Human resources management may seem easy to everyone, but it is very complicated to understand the concept of human resources in depth. There is a lot of stuff that HR has to go through on a daily basis. HR is also regarded as the most challenging job, and in this scenario where youth lack skills because of our education system, it becomes more difficult for the staffing companies to hire the right candidate. There are various terms that are used by the staffing agencies when they hire clients. terms like contract staffing, general staffing, direct staffing, and more Clients often get confused as they had never heard these terms earlier in their lives.
In this blog, we will discuss contract staffing and direct staffing. And we will know what their benefits are.
Meaning of contract staffing
Contract staffing means when an employee is hired for a shorter duration of time with the probability of getting hired for full time when a contract ends. These short-term contracts allow an employee and an employer to know whether they are a perfect fit for a company or not. And on the employee’s side, it helps them know whether the company’s values are aligned with their goals or not. To make contract staffing more flexible, candidates start their job on a staffing agency payroll. A contract staff varies from a defined time period to an indefinite period.
Benefits of contract staffing
Following benefits of the contract staffing are:
-
Large talent pools:
There is a large list of candidates that are available to the staffing agencies. From IT to marketing and other related sectors, staffing agencies hire the best talent that suits the needs of the company. Moreover, the staffing agency remains in touch with all kinds of active and passive candidates.
-
Flexible and cost- efficient:
Companies often choose contract staffing to save their resources, such as time and money. Contract staffing is considered the best recruitment strategy because of its cost-effectiveness. In this kind of staffing, no upfront or hidden costs are included. And you need to pay only when you have the right candidate for performing a specific job.
-
Level up business:
With the help of contract staffing, you can increase and scale your business. This is regarded as the best way to increase services and set flexible working hours. In contract staffing, a firm has the option to provide services on demand and at a lower cost with fixed working hours.
-
Deceases business risks and capabilities:
As you know, contract hiring is a model where the client or employer hires a third party to fill the position. The contract worker is eligible to work according to the following terms and conditions, and he does not have any legal rights such as sick leave, vacation pay, worker compensation, and more. With this, you do not have to decide on any budget related to screening, training, and managing these employees.
-
Breaking geographical barriers:
The most important benefit of contract staffing is that it breaks geographical barriers. The employer could hire the best talent from any corner of the world. Regardless of where your business is operating, the employer can grab the opportunity to scale their business by hiring the best talent.
Types of Contract Hiring
There are various types of contracts staffing and those are:
-
Part- time contract:
It is a kind of contract staffing where a worker is restricted to work according to the fixed hours mentioned in an agreement. An employee gets a proper opportunity and security as compared to a full-time employee.
-
Fixed term contract:
These are the contracts that are based on the perquisites, and when these perquisites are accomplished, the agreement gets terminated. The time period may also increase. In this contract, a worker gets fixed compensation.
-
Agency staff:
Some large companies do not hire by themselves, and therefore, they hire staffing agencies for this purpose. Though a hired employee works for a company, they get paid by the staffing agencies on behalf of the clients that hired them.
Direct Staffing
Above, we have discussed the meaning, benefits, and types of contract staffing. Now we will see what direct staffing is and its benefits.
Meaning of Direct staffing
Direct staffing is also known as direct staffing. Basically, direct staffing is a procedure where a company provides and employs a potential candidate without the help of a third party. It is a different concept from a contract position. Most often, direct jobs are permanent positions with a specified salary and other benefits such as retirement benefits, health, safety, and more. Direct staffing takes more time than contract staffing.
Benefits of direct staffing
Following benefits of direct staffing are:
-
Attracts the best talent:
When a company chooses direct staffing, it attracts the best talent as the permanent position in a company offers a sense of job security, and the employees who are hired for a full-time role are often self-motivated, due to which their productivity also gets increased. This shows that companies attract the right talent when hiring directly.
-
Improves loyalty:
This is one of the best benefits of direct hiring. In direct hiring, an employee considers themselves a part of the team. All this promotes loyalty for the company and, thus, reduces the turnover rate. A company with the method of direct hiring calls for a long-term commitment from a candidate they hire.
-
Saves money:
With the direct staffing solution, a company hires an employee directly on a pay roll. This saves an employer money as he does not have to pay any additional costs to the staffing agencies in India.
Why companies choose direct staffing?
Companies can directly hire through a staffing agency or their HR department. The main reasons why a company chooses direct staffing are:
- To attract quality candidates.
- To fill unique positions that require a specific skill.
- To fill the positions that need a long-term commitment.
These are the reasons why a company hires direct staff. Let’s know the difference between contract staffing and direct staffing.
Difference between direct staffing and contract staffing
After reading the blog, everyone can assume that the main difference between contract staffing, and direct staffing is that the former is for a shorter period of time and the latter is a permanent position. Let’s know the difference between them.
Key Points |
Direct Staffing |
Contract Staffing |
| Long Term VS Short term employment | A company hires an employee for a permanent position, ensuring Job security and other benefits. | A company fills a temporary position to fill the demand for a specific project. Once it ends, the contract is terminated. |
| Cost- effectiveness | As the permanent employees are considered as an asset to the company, they cost more. | A contractual employee does not cost much to the company, and they are paid only for the hours they worked. |
| Productivity | When an employee is hired for a permanent position, productivity tends to increase. | One cannot assure the productivity of the contract-based employees as they are temporary. |
| Company Benefits | The employees hired through direct staffing avail themselves of all the benefits of the company, like sick leave, overtime pay, and more.
|
A contract employee is not eligible to avail of the benefits of the company related to the overtime and more.
|
| Paid through staffing agency | In direct staffing, companies pay directly to the employees without any help of staffing agency. | In a contract staffing, the employees get paid through the staffing agency. |
Bottom Line
In this blog, we have discussed aspects of contract staffing and direct staffing. There is a benefit to hiring both types of employees. As with both of these, a company can reap the benefits of growing their business. Though the productivity of an employee will be higher in the case of direct hiring as compared to contract staffing, because in a direct hire, an employee will consider themselves a part of the team. After all, it depends on a company whether they want to hire an employee for a limited time or for a permanent position.
