Recruiters rethink models in increasingly competitive space

Just as the web has shaken up retail and publishing, it's also causing recruiters to rethink their business model.

Just as the web has shaken up retail and publishing, it's also causing recruiters to rethink their business model. And with the changing face of the workplace and an increasing number of people opting for contracting as a lifestyle choice, connecting clients and skilled staff for less is a major imperative.

OCG Consulting estimates around half of the working population will be on contract in years to come, with more than 50 percent in the IT sector already working on a project basis.

Chief executive George Brooks says this is a trend driven by an ageing working demographic and a generation more interested in flexibility than a long-term career.

OCG recently launched contractors24seven.co.nz, which is driven by its candidate database but charges a fixed flat hourly rate on all placements of $8.50.

All contractors are "market ready", according to Brooks, and have been interviewed and reference-checked within the last year.

"Clients are really looking for efficiencies and speed in online offerings and at a lower cost," he said.

He said contractors had been quick to take to the model, particularly those in accounting, finance, and IT, where skill shortages are most evident.

According to Brooks, the barriers to entry in this space are very low, enabling almost anyone to set up in the business.

Recruiters need to adopt new models to survive, whether by adding on to their existing business or setting up standalone companies.

"The more of us that do it, the more challenging it becomes to those outside the industry trying to move into our space."

Meanwhile, a newly-formed group of PR and communications professionals is shunning the commission model entirely and opting for a one-off engagement fee.

Mark Hanson, coordinator of the Contract Communicators Network (CCN), said clients would only pay contractors an hourly rate after an initial fee of $600.

This could save companies thousands over a matter of months, he said.

“As an example, with a 20 percent commission on an hourly rate of $80, the client ends up paying $640 a week in commission on top of the contractor’s hourly rate. Over the course of a three month contract, that’s $7680,” he said.

“That money could either be saved from the client’s communications budget, or be used for PR and comms activities and initiatives that the client wants to pursue, but may not because of a lack of budget.”

Hanson said all network members had several years of experience as contractors in the communications field.

“The specialist contracting PR and communications field is a very small one  ... CCN contractors have essentially been reference checked by their peers."