Starting a Contract Staffing Business: Seeking Advice on Processes, Timelines, and Salaries

We want to start a business in Contract Staffing and would like to request your help. I have a couple of queries as below:

Process of Contract Staffing

1. I would like to know the process of how contract staffing works.

Consultancy Candidate Provision Period

2. What should be the minimum and maximum period in which the consultancy has to provide candidates to the client?

Replacement Period for Resigned Contractors

3. In case a contractor resigns from the company, what should be the average replacement period to retain the client?

Salary Comparison: Permanent vs. Contract Employees

4. How is the salary different compared to permanent vs. contract employees? If the average salary of a permanent employee for a normal skill set is 1.5 times his years of experience (e.g., 1.5*4 years exp = 6 lakhs) and for a niche skill set is 2 times his years of experience, then what will be the average salary of a contract employee?

Notice Period for Contractors

5. What should be the notice period a contractor has to serve or we can terminate?

I might be missing more questions. I request you to kindly help me out in resolving the above queries, and any other guidance will be much appreciated. Thank you, and I await kind responses.

You will have to decide on which field you would like to provide contract staff, e.g., Finance, IT, etc. You should have some expertise in recruiting them. Once you have decided, you will have to check out in the market for clients who are looking for such candidates. You should really have a strong database of candidates. Once you are sure about it, then you will have to approach the clients and try to get an entry into that organization.

Once you get an agreement signed, you will have to recruit the candidates, and the appointment letter should contain a clause where the candidate's service will be based on the requirement of the client. This is because the period is decided by the client as per their requirement. The average replacement period is a maximum of 15 days, but that too will depend on the criticality of the project handled by the candidate. Usually, you will not face the problem as you will be giving the notice period to your candidate too.

The salary will depend on the amount you will be getting from the client. You will have to keep some buffer of amount apart from other expenditures, as the client will not be increasing the salary every year, but the candidate will expect some increase every year.

You will have to give at least 1 month of notice period either way before the termination of the contract with the client.

The main point to remember is to keep in touch with the candidate as well as the client and collect feedback from both on a regular basis.

Hope it is useful.

Regards,
Anita

Thank you for your precious response. We would like to cater only to the IT industry. We do not have a database of candidates, but we have the option to use Monster and Naukri. Aren't they effective for hunting such candidates?

Salary and Budget Considerations

If we say the salary will depend upon the client's budget, then what if the client has a very minimal budget where it is very difficult or not possible to find a candidate in the market? Should we inform them that the budget is very limited? Additionally, clients usually ask about our charges rather than stating their budget upfront. What is the best figure to quote? Kindly suggest.

Request for Process Document

Furthermore, do you have a process document for contract staffing to share with me? Thanks a lot again, Anita.

It is better to collect the data of the candidates you are planning to recruit, as you know the candidates in the IT sector are very selective. If they are exceptionally good, they may be hesitant to work on a contract basis. I'm not trying to demoralize you, but you will have to work hard to find the right candidate and convince them to work on a contract. You can use both Monster and Naukri, and apart from that, use your contacts or references in the beginning. If they are good, the client will give you more business. I say this because you have to be better than the others.

As you are well aware of the tough market, clients generally pay a candidate with 4 to 5 years of experience around Rs.50,000/- to 60,000/-. This can vary based on the skill set they are looking for and the designation. So, please do market research before you start the business and do proper groundwork. Please never tell the candidate how much you are earning, or you will not be able to make any profit. There is one more practical problem: candidates usually come to know from the client itself, so to avoid that, you will have to maintain a very good relationship with the client. I'm really sorry I don't have any process document, or I would have shared it with you. This business has more hurdles, like bonuses and payment of salary on time, even if your payment is delayed, compared to placement, where you just have to worry for 3 months, and then it is the company's problem. You will have to give a free replacement within that period if he or she leaves.

All the best, and I hope you have success in your business.

Regards,
Anita