The series of layoffs in some of the biggest companies in the world has made the economy stutter. After the banner year most industries experienced in 2021, layoffs are becoming everyday news around the globe. You might have heard of:
- Amazon announcing mass layoff plans for around 1% of its global workforce
- Meta’s mass layoffs after its shares lost two-thirds of their value
- Twitter laying off nearly half of its global employees – the largest mass layoff by any tech company in 2022
- Microsoft laying off less than 1% of its sizeable workforce
As of late November 2022, around 85,000 tech workers in the U.S. were laid off in mass job cuts so far (Source: Crunchbase), making many others fear losing their jobs. Indeed, mass layoffs bring forward difficult times for many employees but are a common occurrence in the world of business. The recent big tech layoffs have their possible origins in:
- The pandemic boom led to an increase in demand.
- Over-hiring during the last two years with the assumption that demand for everything would stay high
- The fear of recession
- The market volatility resulting from the Russia-Ukraine war
- The increasing inflation impacting different world economies
Are you wondering what’s good in all this bad news for your business? Well, you can plan for strategic hiring during an economic downturn. Let’s answer all the questions going through your mind during this difficult time.
Challenges related to Permanent Recruiting During a Recession
Until recently, people in the U.S. have enjoyed the fruits of a steady economy. Now that it has contracted severely and is struggling to recover, the result is a higher unemployment rate and mass layoffs. If you look at the hiring expenses in the private or public sector, it doesn’t only involve remuneration.
Rather, the overall cost of hiring a permanent employee also includes the expenses related to job postings, hiring campaigns, the compensation payable, and various other employee benefits. All these aspects are difficult considerations for a hiring team that knows their company is in cost-cutting mode due to fear of recession.
With many job seekers searching for their next employers, you can tap into the opportunity to hire talent that is rarely available otherwise. Are you wondering which way to go during the economic slowdown? Switch from permanent recruiting to contract staffing.
Here’s Why Contract Staffing Works Better Than Permanent Hiring in Economic Slowdown
Contract staffing basically refers to the hiring arrangement in which individuals are hired per the terms detailed in a contract. In other words, you follow contract staffing when you hire a reliable staffing agency to provide a non-permanent staff for your business. This type of hiring is mostly project-based and the talented individuals will work for your company via the staffing agency based on the B2B contract you sign with it.
Here’s how contract staffing can benefit your organization during an economic downturn:
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Enhanced Hiring Speed
The traditional hiring process involves candidate shortlisting, interviews, vetting, internal sign-off, and then final onboarding. All these steps take a lot of time that can be saved with contract staffing. Here, the selected staffing agency will prepare the roster and ensure that they are ready to work for you as quickly as possible. Following this hiring approach will be quite useful for you if you own a startup and want to focus more on accelerated growth.
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Reduced Labor Cost
If you want to know about the details of financial perks given to any of your permanent employees, look at their employment compensation package. Clearly, their monthly pay isn’t the only thing your company pays for. There is insurance, wellness programs, training programs, food, and more.
On the other hand, when you only have a contract-based staff, you will need to pay for their services based on the current labor market prices. Staffing agencies also have compliant payment and invoicing arrangements in place to make things easier for you.
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Simplified Hiring for Overseas Markets
To recession-proof your business, you might want to expand its reach to the global markets. Again, it will require you to hire the best talent in different geographical locations. Although you may have a good understanding of the local labor market, it’s possible that you will have many questions when hiring overseas employees.
Extending the reach and network of a renowned staffing agency beyond geographical borders can make hiring easier, whether nationally or internationally. On the way to becoming a large multinational organization, your company can benefit more from contract staffing.
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Easy Accomplishment of Short-term Business Goals
Short-term business goals can be fulfilled in less time and do not require organizations to hire more permanent employees to accomplish them all. For a dedicated labor force for time-based projects, hiring contract-based staff makes sense. You need not shoulder any responsibilities around keeping the hired staff once the project is over.
Whether or not the contractual staff will get work opportunities for other projects at a later date depends on their contract with the staffing agency.
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Flexible Workforce Management
The bigger your team is, the more challenges you will face in relation to managing the workforce. For most employees and employers, their organization is no less than an extended family. Similar to your personal lives, there can be chaos related to employee perks, appraisals, hiring, and more.
With a staffing agency by your side for contractual staffing, you can share the workforce management responsibilities. This will ultimately lead to lower operational costs and continued growth of your business.
Contract Staffing Means Savings on Employee’s Compensation & Other Benefits
When you hire a permanent employee, you are liable to pay various types of benefits, including cash compensation, life insurance, retirement plans, and paid leave. When you switch from permanent staffing to contract staffing, it does not mean the employees won’t get these benefits. Instead, the onus of providing these benefits shifts to the staffing agency.
The cost savings that happen by switching to this hiring approach can be utilized for other business needs, including growth planning and operational expansion. This is quite important to continue the pace of hiring during economic downtime.
How Can You Benefit from Hiring Freezes During Economic Slowdowns?
Another side of global-scale layoffs is the availability of talent pools. When a company is laying off a portion of its talented workforce, those individuals will be open to working for another suitable organization to attain financial stability. If you feel your hiring team is always on the lookout for the best talent, now is the time to make your hiring process more efficient to make the right hiring decisions.
In a digitally-connected world, job seekers while searching for the right job openings, also expect the right companies to find them based on the match between their skills and job requirements. In other words, you should also level up your hiring game to onboard the best talent that has become jobless due to external market conditions.
As you increase your hiring efficiency, there will be opportunities to retain employees for the long run and focus on business growth.
Amplify Your Hiring Process During Economic Slowdown with Connect Tech+Talent
As a business owner, you might have realized there’s always a chance to improve the way you hire more people in your team. When it is about making time-sensitive hiring decisions, give wings to your hiring process with the help of Connect Tech+Talent – a leading Austin-based staffing agency. For more information, click here.
