For many recruitment agencies, the journey starts with making permanent placements. They offer a relatively quick return, helping to build early cash flow and momentum. Some agencies even choose to specialise purely in permanent hires, often driven by consultant experience, cost, risk management, or client preference.
However, focusing solely on permanent recruitment can mean missing out on some valuable growth opportunities. Introducing contract and temporary placements into your offering isn’t just about diversification; instead, it can significantly strengthen your business financially and operationally.
A Simple Way to Increase Turnover
One of the key advantages of contract recruitment is how revenue is reflected. Unlike permanent placements, where invoices show only the placement fee, in contract and temporary invoices it includes both your margin and the contractor’s pay.
This naturally results in higher reported turnover, which can:
- Improve your company’s financial profile
- Strengthen your credit position
- Enhance overall business value
It’s a subtle shift, but one that can make your agency appear more robust and scalable.
More Communication usually means More Opportunity
Contract placements require ongoing engagement. Because contractors are paid through your agency and typically work on fixed-term assignments, regular communication with both client and candidate is essential.
But this isn’t just about administration; it’s also where opportunity lives.
Consistent interaction can uncover:
- New hiring needs
- Additional projects
- Deeper client relationships
Often, it’s simply a case of being present and asking the right questions at the right time.
Easier to Manage Than Expected
There’s a long-standing perception that contract recruitment is complex, costly to fund, and painfully admin-heavy. The reality is that the process is far more accessible today with tech and automation doing lots of the heavy lifting.
Alternately look at the benefits an outsourced provider can support for all the:
- Payroll and compliance checks
- Back-office administration
- Funding solutions
In fact, many invoice finance providers actively support recruitment agencies with often advancing 85–90% of invoice value upfront for timesheet-based work.
This means agencies can benefit from contract placements without taking on a heavy operational or financial burden.
It’s Ongoing Revenue, Not One-Off Fees
Permanent placements generate a single fee, usually based on a percentage of salary. Contract placements, however, generate continuous income for every day or week the contractor remains on a live assignment.
While some roles may be short-term, others can run for extended periods. Over time, this can lead to extensions or pay increases, which generate greater overall margins
The result is a more consistent, compounding revenue stream, which many agencies find invaluable as they look to scale.
Building a More Valuable Business
From a long-term perspective, agencies with a contract or temporary book often achieve higher valuations than those focused solely on permanent placements.
This is because they offer a predictable ongoing income.
If a business is sold while contractors are still on assignment, that revenue continues post-sale. In contrast, permanent-only agencies rely heavily on maintaining relationships and generating new placements to sustain income.
This added stability makes contract-focused agencies much more attractive to potential buyers or investors.
Want to Explore this Further?
At MAYACHI, we can advise on what works and what does not work with expanding your business into contract and temporary placements and how it can unlock new levels of growth.
Permanent recruitment will always play an important role, especially for agencies in their early stages. It’s not about replacing your existing model; it’s more about enhancing it.
Look at booking onto a 2-hour free meeting so that in a competitive market, your recruitment business has that added flexibility, which can make all the difference to your clients and your profits
