A staffing agency is a firm that finds workers for client companies. It either places them permanently, earning a fee, or employs them itself and bills the client for temporary or contract work. Many agencies do both and specialize by industry or job type.
Staffing and agenciestopic
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In one line
A firm that finds workers for client companies, either to place them permanently or to employ them and bill the client for temporary or contract work.
There are two main business models. In direct hire, also called permanent placement, the agency recruits a candidate who joins the client's payroll, and the client pays a one time fee, often a percentage of first year salary. In temporary or contract staffing, the worker is employed by the agency, which runs payroll and taxes and bills the client an hourly bill rate that is higher than the worker's pay rate.
Agencies usually specialize. Some focus on light industrial, clerical or healthcare roles with high volume, others on IT, engineering, finance or executive search. Large clients often manage several agencies through a vendor management system or a managed service provider. Smaller clients usually work directly with a recruiter or account manager at the agency, who learns their roles and team over time.
Why it matters to recruiters
For companies, an agency adds recruiting capacity on demand, access to candidates they cannot reach and a way to staff short term work without adding headcount. For recruiters, agency work is a common entry point into the profession, with pay often tied to placements. Understanding the models helps both sides negotiate fees, rates and guarantees clearly.
An example from a recruiting desk
A manufacturer needs 25 assemblers for a four month production surge and one quality manager permanently. It uses a local staffing agency for both. The 25 assemblers are agency employees billed by the hour, while the quality manager is a direct hire placement with a one time fee and a replacement guarantee if the hire leaves early.
Tips that help
Agree on fees, payment terms and the guarantee period in writing before work starts.
Pick agencies that specialize in the roles you hire most.
Give the agency a clear intake so submittals match the brief.
Track agency results by time to submit, interview rate and retention of hires.
Mistakes to avoid
Sending the same role to many agencies at once, which leads to duplicate candidates and weak effort.
Assuming contract workers are the client's employees when the agency is the legal employer.
Frequently asked questions
How do staffing agencies make money?
In direct hire, they earn a placement fee when a candidate starts. In temporary and contract staffing, they bill the client an hourly rate and pay the worker a lower rate; the difference covers payroll taxes, insurance and overhead, with the rest as margin.
Is a staffing agency the same as a recruiting agency?
The terms overlap. Staffing agency often suggests temporary and contract work, while recruiting agency or search firm often suggests permanent placement. Many firms do both, so check the services rather than the label.
Do candidates pay staffing agencies?
In the US, reputable staffing agencies are paid by the client company, not the candidate. Be cautious of any firm that asks job seekers for fees to be placed, and check state rules, which can limit such fees.
