The world of work is changing and has become a tailwind for the growth of the contract market.
Entering its steepest rise in almost a year, figures from the REC’s latest Report on Jobs reveal that having grown consecutively month-on-month last year, contract placements accelerated in December to record their fastest rise since April.
A desire for more flexible work, increasingly agile businesses and a huge demand for short-term high-skilled labour has given birth to the career contractor.
Largely unaffected by economic instability, the contract market is flying in the face of Brexit uncertainty as the brakes are applied to perm headcounts.
The contract market is booming
Our recruitment industry is the envy of Europe, outperforming on a global scale to sit as the third largest market in the world.
It’s a £35.1bn industry that employs over 100,000 and is forecast to grow by up to 6% in 2017. Of that, over three-quarters of the value added to the economy derives from temporary employment activities.
Growing by 9% in 2016, the contract market accounts for almost 2m of the 4.6m self-employed and is expected to see the lion’s share of growth in the coming year as Brexit uncertainty takes effect.
Unlock your agency’s cash flow
With perm hiring tied so closely to business confidence and economic buoyancy, it can be difficult to predict the future and where the next payment is coming from.
Having a cyclical income from a contract book allows agencies to anchor their finances and plot their agency’s growth.
See how agencies can completely remove the wait in receiving their profit
A predictable income makes agencies more financially stable, better equipped to forecast and better positioned to support bigger projects on their perm side.
According to the the REC’s Report on Jobs, the vast majority of contract assignments last longer than 12 weeks, often with a promise of repeat business if you’re providing a good service.
With the number of contractors on daily placements growing by almost 4% annually, the additional 50,000 or so contractors swelling the ranks of the market offer a huge opportunity to recruiters.
If you imagine the average day rate of a specialist sitting in a three-month rolling contract often extends to £500 and upwards, then you can quite quickly see how having just ten of those 50,000 contractors on your book, can become a serious cash cow for agencies.
Take advantage of the Brexit
The Independent have us heading for the abyss with only Corbyn to protect us, the Telegraph tell us we’re entering the biggest jobs boom we could hope for.
The finger in the air predictions of think tanks and economists that have been so wildly inaccurate, have driven businesses into adopting a “wait and see” attitude whilst safeguarding themselves financially by focussing on contract hires.
As the triggering of Article 50 comes into view, we only have to look at our recent history to see how the contract market weathers the storm and the opportunity it can offer for agencies.
According to the ONS, self-employment boomed following the burst of the dot.com bubble, with almost half a million moving into self-employment during the financial crisis of 2008.
Hiring intentions over the next 12 months have actually been marked up as businesses look to secure overseas talent before any potential barriers come into play.
Our world of work is changing
The growth of self-employment over the last decade now outstrips perm numbers by three to one to account for 15% of the UK workforce.
On a global scale agency workers have grown by 12% annually, which shows the growing desire for people to move into a more flexible work dynamic.
A traditional nine-to-five employee is a dying breed as workers look to balance their lives better and choose to become the owners of their own career path.
Capitalise on skill shortages
In specialised sub-sectors where demand outstrips supply there is a constant need for contractors to deliver vital skills on a project based short-notice period. This is why agencies that can establish themselves in micro-niches have an unlimited demand to tap.
Read: How to find and conquer your micro-niche
As candidate availability is squeezed and the brain drain increases, rates in these sectors rise and the recruiters able to place become an even greater lifeline for businesses.
With overseas talent facing potential barriers in a post-Brexit landscape, and the skills gap widening, businesses will be looking to take advantage of the two year transitional window.
Add major value to your agency
If you intend on selling your agency in the future then your company will need a credible contract book to add real value to it.
Your business pipeline and active book are effectively the price tags to your agency, and by providing an accurate forecast of regular revenue coming into your business you can provide an indication of its worth.
As a perm focused agency catering to contract demand, you not only open the door to potential business from clients that need contractors, but also accommodate your existing perm clients who could also be looking for contractors.
With the contract market positioned for opportunity in 2017, you’ll want to secure the best finance to unlock growth.
See the reality of what it will cost and what you can make in our free eBook.