10 Reasons Why Companies Use Staffing Agencies

Short answer: Companies use staffing agencies to fill roles faster than their own team can, to cover short projects without adding permanent headcount, to try a worker before making an offer, and to hand off screening, payroll and paperwork. Most employers call an agency when a seat is hard to fill, urgent, or temporary.

Why do companies use staffing agencies?

A staffing agency finds, screens and places candidates for an employer. The placement can be contract, contract to hire, or direct hire. On a contract, the worker is usually on the agency payroll while working under the employer’s direction.

Gaps happen no matter how well a team plans. People take leave, overtime costs climb, a new project needs extra hands, or a hard role sits open for months because the internal team has no time to search. An agency lets the employer keep the work moving, take on short projects without adding long term headcount, and scale back when the project ends.

What do staffing agencies do for employers?

Staffing agencies source candidates, screen resumes, check references, build a shortlist, schedule interviews and handle the offer. For contract workers they also run payroll, withhold taxes and carry workers compensation, so the person works on site or remotely for the employer while employed by the agency.

10 reasons companies use staffing agencies

1. To reduce overhead costs

Permanent employees cost more than their salary. There is a lot of overhead associated with hiring: health care, retirement plans, sick days, vacation pay and employer taxes are just a few of the costs that come with permanent staff.

With a temporary staffing agency, the employer pays an hourly bill rate for the work done. The agency carries the payroll costs, which makes a temporary seat easier to budget.

2. To cut overtime and protect the core team

Rather than piling more hours on permanent staff, an employer can use an engineering staffing agency to bring in contract workers during busy periods.

That keeps full time employees from burning out and holds down overtime pay for hourly staff.

3. To cover leave and short term gaps

An employer may need a temporary worker while permanent staff are sick, on parental leave, dealing with a family emergency or on a leave of absence.

Hiring through a temporary staffing agency gives the employer the flexibility to cover a seat for a set period, and it can be an important recruiting resource in these situations.

4. To save on training and lower hiring risk

Training a new employee takes real time and money. When the need is a few months of work, it rarely makes sense to train someone from scratch. Through a temporary staffing agency, the employer gets a person who can do the work from week one.

When the assignment ends, the work ends. There is no severance, no unemployment claim against the employer and no awkward exit.

5. To bring in a specialist for a defined project

Some projects need expertise the team does not have. If the project has an end date, a permanent hire is hard to justify. For job seekers, using an AI powered resume builder like Rezi.ai can help make sure a resume is polished and keyword optimized, which raises its chances of standing out during agency screenings.

A temp agency can find that specialist and save the employer the time spent reading hundreds of resumes, checking references and taking calls from candidates who may not be qualified. For some technical projects, especially web applications or enterprise systems, it can also make sense to partner directly with a specialized development firm.

If you need .NET expertise specifically, consider these Top .NET Development Companies that offer scalable, full cycle engineering solutions.

6. To hand off onboarding and payroll

A big benefit of using staffing agencies is that the agency takes care of the contract worker’s onboarding paperwork, payroll taxes, workers compensation and unemployment insurance.

7. To reach a bigger talent network

A good staffing agency spends years building its network through referrals and daily conversations with candidates, including people who are not job hunting. Many also use job postings data to see where the right talent is active. Most employers do not have the time to keep that kind of network warm.

When an employer says “I need a staffing agency to search for IT resumes“, a specialist IT agency should be able to put qualified people in front of them quickly.

When the right skills simply are not available locally, some employers widen the search internationally. For companies hiring into Australia, working with experienced immigration agents in Australia can make employer sponsored visas and skilled worker pathways far easier to navigate, so overseas talent can start sooner.

8. To hire quickly

When someone quits without warning, the work does not wait. Because an agency already knows qualified people, it can often present candidates within days instead of the weeks a new job post takes to draw applicants.

9. To get industry market knowledge

Once you choose a staffing agency, you get the recruiter’s working knowledge of who is available, what they expect to be paid and how the local market is moving. That helps set a realistic salary before a search stalls.

10. To try out a worker before a full time offer

An interview only shows so much. Starting someone on a contract lets both sides see whether the fit is right. If it is, the employer converts the worker. If it is not, both can part ways cleanly.

When does using a staffing agency make sense?

An agency earns its fee when the role is specialized, urgent, or temporary, or when your team has already tried and failed to fill it. It makes less sense for an easy, high volume role your own job posts already fill well, or when you have a recruiter with time to run the search.

• Good fit: niche engineering or IT skills, a project with an end date, a seat that has been open for months, a role where fit is uncertain.
• Weaker fit: entry level roles with plenty of applicants, roles your referral network already fills, searches with no agreed salary range.

How much does it cost to use a staffing agency?

It depends on the model. On a contract, the employer pays an hourly bill rate that covers the worker’s wage, employer taxes, insurance, any benefits and the agency margin. On a direct hire, the employer pays a one time fee, usually a percentage of the new hire’s first year salary, and only when someone is hired. Our guide on how a staffing agency works breaks down fees and who pays.

Types of staffing services agencies provide

Contract staffing

Contract staffing, also called temporary staffing, is when an employer engages an agency to supply a worker for a set assignment, often one month to a year, at an agreed hourly bill rate.

The agency covers the employment costs of contract workers, including but not limited to general liability insurance, FICA, FUTA, SUTA, workers compensation and unemployment insurance. Agencies also issue year end W2s and may offer paid holidays, health benefits and a 401k.

Contract to hire staffing

In a contract to hire setup, the employer and agency agree on a contract period before the employer can make a full time offer. At the end, the employer can hire the worker onto its payroll, extend the contract, or end it. The big benefit is flexibility: you see the person’s skills, habits and fit with your team before you commit.

Direct hire staffing

Direct hire staffing fills a long term seat. The agency recruits the candidate, who joins the employer’s payroll from day one with full employee benefits. The agency is paid a negotiated fee based on a percentage of first year compensation. To compare the models for your team, see contract vs direct hire and how contract to hire works.

Staffing agency FAQ for employers