I have to believe that most transactional recruiters don’t intend to stay in that space forever.
Transactional recruitment is a good way to get your foot in the door and establish a presence. But surely no one thinks that hovering just above or below average fees, living month to month, is a good long-term business plan.
But how long are you going to wait to make retained and Managed Service contracts your core offering?
Because there’s a time limit on this.
Not because of the likelihood of an economic downturn or recruitment competition reaching critical mass (although both of those things are factors you should be thinking about), but because of the nature of the recruitment service itself.
I hardly ever hear recruiters talking about this, and I listen to a lot of them.
So, it falls to me. Here’s what you need to know…
Knocking on the Closing Window of Opportunity
There’s nothing like a mixed metaphor to get my creative juices flowing 
I’m deadly serious when I say that recruitment opportunities have a time limit on them. But on the plus side this means that, at least for now, the opportunities are there.
I say this to prevent the assumption that this article is going to be all doom and gloom. It isn’t. But I hope that it will serve as a wake-up call.
Here’s how this works…
Retainers and Managed Service Provision (MSP) contracts are the most lucrative areas of permanent recruitment. They currently represent a smaller part of recruitment strategy when compared to transactional recruitment, but that won’t last forever.
Eventually the balance will swing the other way.
But when that happens – and this is what I don’t think a lot of people have figured out – the market for these opportunities is going to shrink. Slowly at first, and then faster and faster.
And the reason for this is staring us in the face.
Retainers and especially MSPs, by their very nature, tie a recruitment firm very closely to the client. If set up properly, recruiter and client become so closely entangled that it would take a lot of time, effort and money to disconnect.
When we teach MSP strategy to our i-intro® clients we refer to this as “liquid cement” because it’s much easier to lock recruiter and employer together than it is to separate them later.
Bottom line…
If there’s a client out there with whom you’d like to someday establish an MSP, don’t wait. Because if another recruiter gets in first, the opportunity has gone. It could be years, or even decades, before that client becomes available again.
It’s Hard to Tell Where Client Ends and Recruiter Begins
If it seems like I’m exaggerating then you might not have looked closely enough at how MSPs work.
A MANAGED SERVICE PROVIDER contract usually takes the form of a commitment to completely manage a company’s recruitment requirements. In addition to regular recruitment processes, this can also include reporting, tracking, on-boarding, development planning and long-term scheduling.
This model is also sometimes referred to as RECRUITMENT PROCESS OUTSOURCING (RPO). The only real difference is that a firm providing an MSP function may not be a recruiter, in which case finding a suitable specialist will be part of their responsibilities.
An MSP, by design, draws the recruiter closer to the client. Instead of just finding candidates, the recruiter is involved with almost every stage of an employee’s life-cycle. This can include…
· Helping clients plan their short-term and long-term hiring requirements.
· Planning and implementing branding and PR as part of the recruitment campaigns.
· Finding and assessing candidates.
· Assisting with candidate interviews and decision-making.
· Organising new hire on-boarding and long-term development.
· Managing exit interviews.
MSPs are a full-fat service, which is why they are generally considered to be the most lucrative type of recruitment available (they usually include a monthly retainer either on top or, or subtracted from, commissions).
But this also means, that within just a few months, the recruiter is so closely aligned with the employer, that it would take little short of a seismic shift before the client would even consider starting over with a new recruiter.
Can you see what I’m getting at?
There are a finite number of employers who are a good fit for an MSP contract. And once they’re signed to a recruitment firm, they’re off the market, maybe for good.
This isn’t like a PSL where the employer periodically reviews their providers and invites new firms to pitch. MSPs are on a whole new level.
If you thought running into a PSL when you’re looking for new business is frustrating, think about how it will feel when you know a client is perfect for you, but they’re already locked into a long-term MSP that they won’t even CONSIDER reviewing for at least the next few years.
First-Mover Advantage is Critical
The market for MSPs and retainers, right now, is huge. But it absolutely won’t stay that way.
And when the preference for stable, long-term relationships with a single recruiter becomes the dominant force, that culture is going to grow at an exponential rate.
Right now, the transactional recruitment market is not entirely dissimilar to the energy supply market. Switching to whichever provider has the best price and/or perks is easy for the consumers.
But there’s a time limit on this. Retainers and MSPs will eventually become the norm. So why wait until the market begins to shrink to start locking down your clients?
MSPs or strategically and financially beneficial for employers and recruiters, and at the time of writing, opportunities abound.
Don’t make the mistake of thinking you have all the time in the world.