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Recruiting Contractors: Staffing Agency vs Job Marketplace

By MBO Partners |

Updated Wednesday, September 16, 2020

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41 million Americans are currently work as independent professionals, more organizations than ever before are taking advantage of this flexible pool of talent. In the past, companies may have relied on internal referrals or staffing agencies as the go-to solution to recruit independent contractors, but today organizations are finding new ways to reach this talent directly. Marketplace platforms are quickly growing in popularity, providing organizations with direct, on-demand access to top talent they need for projects.

Here’s a look at the difference between staffing agencies and marketplace platforms, as well as some insight into which might be appropriate for your unique scenario.

What Is a Staffing Agency?

Staffing agencies are specialists in filling temporary, contract, and full-time roles for organizations. Think of staffing agencies as a broker in connecting companies with talent looking for work.

The advantages of a staffing agency

Many enterprises turn to staffing agencies if they don’t have the time or resources to fill job openings themselves. They also payroll any talent they find who will be engaged on a temporary basis. Staffing agencies can benefit companies by sourcing, screening, and interviewing candidates, running payroll or invoicing, and handling taxes and associated job benefits.

The disadvantages of a staffing agency

With rates becoming more competitive, staffing agencies are often expensive to work with. Fully loaded, negotiated mark-ups are applied regardless of how a worker is originally sourced, the length of the project, or if the same worker is re-engaged. Often times, the direct-engagement between a company and a worker is controlled, which can leave gaps in both the candidate’s and the company’s understanding of qualifications and requirements.

As more organizations add independent professionals to their workforce, they often rely on staffing agencies or their Managed Service Provider (MSP) to manage the qualification and engagement of independent workers. But because these companies do not specialize in independent contractor compliance and engagement, they may not be well-versed in the applicable laws and regulations. Staffing agencies that have misclassified workers as independent contractors are exposing their clients to risk. Risk-averse staffing companies will often choose to payroll everyone, alienating independent talent.

What is a marketplace platform?

Marketplace platforms are an increasingly popular way for independent professionals to find work, and for organizations to engage this pool of talent. These platforms enable the transaction between client and contractor directly online, eliminating the need for a third-party. Typically, a freelancer or independent contractor will fill out a profile and then apply to or be matched with positions that fit their skill set. The company that posted the open position can then evaluate candidates and engage the right person for the job. In addition to this self-service model, there are now some hybrid marketplaces supported by an additional human layer to assist with project matching.

There are many different types of platforms ranging from ones that specialize in relatively short and small contracts to organizations that have developed their own company-specific marketplaces such as PwC’s Talent Exchange, and the Washington Post’s Talent Network.  There are also marketplaces like MBO’s platform that match skilled independent professionals with large enterprise clients in a way to help them build their talent networks by sourcing externally or internally.

The advantages of a marketplace

Marketplaces can be useful for organizations as a place to post jobs, and source and self-select independent contractors. By removing the need for a third party and allowing direct access to talent, marketplaces enable organizations to save costs, reduce the time spent on recruiting activities such as contract administration and onboarding, and get to work as soon as talent is identified, often within a few days.

For many, the control provided by a marketplace can be appealing. Other benefits may apply, such as the ability to negotiate fees or easily find and re-engage talent that has previously been used throughout your network or company.

The disadvantages of a marketplace

Marketplaces vary widely in the depth and breadth of talent available, and many do not include compliance vetting. The burden of establishing a clear contractor-client relationship is often left up to the company engaging the contractor.

Some marketplaces, however, do provide higher levels of compliance vetting. MBO’s platform, for example, facilitates a compliant engagement process by allowing managers to post a project for a pre-vetted network of skilled independent contractors. If talent is new to the platform, MBO will use its rigorous compliance standards to provide a proper engagement method that ensures compliance with state and federal contractor classification requirements.

Do you have more questions about compliantly sourcing and engaging independent talent? We’re here to help!