies across the UK and internationally in launching and growing their contract recruitment divisions. We provide expert guidance on setting up internal processes and connecting with trusted outsourced service providers to manage administration and funding, making your transition into contracting smooth and successful.
