Statement-of-work contracting is on the rise: what it means for your staffing agency

The growth of contract employment reflects a larger shift in the way that companies are operating. By using a blended workforce model that includes both direct-hire employees and contract workers, companies enjoy greater flexibility, leading to cost savings and other benefits.


Statement-of-work (SOW) contracting takes the idea a step further by giving your clients the opportunity to employ contract workers on a project basis rather than on number of hours worked. Potential benefits include everything from cost savings to the ability to attract more highly skilled talent.


If your staffing agency isn’t currently using SOW contractors, here are three reasons to begin including them in your hiring mix.


1.     A new source of profits

Some recruiters and staffing agencies have avoided contract hires because they believe they are not as lucrative as direct-hire recruiting. Yet as more companies outsource specialized projects – often because can’t afford to hire a full-time employee – they are looking to staffing firms to find this skilled labor for them. As a result, staffing agencies can charge a premium to connect companies with competitive SOW contractors, especially in areas such as IT, health care and engineering. Having SOW contractors on staff also gives your agency a way to offset declines in seasonal hiring, as these employees are paid by the project and are less affected by seasonal demand.

2.     Long-term viability

In June 2013, contract staffing reached its highest point since 2006, with 2.7 million active U.S. contractors, according to Staffing Industry Analysts. This spike shows that more companies now view contract workers as a way to control costs, secure competitive talent and keep overhead low. Thus, staffing agencies now have two options: offer hourly and SOW contracting services for clients, or risk losing business to other recruiters. Choosing the former allows you to serve as a single-source provider your clients and better support them as their needs evolve.

3.     A better pool of talent

Highly specialized workers are gravitating toward contract positions for their unique benefits. Some see these positions as an opportunity to improve work-life balance, try more and different types of work and break away from a typical nine-to-five work schedule. Staffing agencies can use this trend to their advantage by snapping up these workers who don’t fit into the traditional direct-hire model to build a strong network of skilled contractors for clients.


By employing full-time hires and SOW contract employees, your staffing agency can provide clients with more flexibility while taking advantage of the growing number of contract employees that are now part of the U.S. workforce.