Recruiters should be aware of correctly pricing their contract assignments when the client does not permit conversion fees.

Profitability on a contract assignment should be no different than when providing direct placement personnel to the client. Many clients seek to undercut recruiting fees by shortening the contract period while simultaneously prohibiting conversion fees.  In addition, some even control the markup during the contract period, limiting the billing rate to a specific markup.  All these restrictions lead to losing value on talent, and ultimately cause financial instability for the recruiting firm.

What to avoid:  clients who combine the prohibition of conversion fees, shortened contract period, and simultaneous maximum markup requirement.   This three way combination invariably costs recruiters a lot of money, effectively lowering the direct placement fee to less than 7% in many cases.  When direct placement fees are effectively forced this low, to maintain a successful business an independent recruiter must make nearly one successful placement every week throughout the entire year.  Doing this alone would be a monumental feat, and there would be little ability to hire internal staff for recruiting help because profit margins are too low.

What to do:  if the standard direct placement fee is 20% of annual salary, on a $50,000 salary placement the fee is $10,000. If the client prohibits conversion fees, the fee must be priced into the billing rate of the contract assignment.

The best option for a client who does not pay conversion fees is to negotiate extending the contract period.  In most cases, three months is not a long enough period to earn the entire fee without raising the billing rate too high and breaking the client’s budget.

Also, if the client wants to control your maximum markup, if at all possible, walk away from the deal.  There is usually no money or long term success in high volume, low markup business.

For help on pricing contract assignments, contact ECS today.

Ed Kelly, ECS President

Contract staffing capability is key to your success in 2012 and beyond. The contingent labor market continues to grow and will be a permanent fixture in American labor markets in the coming years.

Your recruiting firm needs contract staffing support so that you can service this booming market.

ECS is the leader in employer of record, professional payrolling and recruiter service in the staffing industry.

Get 2012 started off right. Contact ECS!

The IRS recently unveiled an opportunity for eligible employers to voluntarily reclassify workers as employees in exchange for partial tax relief from past federal employment taxes. Late this year, the U.S. Department of Labor agreed to work with the IRS, as well as several states, to share information and coordinate enforcement. Legislation in several states to increase fines for worker misclassification may also impact employers in 2012.

http://www.staffingindustry.com/site/Research-Publications/Daily-News/Paychex-Lists-Possible-Regulatory-Changes

Buyers of contingent labor plan to increase their use of such workers by 26 percent over the next two years, according to a survey by Staffing Industry Analysts.

Buyers in the restaurant/hospitality and finance/insurance industries are among those planning the biggest increases in their use of continent workers, according to the study.

http://www.staffingindustry.com/site/Research-Publications/Daily-News/Buyers-to-Increase-Use-of-Contingents-by-26

As of week ending December 10th, ECS sales have exceeded 2010 by 23%.  We have high expectations for 2012 and look forward to continued growth with new recruiting partners and professional payroll clients.

In 2011, ECS expanded its advertising campaign, added internal staff and grew our Georgia office operations.  For our contract personnel, we have enhanced our benefits package to include medical, dental and vision, and are now offering a simplified and new tax deferral program for contract employees.

Contingent staffing continues to grow even in this difficult labor market.  See you in 2012!

In the second quarter of 2011, ECS posted a 34% increase in overall sales relative to the second quarter of 2010. W-2 contract employment sales increased by a solid 22.5% while corp-to-corp information technology related sales surged 68% on a comparative basis.

The dynamic in the current labor market is the increasing use of contingent staffing arrangements by companies still lacking clarity about the market’s broader health. Many companies are implementing mandatory temporary-to-direct hire models, and lengthening the term of the temporary period, as both a vetting process for personnel and a mid-term financial management tool as the marketplace evolves.

Recruiters can offer temporary-to-direct hire options to their customers by working with ECS. Contact ECS for help in putting those plans in place.

In other positive news, ECS recruiter clients have reported significantly increased job order activity on the direct placement side. A northeast-based recruiting client has reported “more direct placement job orders than we can handle”.

Though the gloomy national employment picture continues to be the status quo, proper positioning in the marketplace is still working for ECS and its recruiter clients in the second quarter, and we hope that continues.

-Ed Kelly, President

ECS has recently opened an office in Cumming, Georgia, north of Atlanta.  The southeast office is managed by ECS Business Development Executive, Mr. Bob Brown.

ECS has always enjoyed working with the recruiters in the Atlanta market, and Bob Brown’s presence in the region will be a long term asset for business development.

Contact Bob Brown at our new Georgia location at (678) 648-7375.

Record Quarter for ECS.
ECS experienced a record quarter in Q1 2011, exceeding Q1 2010 sales by 86%.  The demand for ECS services has grown rapidly in the days following the recession.

Recruiter Partners.
ECS recruiter partners have reported positive experiences in the last two quarters, citing increased demand on the direct placement side of the desk as well as increased client-demand for contract workers.  Particularly active regions of the country are the Northeast, possibly a result of pent up demand after some poor numbers coming out of 2010 and the following quarters.