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Topics: Recruitment, Temp Recruitment

What is Temporary Staffing Industry about? Here’s all you need to know!

Posted on May 06, 2021
Written By Aron Vaidya

temporary staffing industry definitions

The temporary staffing industry is a massive industry that works with other businesses and processes. The recruitment process, in general, is a lengthy procedure, and temporary staffing is just as critical.

The temporary staffing industry, also known as TSI, exploded in the USA during the mid-70s. Since then, the market for temporary labor grew over time. Temporary staffing is a puzzle that needs multiple pieces to be completed. This article will talk about the most critical elements of this puzzle, named temporary staffing. Before we do that, let us quickly understand temporary staffing first.

What is Temporary Staffing?

Temping or temporary staffing is injecting liquidity into the existing job market. To make it even more transparent, temporary staffing is hiring employees for a limited time on a contract. Temporary candidates are not permanent candidates, and they will leave after their arrangement or the project is complete.

A temp is a temporary candidate who works for the client company but on the payroll of a third-party staffing agency. Temporary staffing is a three-party agreement. The client company, staffing agency, and the temp staff are all part of this agreement. However, appointing Managed Service Provider (MSP) will add one more head to the table. Temping is not only for mass recruiting; executive and high-rank employees are often sourced as temporary candidates. According to a Statista report, the US recruitment industry’s temporary and contract revenue share is 85%.

What is a Temp Agency?

Many large companies these days have high-traffic or cyclical work schedules. These companies are looking for temporary employees with specific knowledge and skills who can manage particular projects. These companies need skilled labor for various projects, but at the same time, they don’t want to keep the employees on their payroll forever. That’s when a temp agency comes in.

A temp agency provides workers to companies on a case-by-case basis. They allow companies a cost-efficient way of employing new employees with specialized skill sets. These employees are released after the project or period of contract is over.

Since the Covid-19 pandemic hit the job sectors, demand for remote working or freelancing is overgrowing. While employers believe remote working or working from home can be more productive, employees also feel the same. Keeping their safety in mind, freelancing or remote working is the best thing in this situation. This will also allow the temp staffing industry to grow further as remote working is cost-efficient for both the employee and the employer.

There are many processes and methods of getting things done in this temporary staffing industry, but here are the four most common words that we often hear. Contingent workers, MSP, VMS, and Vender neutral. Let us dive deeper and find out the definition of these four commonly used words.

Talk to us if you need help managing contingency staffing

Contingent Workers

Contingent Worker is a word that the temporary staffing industry uses to separate the temp workforce from the regular crew. Workers who are not under the permanent workforce or regular wage are called contingent workers. They have a shorter tenure and leave after the contract is over.

Contingent workers include temporary employees provided by a third-party staffing agency. Summer interns, seasonal workers, gig workers, and freelancers are also considered contingent workers. A third party directly employs contingent workers.

While staffing agencies may or may not employ people actively for their firm, their work for the client is considered contingent.

Managed Service Providers

MSP or Managed Service Providers are a third-party agency that handles outsourced responsibilities. A managed service provider’s job is to hire and recruit contingent workers from preferred staffing agencies. A managed service provider can outsource employees from their vendor or work with the vendors you choose.

Their job is to build a bridge between the client and the vendors. A typical MSP is responsible for many things. They are responsible for overall program management, reporting, and tracking, hiring, order distribution, supplier selection, etc.

MSPs also offer payroll outsourcing services.

Managed service providers take requirements from the client, then forward the requirements to the staffing agencies. They are also responsible for interviewing, recruiting, and managing the contingent workforce. An MSP may or may not be an independent staffing supplier.

Things MSP Can Do –

  1. Cooperating with the client manager and obtain requirements
  2. Transmitting the requirements to staffing agencies
  3. Ensuring the candidate’s selection and onboarding process
  4. Collecting timesheets, clearing approvals, billing, and paying the agencies
  5. Tracking supplier and vendor performance
  6. Managing the whole contingent worker program

Vendor Management System

VMS or Vendor Management System is often software or website the Managed Service Providers use. VMS helps the client and the MSP to communicate, transfer information, and recruit efficiently. Without a VMS, clients will have to email the MSP manually about the requirements; after that, the MSP will do the same to transmit the requirements to the vendors.

However, with VMS, the whole process became more efficient and less time-consuming. With a VMS in place, the client can send requirements directly to the MSP, and then MSP can transmit that to multiple vendors.

Besides these benefits, VMS is also an excellent tool for tracking recruitment-related metrics. VMS can track metrics such as how many days it took for a staffing agency to submit candidates, their rejection rate, time stamps, whether the candidate offered backed out or not.

Depending on these metrics, Managed Service Providers can warn or boot the staffing agency and bring in a new one to replace the one kicked out. The top managed service providers provide their VMS, which can be integrated into your system or use the system you have.

Things VMS Can Do –

  1. Interact with client’s H.R. system to pick up new requests
  2. Transmit the requests to the staffing agencies
  3. Track metrics and provide real-time data to both the MSP and the client

What is MSP & VMS in Staffing?

Vendor Neutral

What does vendor-neutral mean? Vendor-neutral is a term used to describe a particular business model in which a managed service provider or a vendor management system handles all the tasks such as order distributing or candidate selection based on client-defined policies that all suppliers and vendors should be given an equal chance of filling the order.

Under a vendor-neutral model, managed service providers or vendor management systems can not push orders to any vendors they like ignoring the rest. The positive side of the vendor-neutral model is that the best vendor with the best candidates will fill each position.

In a vendor-neutral model, employees are hired based on skillsets and other criteria. In this model, orders are transmitted to all vendors, and every vendor has an equal chance to submit their best-suited candidate. When the limited number of vendors does not bind your client, it is easier to find a top-qualified candidate.

The term is also often used in a stricter form to refer to independent managed service providers entirely autonomous from the staffing agencies.

With the ongoing pandemic, it seems that contingent workers are becoming more critical to large companies. While contingent workers can often be freelance and remote workers, they are highly productive, experts in their sectors, and often can work on multiple projects simultaneously.

Outsourcing your contingent workforce program to managed service providers will not only save your time and in-house workforce but also lower the costs of operations. While freelancers and contingent workers are less expensive to employers, the workers also get the chance to work on multiple projects.

Temporary staffing benefits both the company and the worker. Here are the benefits employers can candidates can get from temporary staffing.

Benefits of Temporary Staffing

Let us take a look at the client benefits before we look at the staff benefits.

Advantages of temporary staffing for the employers

  1. Temping allows the company to lower the costs of operations
  2. Ease of recruitment and replacing
  3. Saves time and in-house workforce
  4. An employer can channel the saved workforce and time towards the core competencies of the company to boost growth and productivity
  5. Companies don’t need to bother about issues such as employee motivation, career planning, and growth. Since the temp workers are employed under the staffing agencies, they will take care of such issues.

Now let us take a look at the advantages employees get from working as a temp worker.

Advantages of temporary staffing for the employees

  1. Temp employees can gain hands-on experience in their chosen and other industries
  2. More accessible for employees to gain experience in any field from the inside
  3. Temp workers can catch a glimpse of multiple sectors and decide which one is for them
  4. Temp staffs get the chance to learn new skills and attend training sessions for new skills
  5. Working as a temp worker will allow the candidate to explore more industries or work as a freelancer simultaneously
  6. Temps working in the healthcare or I.T. sectors can earn a decent salary and double it up by freelancing
  7. When temps work for a top company, they have the advantage of flaunting multiple top companies on their CV.

Temporary staffing helps both the employer and employee in various ways. Using MSP and VMS to recruit temporary staff is an excellent idea for employers and employees. While it saves your costs, time, and workforce, it also allows the temp worker to pick up new skills and opportunities. However, to keep a healthy work environment, it is essential to choose the right MSP, VMS, and best practices.

Here are Some of the Best Practices Regarding Contingent Workers

  1. Do not discriminate between a permanent and a temp worker. Progressive companies treat all of their employees well and promote a healthy work environment to boost their productivity. People are more motivated when they are working on something important to them. Be important to your temp workers by making them feel important.
  2. Communicate with your temp workers. There should be space for communication between the employers and the temp workers. Standards of performance, actual performance analysis, or feedbacks about any room for improvements should be the discussion topics.
  3. If the company has a rewarding system, temp workers should be a part of it.
  4. Employers do not provide training to temp workers, as they do for the permanent workers. Even though training of temp workers is a responsibility of the vendor, it is advisable that employers can and should train the temp worker if needed.

Temporary staffing is becoming relevant day by day, and with the pandemic going on, we can expect the temp staffing industry to grow even more shortly. With the right combination of a top MSP and VMS, it is easier for companies to send requirements, hire, and track vendors’ records. MSP and VMS programs are now being used by 50%-60% of the Fortune 500 companies, and in the future, the temp staffing industry will only grow more.

QX Recruitment Services, a part of QX Global Group, offers managed service provider recruitment support to MSPs and temporary staffing agencies in the US. If you need help managing your contingency and temp recruiting process, click the button below and send us a message.

Originally published May 06, 2021 06:05:35, updated Nov 24 2021

Topics: Recruitment, Temp Recruitment


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