The recruitment industry is vast and varied, with agencies operating across different sectors and offering a range of services to clients. However, when it comes down to it, most agencies focus on one or more of three main types of recruitment: Permanent, Temporary, and Contract.
Some agencies specialise in just one of these, while others have teams or consultants dedicated to different areas, for example, one consultant handling permanent placements while another manages temporary or contract workers for the same clients.
Let’s take a closer look at each type and what makes them distinct:
PERMANENT RECRUITMENT
Permanent recruitment is when an agency helps a client hire a full-time employee who will be directly employed and paid by the client. Agencies typically charge a percentage of the candidate’s annual salary or sometimes a fixed fee for this service. There are two main approaches:
- Contingent Recruitment – The client only pays a fee if the agency successfully places a candidate who starts the role.
- Retained Recruitment – The client pays in stages, often with an upfront fee, another upon shortlist, and the final payment when the candidate starts. This model gives the agency more security and ensures a stronger commitment from the client throughout the process.
Permanent recruitment doesn’t usually require external funding, although agencies might need to refund part of the fee if a candidate leaves within a specified rebate period.
This model can be quite transactional unless the agency builds long-term, exclusive relationships with its clients , which is where the real value lies.
TEMPORARY RECRUITMENT
Temporary recruitment involves supplying workers to fill short-term or shift-based roles. These placements are typically charged by the hour, making this model ideal for industries like commercial, manufacturing, logistics, nursing, and care, where workforce needs can fluctuate week by week.
Agencies often manage large volumes of low-paid, lower-skilled workers, paying them weekly through the agency’s PAYE system or via umbrella companies. This setup requires significant administrative support to manage timesheets, payroll, and compliance.
Because the agency must pay workers before the client pays the invoice, temporary recruitment usually requires funding (often through an invoice finance facility). While the profit margins per worker might be slim, the model can be highly profitable due to the high volume of placements.
CONTRACT RECRUITMENT
Contract recruitment is similar to temporary recruitment but typically involves longer-term, higher-skilled placements, often lasting between 3 and 12 months. Contractors are usually paid daily rates rather than hourly ones.
This model is common in industries like IT, engineering, construction, education, healthcare (locums), and finance, both in the UK and internationally. Clients in these sectors prefer contractors who can commit to a set project or time period, ensuring continuity and expertise throughout.
Agencies in contract recruitment usually manage fewer workers, but each placement generates higher profit margins. As with temporary recruitment, agencies must fund the contractor’s pay before client payment comes in, but once contractors are on-site, the admin tends to be lighter until renewal time.
At MAYACHI, we work with all types of recruitment agencies, from those specialising in permanent roles to those running large-scale temporary or contract operations. We’ve helped many agency owners explore new recruitment avenues, such as expanding into the contract market or overseas placements, while helping them understand the financial impact (both positive and negative) of those moves.
Whether you’re considering diversifying your recruitment model or just want to ensure you’re maximising your existing setup, MAYACHI can guide you through the process and help you find the right strategy for your business growth.
