Contract and permanent recruitment are two distinct approaches to hiring, each suited to different business needs and candidate expectations.
Recruitment agencies can specialise in either contract or permanent recruitment, but many provide both services to cater to diverse client needs.
Whatever the case, understanding these differences is critical to tailoring your recruitment agency's services effectively.
Contract recruitment focuses on short-term or project-based roles, offering flexibility and rapid placements, while permanent recruitment involves hiring candidates for long-term positions, fostering stability and organisational growth.
By leveraging the best recruitment strategy for their clients, agencies can improve candidate placement success, enhance client satisfaction, and navigate the dynamic demands of the modern labour market.
Read on to find out everything you need to know about contract recruitment vs permanent.
What Is Contract Recruitment?
So, how do we define contract recruitment?
Definition and Characteristics
Contract recruitment involves hiring candidates for temporary roles or specific projects, usually for a fixed duration.
It plays a crucial role in addressing short-term workforce needs, such as seasonal demand, project-based tasks, or covering employee absences.
It also allows businesses to be more agile and scalable, tapping into specialist expertise while they need it without being tied into a long-term contract.
This is especially attractive in today's uncertain economic landscape.
Meanwhile, a contract employee gets to set their own schedules, choose projects that align with their interests and career goals, and often earn more than they would in an in-house role.
Recruitment agencies specialising in contract hiring are tasked with delivering talent quickly.
They ensure quick placements by building pre-vetted talent pools they can access anytime.
Metrics That Matter
The precise metrics you choose to track will depend on your agency's specific circumstances and goals and those of your clients.
However, contract recruitment agencies should prioritise the following three metrics.
- Speed of Placement: This tracks the time taken to fill a position, from job posting to candidate placement.
- Candidate Pool Size: This metric is used to measure the number of potential candidates available for current or future roles.
- Match Quality: This assesses how well candidates align with job requirements and company culture.
Why are these metrics so important in contract recruitment?
Speed of placement highlights the efficiency of the recruitment process, which is crucial for meeting client demands and staying competitive in fast-paced markets.
Meanwhile, candidate pool size tells you how prepared you are to meet client demand.
A larger candidate pool allows agencies to quickly match talent with client needs, boosting quality of hire and reducing time-to-hire.
High match quality leads to better long-term performance, reduced turnover, and higher client satisfaction.
It's a critical metric for ensuring successful placements.
What Is Permanent Recruitment?
Now we've defined contract recruitment, let's take a deeper look at permanent recruitment.
Definition and Characteristics
Permanent recruitment focuses on hiring candidates for full-time, long-term roles within an organisation.
The process involves carefully matching candidates to positions based on skills, experience, career progression, and cultural fit.
It's vital to ensure permanent recruits align with the company's long-term goals, as retention is essential for clients and often agency commissions.
Indeed, this type of recruitment aims to create stable, enduring workforce solutions, providing businesses with committed employees who contribute to long-term success.
Metrics That Matter
Permanent and contract recruitment agencies will track a lot of the same metrics.
But the following five metrics are especially relevant for permanent agencies.
- Jobs Added: The number of new job vacancies a recruitment agency takes on.
- CVs Sent: The number of CVs submitted to clients for consideration.
- Interviews Booked: The number of candidate interviews scheduled.
- Placements Made: The number of successful candidate placements in roles.
- Revenue Generated: The income earned from successful placements.
Jobs added reflects your workload and growth, while CVs sent is a key indicator of candidate activity and engagement, as well as recruiter performance.
Meanwhile, interviews booked demonstrate the number of candidates who have moved forward in the recruitment process, highlighting the agency's ability to connect candidates with potential employers.
Placements made is a crucial metric to track because it reflects the effectiveness of the recruitment process and the agency's ability to match candidates with client needs.
And revenue generated is a major KPI, helping you to measure profitability.
Key Differences Between Contract and Permanent Recruitment
While recruiting into full-time contract vs full-time permanent have many similarities — after all, both types of recruiters are tasked with placing candidates in roles — there are also several significant differences that are important to note.
Here are three of the biggest differences when it comes to contract vs permanent recruitment.
#1 Recruitment Funnel
In contract recruitment, your clients need vacancies filled asap.
This means the focus is firmly on speed and efficiency, with a priority on quickly filling roles from a large pool of pre-vetted candidates.
Of course, you still need to deliver great candidates, but there's much less emphasis on making sure they fit in with the company culture or will stay there in the long term.
This means the recruitment funnel is streamlined, with the goal of rapid placements.
In contrast, permanent recruitment emphasises precision, and the funnel is slower-moving and has more stages.
For instance, it typically involves multiple assessments, such as in-depth interviews, tests, and cultural fit evaluations.
The process is much more thorough, as the goal is to secure candidates for long-term roles that align closely with the client's needs and company culture.
While clients are likely still under time pressure to make a hire, they understand the importance of thoroughly investigating each candidate, meaning you have longer to make placements.
#2 Metrics and KPIs
There's plenty of overlap when it comes to metrics in contract and permanent recruitment.
However, the metrics that matter most in contract recruitment — speed of placement, candidate pool size, and match quality — focus on recruiters' ability to meet their clients' short-term needs and do so quickly.
These metrics are all about how fast they can fill roles, whether they're prepared to fill more roles quickly, and the quality of those candidates.
In contrast, vital metrics in permanent recruitment — jobs added, CVs sent, interviews booked, placements made, and revenue generated — take a more granular look at the recruitment funnel.
Permanent recruiters have a much longer recruitment funnel to contend with, each of which contributes to the end goal of efficiently delivering top talent to clients.
This means that it's important to thoroughly investigate each funnel stage.
#3 Candidate Engagement
In contract recruitment, candidate engagement is rapid and focused on immediate availability.
Recruiters prioritise quick responses and readiness for short-term roles to swiftly match candidates to urgent positions.
Furthermore, contract recruiters are tasked with filling a high volume of roles, so they need large talent pools.
While they may use recruitment automation and bulk messaging to engage these candidates, developing personal relationships with every candidate in these pools would be impossible.
In contrast, permanent recruitment centres on developing long-term relationships, nurturing candidates over time through ongoing communication and trust building.
This approach ensures a deeper understanding of candidates' career aspirations — vital in permanent recruitment.
It leads to successful, long-lasting placements that align with both client needs and the candidates' long-term goals.
Benefits of Contract Recruitment
Contract recruiting comes with many benefits.
If you're considering specialising in contract recruitment or adding it into the mix, consider the following three advantages.
#1 Faster Placements for Urgent Needs
Contract recruitment excels at providing quick solutions for urgent staffing needs.
And this means a faster recruitment funnel, higher-volume hiring, and more opportunities for revenue generation.
If you have packed, pre-vetted talent pools and can keep up with demand, your agency can grow quickly.
There are heaps of contract vacancies out there — it's all about mastering the speed needed to compete.
#2 Flexibility for Clients and Agencies
One of the major advantages of contract recruitment is the flexibility it offers both clients and recruitment agencies.
Clients can quickly scale their workforce up or down based on fluctuating needs without the long-term commitment of permanent hires.
Similarly, when filling a high volume of roles, agencies can take on as much work as they can handle — scaling up and down depending on their resources.
This dynamic flexibility allows for faster decision-making and more agile responses to changing business environments.
#3 Access to a Wider Range of Industries and Projects
Contract recruitment opens doors to a broader range of industries and projects for candidates and agencies.
For candidates, it provides opportunities to work across different sectors, gaining experience in various environments.
And for agencies, this broadens their client base, enabling them to serve multiple industries and bring more clients on board.
This diversity not only enhances recruitment options but also strengthens an agency's reputation as a versatile service provider.
Benefits of Permanent Recruitment
Permanent recruitment also has several unique benefits.
#1 Long-term Value for Clients
Permanent recruitment provides long-term value for clients by ensuring the right candidates are hired for lasting roles, reducing turnover rates and the costs associated with frequent hiring.
By focusing on finding candidates who align with the company's culture, values, and goals, agencies help build stable, committed teams that contribute to business success.
And when clients find a recruitment agency that can deliver top talent that stays with the business, they tend to use them again and again.
This helps agencies generate revenue from repeat business and build a positive brand reputation, attracting new clients.
#2 Higher Fees and Revenue for Successful Placements
Permanent recruitment typically yields higher fees for agencies compared to contract placements.
These fees are often based on a percentage of the candidate's salary, reflecting the value of securing high-quality, long-term employees for clients.
Indeed, successful permanent placements can lead to substantial revenue generation for agencies, especially when working with large companies or headhunting into senior-level roles.
What's more, over time, building a strong track record of successful permanent placements enhances the agency's reputation and ability to command higher fees.
#3 Greater Emphasis on Quality and Fit
Permanent recruitment strongly emphasises quality and fit, ensuring that candidates not only have the required skills but also integrate well with the client's culture.
This thorough vetting process results in better client outcomes, as well-matched candidates are more likely to thrive and contribute positively to the organisation.
Agencies benefit from their role in delivering high-quality placements, which boosts client satisfaction and strengthens long-term relationships.
Challenges in Both Recruitment Types
Of course, both types of recruitment come with their own challenges.
In contract recruitment, you can expect high turnover, while maintaining engagement with a large pool of contractors — who often work with several clients at once — can be tricky.
There are also more compliance issues to deal with in contract employment than in permanent positions, such as contracts, taxes, and regulations that ensure compliance with labour laws.
In permanent recruitment, meanwhile, you'll be dealing with longer timelines, higher candidate expectations, and very specific client demands.
How OneUp Enhances Both Recruitment Processes
Whether you're a permanent or temporary recruiter, it's crucial you have the tools you need to thrive.
Recruiting analytics software OneUp can help drive both contract and permanent recruiting teams to success.
Here's how.
For Contract Recruitment
OneUp offers real-time recruitment performance metrics tracking, and automated workflows — all of which speak to the needs of contract recruitment agencies.
Agencies can create metrics based on data drawn from any of their systems, from CRM and VoIP to timesheets tools.
This allows them to measure metrics such as calling volume and meetings booked, which helps them to create realistic yet ambitious targets for growing and engaging their candidate pipeline.
These metrics are tracked on real-time custom dashboards and reports with intuitive visualisations, making it easy to gain a progress overview at a glance.
Meanwhile, OneUp's automated workflows help contract agencies to work as fast as they need to in order to keep up with client demand.
For Permanent Recruitment
OneUp has a wide range of features designed to boost hiring efforts, but some of the most useful for permanent recruiters are funnel tracking, recruitment analytics, and recruiter performance monitoring.
Using OneUp's dashboards and reports, you can closely track progress and ratios at every stage of the permanent recruitment funnel:
- Job added
- CV sent
- Interview booked
- Placement made
- Revenue
This gives you key insights into conversion rates and recruiter performance.
Using OneUp's real-time data analytics, you can easily identify problems such as bottlenecks, take swift action to solve them, and find out which activities work best for you.
It's also essential to monitor recruiter performance metrics in order to drive your team to success.
As permanent recruitment moves at a slower pace than contract recruitment, OneUp's gamification suite is helpful to keep your team engaged with their SMART goals for recruiters.
Using OneUp, you can launch competitions, missions, and leagues with live leaderboards and celebration anthems to motivate permanent recruiters to reach their goals through gamification.
Conclusion
So, permanent vs contract recruitment?
There's no right or wrong approach — permanent and contract recruitment both come with their own benefits and challenges.
However, it's essential to recognise that each strategy requires a different approach, as outlined above.
To be successful in either sphere, you must have a deep understanding of the foundations of your chosen type of recruitment, focus your team on the best goals and outcomes, and have the right tech stack to support your efforts.
Whether you're a permanent or contract recruiter, OneUp delivers the streamlined, data-driven recruitment process you need to succeed in the competitive landscape of 2025.
Book a demo today to learn more about how OneUp could transform your recruitment agency.
