Starting a Direct Hire Agency – Questions about U.S. Market
Hello everyone,
I’m in the process of launching my own direct hire agency in Canada. With around 7-8 years in professional staffing, I have a strong grasp of the industry. I’m also familiar with the new licensing regulations coming into effect in Canada for 2023/2024.
For now, I plan to focus exclusively on direct hire placements and not on temporary or contract work until I reach between $500k to $1M in revenue. It’s a big goal, but I’m optimistic about the direction. After a couple of years, I’ll look into options for capital loans, grants, and more.
I’m reaching out to the community for resources or advice on navigating direct hire placements in the U.S. Is the process as straightforward as it is in Canada? Typically, it involves a master search agreement where the client handles the offer, with some negotiation on fees—usually over a 30, 60, or 90-day period.
I understand that in the U.S., healthcare roles require compliance with HIPAA, but my focus is on back office IT and technology positions, along with some go-to-market roles.
Any insights or links to helpful resources would be greatly appreciated! Thank you! 😊
RCadmin
Starting a direct hire agency is an exciting venture, and it’s great to hear you have a solid background in staffing. Here are some insights and resources that may help you navigate the U.S. market for direct hire placements:
Legal Considerations: While the process for direct hire placements may seem straightforward, make sure you understand the legal implications, such as compliance with the Fair Labor Standards Act (FLSA) and any state-specific labor laws that may apply. Consult with a labor attorney to ensure you’re covering all bases.
Master Service Agreements (MSAs): As you mentioned, having a solid MSA is crucial for defining the relationship with your clients. Ensure that it covers all key aspects, including payment terms, confidentiality clauses, and onboarding processes.
Fee Structure: Research industry standards for placement fees in your niche. Typically, direct hire fees range from 15% to 30% of the candidate’s first-year salary, but this can vary based on competition and specialization.
Networking and Partnerships: Build connections with business leaders, HR professionals, and other staffing agencies in your target market. Join industry groups like the American Staffing Association (ASA) to network and access valuable resources.
Recruitment Tools: Invest in robust Applicant Tracking Systems (ATS) and Customer Relationship Management (CRM) tools to keep your recruitment processes organized. Popular ones include Bullhorn, Jobvite, and Greenhouse.
Further Education: Consider enrolling in courses or certifications that specialize in U.S. employment law or direct hire staffing processes. Resources like Coursera or local business programs can be beneficial.
Online Research: Websites like SHRM (Society for Human Resource Management) and HR.com have a wealth of information on recruiting best practices, compliance, and industry trends.
Market Research: Stay informed of the economic landscape in the U.S. and how it affects hiring trends in the tech sector. Publications like Gartner or Forrester can provide valuable insights.
Hire Expertise: If feasible, consider bringing in a consultant or a mentor with experience in the U.S. market to help you navigate the initial stages and share their insights.
Starting with a focused approach on your chosen niche will certainly help you build a strong foundation. Best of luck with your new agency! If you have any specific questions as you progress, feel free to ask.