Should You Work With a Contract Staffing Agency?

With the challenges that the labor market has presented in recent years, and continuing difficulty finding candidates interested in full-time employment.

In many cases, businesses have relied on temporary or contract staffing agencies as a strategy to fill open roles or supplement their full-time employees. If your business is still struggling to hire, is a contract staffing agency a route you might want to consider?

What is a contract staffing agency?

A contract staffing agency, also known as a temporary staffing agency or temp agency, is a specialized recruitment organization that focuses on matching businesses with temporary or contract-based employees for open positions.

These agencies work with a pool of skilled professionals who are available for short-term or long-term assignments, depending on the specific needs of the client. The main function is to help businesses manage fluctuations in their workforce demands, fill temporary vacancies, and ensure that they have access to the right talent at the right time.

Contract staffing agencies are particularly useful for businesses that experience seasonal peaks, require specialized expertise for specific projects, or need to cover employee absences due to vacations, maternity leaves, or other reasons. Partnering with a contract staffing agency can save employers time and resources that would otherwise be spent on recruiting, interviewing, and onboarding temporary employees. 

Contract staffing agencies many times have access to a larger pool of talent than an individual business may, as they maintain relationships with professionals across various industries and skill sets. This enables them to quickly identify and match the most suitable candidates to the specific requirements of each assignment. They can also provide valuable insights and guidance on market trends, salary benchmarks, and best practices for managing a flexible workforce based on their scale.

What services does a contract staffing agency provide?

  • Recruitment and talent acquisition: Contract staffing agencies specialize in finding and hiring skilled professionals for temporary, contract, or project-based positions. They have access to a large pool of candidates and use various recruitment strategies to identify the best fit for a specific role.
  • Job matching and placement: Staffing agencies work closely with clients to understand their specific needs and requirements, and then match candidates with the most suitable job opportunities. This ensures that both the client and the candidate are satisfied with the placement.
  • Payroll and benefits administration: Agencies in many cases handle payroll and benefits administration for their temporary employees, ensuring that they are paid accurately and on time. This includes managing taxes, insurance, and other deductions, as well as providing benefits such as health insurance and retirement plans.
  • Compliance and legal support: Staffing firms ensure that all employment-related laws and regulations are followed, including labor laws, workplace safety, and equal opportunity employment. They typically also handle any legal issues that may arise during the course of a contract assignment.
  • Onboarding and orientation: contract staffing agencies provide onboarding and orientation services to help temporary employees integrate into their new work environment. This may include providing training, setting up workstations, and introducing them to company policies and procedures.
  • Performance management and evaluation: Agencies monitor the performance of their temporary employees and provide regular feedback to both the employee and the client. They may also conduct performance evaluations and recommend any necessary adjustments or improvements.
  • Contract negotiation and management: Staffing firms negotiate contracts on behalf of their clients and temporary employees, ensuring that all parties are in agreement on the terms and conditions of the assignment. They also manage contract renewals, extensions, and terminations as needed.
  • Ongoing support and communication: Agencies maintain open lines of communication with both clients and temporary employees throughout the duration of a contract assignment. They provide ongoing support and assistance to address any issues or concerns that may arise.
  • Workforce planning and management: Staffing agencies can help clients plan and manage their workforce needs, including identifying skill gaps, forecasting future staffing requirements, and developing strategies to address these needs. This may involve providing temporary staff to cover short-term needs or helping clients transition to a more flexible workforce model.

Should you hire a staffing agency or explore alternatives?

There are a wide variety of reasons a business may look to use a contract staffing agency:

  • Access to a large talent pool: Most agencies have extensive networks and databases of skilled professionals, making it easier for them to find the right candidate for a specific role. 
  • Time and cost savings: Hiring a staffing agency can save time and resources that would otherwise be spent on advertising, screening, and interviewing candidates. The agency handles the entire recruitment process, allowing the client to focus on their core business activities.
  • Flexibility: Contract staffing allows companies to quickly scale their workforce up or down based on their needs. This can be particularly useful during peak seasons, special projects, or when permanent staff are on leave.
  • Expertise: Staffing agencies often have specialized knowledge and experience in various industries, enabling them to identify the most suitable candidates for specific roles.
  • Reduced risk: Hiring temporary workers through an agency can help reduce the risk of making a bad hire, as the agency is responsible for screening and vetting candidates. Additionally, the agency handles legal and compliance issues, reducing the client's liability.
  • Trial period: Temporary workers can be a great way to evaluate a candidate's performance and fit within the company before offering them a permanent position.

While there are obvious benefits to having workers on a short-term or temporary basis, there are a number of reasons why using a contract staffing agency may not make sense:

  • Cost: While using a staffing agency can save time and resources, it can also be more expensive than hiring directly, as the agency charges a fee for their services. Most agencies will charge a set markup based on a worker’s rate or wages, and may also require fees to convert a worker to full-time.
  • Lack of control: When working with an agency, clients  may have less control over the recruitment process and the selection of candidates than sourcing their own talent.
  • Integration challenges: Temporary workers may require additional time and resources to integrate into the company culture and learn the necessary processes and procedures.
  • Limited long-term relationships: Since temporary workers are often employed for a specific project or period, they may not develop strong relationships with their colleagues, which could impact team dynamics and collaboration. However, temp-to-hire arrangements can sometimes be a route to transitioning workers to a full-time role with your business.

What are the pros & cons of hiring a contract staffing agency?



 Access to a larger talent pool

 Cost of agency fees

 Faster hiring process

 Less control over candidate selection

 Reduced administrative burden


 Expertise in specific industries

 Harder to integrate workers to your business culture and mission   

 Flexiblity in workforce management

 Legal and compliance risks

 Cost savings on recruitment and training

 Reliance on external agency

What should employers do if contract staffing agencies are not the right fit?

If employers have explored contract staffing agencies to find temporary employees but found that it may not be the best fit for their needs, they may want to consider alternative approaches. Flexible work platforms, freelance marketplaces, or other gig economy alternatives may solve many of the challenges experienced in working with a temp or contract staffing agency. The following represent some of the most established options:


Instawork is a flexible staffing platform that connects businesses with local hourly workers for temporary and permanent positions. It offers a user-friendly interface, allowing employers to quickly find and hire qualified candidates for various roles. Instawork also provides ratings and reviews for each professional, ensuring that employers can get visibility into who has selected their position and have confidence in their experience and background.

In many ways, flexible staffing platforms like Instawork provide a similar experience as a temporary staffing agency, but have solved many of the challenges of working with a traditional agency through their use of technology and accountability features. This route may be a good option if you like the flexibility of hiring temporary workers, but are looking to improve fill rates or simplify the process overall.

Online Freelance Marketplaces

Online marketplaces such as Upwork and Fiverr can be a valuable resource for finding temporary employees. These platforms allow employers to post job listings, review candidate profiles, and communicate directly with potential hires. Online marketplaces often cater to a wide range of industries and skill sets, making it easier for employers to find the right fit for their needs.

Working with Freelancers

Freelancers can be a cost-effective and flexible option for employers seeking temporary workers. Freelancers typically work on a project-by-project basis, allowing employers to scale their workforce as needed. Employers can find freelancers through online platforms, professional networks, or referrals, and can negotiate contracts and payment terms directly with the freelancer.


Is a contract staffing agency the same as a temp agency?

A contract staffing agency and a temp agency are similar in that they both provide temporary workers to clients. However, there are some differences between the two. Contract staffing agencies typically focus on placing professionals in specialized roles for a specific project or a fixed period, whereas temp agencies often provide workers for more general, short-term assignments. Additionally, contract staffing agencies may offer a higher level of expertise in specific industries and handle more complex employment arrangements compared to temp agencies.

Is contract staffing the same as on-demand staffing?

Contract staffing and on-demand/flexible - staffing are related concepts, but they are not exactly the same. Contract staffing refers to hiring professionals for a specific project or a fixed period, often with specialized skills. On-demand staffing, on the other hand, focuses on providing workers as needed, often at short notice, to fill immediate or temporary staffing needs. While both approaches offer flexibility, on-demand staffing is more focused on quickly addressing short-term workforce gaps. Contract staffing is more project-oriented and may involve longer-term engagements.

What should you look for before selecting a contract staffing agency?

Before hiring a contract staffing agency, consider the following factors:

  • Industry expertise: Ensure the agency has experience and knowledge in your specific industry and understands the unique requirements of the roles you need to fill.
  • Reputation and track record: Look for an agency with a strong reputation and a proven track record of successful placements.
  • Candidate pool: Assess the agency's pool of candidates to ensure they have access to a diverse and skilled talent pool, and one large enough to fill the volume of needs you may have
  • Communication and responsiveness: Choose an agency that maintains open lines of communication and is responsive to your needs and concerns.
  • Customization and flexibility: Look for an agency that can tailor its services to your specific needs and can adapt to changes in your staffing requirements.
  • Legal and compliance support: Ensure the agency is well-versed in employment laws and regulations and can handle any legal issues that may arise.


While many businesses will still prefer full-time employees for a variety of reasons, these agencies can serve as either a temporary bridge, or a strategic long-term tool, depending on your needs. Contract or temporary staffing agencies can be an excellent way for businesses to solve specific hiring gaps while maintaining more flexibility to deal with changing business conditions.