In 2025, there is a significant decline in demand and supply for permanent roles. In this article, we will explore what this shift means for recruitment agencies and how they can start managing temporary & contract workers more effectively.
It’s no secret that the workplace landscape has not only changed in recent years but also shows no signs of stopping. With the world adopting hybrid working and flexibility during the pandemic, alongside budget cuts caused by economic uncertainty and ongoing technological advancements, it would be naive to expect things to remain the same. However, predicting its future direction remains difficult.
Recently, there has been a noticeable shift in preference from permanent to temporary roles, observed among both employers and candidates. While recruitment agencies working with temps and contractors are thriving, this change brings a host of challenges to those focused on filling permanent positions.
In this article, we will explore what caused the shift, what it means for recruitment agencies, how to address the new challenges, and why it’s important to develop the right approach to managing temporary and contract workers as soon as possible. We will also share a couple of tips on how to make the adaptation easier, as well as discuss our prediction on whether this trend is just a passing fad or here to stay.
What is the State of Temporary Recruitment in 2025?
Currently, temporary recruitment is increasing. This trend originally started during the job crisis caused by the pandemic, when many workers faced layoffs from their permanent roles. With competition for even entry-level positions now exceeding hundreds of candidates per vacancy, temporary work has become a viable solution for many.
That said, the state of temporary recruitment largely depends on global economic shifts and circumstances. However, an no less important factor is the mentality, which has drastically changed since the pandemic. Namely, companies now want to hire faster, and employees seek maximum flexibility. Both of these expectations collides in temporary working arrangements, making it favourable.
Whether the situation should change is debatable, and it is too early to tell. The state of temporary recruitment is known to be unstable and dependent on many external factors. However, at present, it is surpassing the preference for permanent roles on all fronts, prompting many recruitment agencies to reconsider their strategies and make adjustments to adapt.
Permanent vs Temporary
What makes temporary positions more appealing to both employers and candidates than permanent ones? Previously seen as a more secure option, their availability has decreased since the pandemic. However, lately, candidates are also less inclined to take them up.
The Decline of Demand for Permanent Roles
There are two reasons why the popularity of temporary positions is increasing, and one of them is that more companies are choosing to employ contractors rather than permanent staff. As we experience economic uncertainty, many organisations are unsure about their future, so creating or filling more full-time roles involves significant risks. Temporary workers are often a safer option in many respects. Additionally, they can always be re-hired for a different project if their skill set is needed.
In recent years, managing temporary employment has become easier from an administrative point of view. With complexities like differentiating rates and holiday carryovers, it was not a favourable option because of the high risk of errors and longer processing times. However, with the rise of technology, there are now many solutions that address these needs in seconds, placing temporary workers on equal footing with permanent staff in internal processing. For many, this was a barrier, and now that it has been removed, more companies are willing to hire contractors.
Flexibility as a Trend Driver
The second reason lies with the workers themselves. With the rise of hybrid working and numerous adjustments, alternatives, and innovative solutions introduced when adapting to working in the quarantine environment, work-life balance requirements shifted. Having learned that flexibility is possible and that the traditional rigid 9-to-5 isn’t the only option, workers now have new expectations regarding their employment. Specifically, they want to structure their workflows according to their preferences and life circumstances.
While many companies adopted flexible working arrangements, some have revoked them since the pandemic. Additionally, each organisation has its own rules defining its flexibility policy, which may not appeal to all workers. Working as a contractor, on the other hand, involves almost unlimited self-management as long as the terms of the contract are honoured. As the new workplace takes shape with defined rules and boundaries, more people are opting for temporary employment to maintain their freedom.
What the Shift Means to Recruitment Agencies
Recruitment agencies, as a rule, are expected to adapt quickly to the changing work market landscape. While recruiters who previously worked with temporary staff are thriving, companies focusing on permanent roles need to train their staff on IR35 policies, compliance and insurance intricacies, as well as technical processes like payroll and timesheets. The main impact, however, is seen in revenue. Permanent placements usually generate a higher one-off fee, whereas temporary positions often provide recurring revenue and the flexibility to work with a larger volume of candidates. This approach is particularly valuable in sectors facing workforce shortages, such as IT.
The rise in both demand and supply of temporary workers means recruitment companies need tools to manage the complex administrative processes quickly and efficiently. Additionally, they must improve their candidate relationship management, as temporary workers often require more support, especially when transitioning between contracts. With companies prioritising speed and flexibility, the emphasis on cultural fit diminishes, which could affect the contractor’s productivity and mental wellbeing. Recruitment agencies are now expected to bridge that gap.
Navigating the Current Recruitment Landscape
While recruitment agencies are equally affected by this shift, it’s not a widely recognised fact. Consequently, they often need to figure out how to adapt themselves, with limited scope for trial and error as expectations remain high. In this section, let’s explore what this change means for them and how recruitment agencies can navigate it efficiently.
Temp-First Challenges
The biggest challenge is the high turnover rate, which affects speed and volume, putting pressure on infrastructure. Clients expect positions to be filled swiftly, and temps often seek short assignments, meaning both demand and supply are ever-present and require constant adjustment. Given the amount of compliance and risk management involved, this creates an environment prone to errors, employee burnout, and strained relationships with both clients and candidates. Not to mention, all of this often occurs with thin margins and rising costs. Unless you have adequate technology in place, this is not a pace that recruitment companies can sustain long-term, especially if their goal is to scale.
Despite the first-place landscape setting up many new hurdles for recruitment agencies to overcome, the clients seldom show sympathy. If anything, their demands and expectations are higher than ever, both in service and timing. Communication is crucial when establishing boundaries and managing expectations, especially during special circumstances like seasonal spikes. When prioritising temporary workers, speed is essential. While standards for quality remain high, occasional pushback citing the reality might be necessary: thorough research increases the chances of finding the right fit. Rapid employment, however, remains a gamble in which the client accepts the risks.
Poor Management Costs A Lot
The lack of organisation, scheduling, and structure further complicates the main challenge of a temp-first approach: high turnover. Poor scheduling, lack of communication, or a negative candidate experience can cause temps to quit or fail to show up. In this scenario, you lose revenue in several areas: unfilled shifts, the recruiter’s wasted time, and the risk of an unsatisfied client walking away. This also directly impacts another area that can quickly drain your budget if mismanaged: payroll and timesheet errors. Administrative mistakes in these areas, which increase with no-shows and scheduling issues, mainly lead to overpayments and underpayments, both of which generate mistrust and heighten the risk of losing clients and candidates alike.
Given that the temp-first approach puts a lot of pressure on recruiters due to the fast pace and never-ending demand, poor management means their time is being underutilised. The clearest signs of this are when, instead of filling placements, recruiters chase timesheets, reschedule shifts, and are tasked with resolving issues. Less time spent on sourcing and securing placements results in lower profitability. On the other hand, poor management also affects candidates, leading to poor onboarding, little or no support, and delayed payments. Losing the trust of clients is harmful; earning a bad reputation with candidates is worse - if their supply diminishes, you won’t be able to serve clients and thus generate revenue.
Tools to Manage the Contractor Growth
We’ve briefly discussed the potential solution to the challenges arising from the shift in focus toward temporary workers, as well as the risks of not handling them properly. That solution is technology. Of course, one solution will not fix all your problems, and you want to avoid increasing your team’s admin workload by juggling data across multiple tools. Instead, aim to create a fully interconnected digital toolkit that is both centralised and easily accessible. So, what tools should it include? That depends on your specific niche, but generally, you should consider integrating a CRM/ATS, a team management platform, and an accounting software.
Most of these tools offer more than their names suggest, so be sure to review the included modules carefully. For instance, remain alert for holiday management modules that will calculate holiday entitlements, self-billing, expense management, shift scheduling, and other useful features that can assist your teams with daily tasks. Many aspects of internal management can be automated, which helps reduce the pressure caused by high volumes and minimises the chance of errors. This tackles several risks simultaneously: payment mistakes, recruiters needing to resolve issues, last-minute shift rescheduling, and more.
The Future of Recruitment
The shift away from traditionally seen as ‘more secure’ permanent positions towards flexible contracted jobs was unexpected. While temporary job recruitment flourished at the height of the pandemic due to a decline in permanent roles, many viewed this as a short-term change. However, just like the hybrid working setup, not only did it persist, but it also significantly shaped the modern work landscape.
That said, it’s too early to determine whether permanent roles will again surpass temporary ones in popularity. While most companies have recovered financially and are once more offering permanent positions, employees are less interested in them, as they often offer less flexibility. We predict that demand for permanent roles will recover, but only after companies reconsider what they provide. That said, the future is likely to be mixed. Organisations need a solid, defined team to handle their core operations daily. When working on projects, they will rely on contracted workers who can boost the team’s performance with additional skills.
Key Takeaway
There’s a decline in both demand and supply for permanent roles, while temporary positions are increasing. This change is due to a broader shift in the workplace environment. Post-COVID, flexibility became a common requirement for workers, and although many companies adopted this approach permanently, they still impose some limitations. Recruitment agencies need to adapt quickly to this shift, as it directly impacts their revenue and brand image.
The temp-first trend presents many challenges, such as higher turnover rates, increased work volumes, and thinner margins. Failing to adapt quickly and manage internal operations efficiently can lead to significant financial losses and damage to reputation, especially for agencies specialising in niche sectors. The best way to regain control and align with industry movements is through adopting relevant digital tools.
Will the balance shift in favour of permanent roles in the future? It’s difficult to say, as the current workplace landscape continues to evolve. If companies adjust to offer more of what attracts people to temporary positions—namely flexibility—the balance may tip towards permanence. However, if they keep prioritising quick help over developing company culture, the temp-first approach is likely to dominate.
Do you find it challenging to manage temporary & contract workers? Let us know - we’re here to help.