If you’re a business owner or HR manager trying to fill open positions, you’ve likely asked yourself, “Staffing agency vs. temp agency, which is right for my needs?” The terms are often used interchangeably. And in today’s job market, the lines between them are blurrier than ever.
In this post, we’ll break down the differences between a staffing agency and a temp agency and explore how each one works. We’ll help you determine which is best for your hiring needs.
With over 25 years of experience, we at Temp Staffing Inc. understand the key differences between staffing agencies and temp agencies. We help businesses hire efficiently by offering the right mix of temporary, temp-to-hire, and direct-hire solutions.
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Staffing Agency vs. Temp Agency
Both staffing and temp agencies are types of employment agencies that help match job seekers with companies that are hiring.
In the U.S., though, the term “employment” can be misleading. Workers placed by these agencies aren’t always legally employees of the hiring company. Often, especially in temporary roles, they’re employees of the agency itself.
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What Is a Staffing Agency?
A staffing agency helps employers find and hire qualified candidates for open positions. These positions can be contract-based or permanent, and the agency may provide candidates for roles across multiple industries.
Here’s how staffing agencies typically operate:
- Direct-Hire Roles: For permanent positions, the agency sources candidates, screens them, and connects them with hiring companies. Once hired, the company becomes the employer of record, and a standard employer-employee relationship begins.
- Contract or Temp-to-Hire Roles: For contract or temp-to-hire roles, the staffing agency remains the employer of record. They handle everything from payroll and taxes to onboarding and benefits, reducing HR overhead for the company.
Some staffing agencies focus on niche industries such as IT, healthcare, or finance. Others, like Temp Staffing Inc., specialize in staffing services for high-demand roles in warehousing, manufacturing, logistics, and office support.
What sets Temp Staffing Inc. apart is our flexibility. We offer both permanent placements and scalable options like temporary staffing and temp-to-hire solutions, allowing businesses to adapt quickly without compromising on quality.
It’s also worth noting that a staffing agency isn’t the same as a recruitment agency, which typically focuses on hiring for mid-to-senior-level permanent roles, not flexible workforce needs.
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What Is a Temp Agency?
A temp agency helps businesses fill roles quickly with short-term or seasonal workers. These positions are usually created to cover immediate labor needs, such as employee absences, increased seasonal demand, or one-time projects.
Common roles filled by temp agencies include general laborers, machine operators, order pickers/warehouse packers, forklift drivers, janitorial staff, and customer service reps.
Here’s how temp agencies work:
- The temp agency is the employer of record, managing onboarding, payroll, taxes, insurance, and employee benefits.
- Companies pay a markup on the worker’s hourly wage, which covers both the employee’s wages and the agency’s administrative costs.
- Temp workers can be assigned quickly, helping businesses respond to urgent staffing shortages or fluctuating workloads.
This structure allows businesses to meet short-term staffing needs without committing to long-term contracts or taking on the administrative burden of hiring.
Many modern temp agencies, including Temp Staffing Inc., also offer temp-to-hire and direct-hire services. This means if a temporary worker is a great fit, they can transition into a permanent role with minimal disruption. This flexibility makes temp agencies a valuable partner for companies navigating both short- and long-term hiring needs.
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Which Type of Employment Agency Is Better for Your Business?
Choosing between a staffing agency and a temp agency depends on your goals, timelines, and the roles you need to fill. While both offer valuable services, their pricing structures and long-term impact can differ greatly.
Staffing vs. Temp Agency Costs and Fees
The cost structure for each agency type reflects the nature of the service they provide and what’s included in that service.
Staffing Agencies
Staffing agencies typically work on a direct-hire model, meaning you pay a one-time fee after hiring a candidate.
This fee is usually a percentage of the employee’s first-year annual salary and ranges between 15% to 30%. The percentage often depends on the role’s complexity, seniority, and how specialized the skillset is.
Because these roles are permanent, you’re gaining a long-term employee without the headache of recruiting and screening on your own.
Temp Agencies
Temp agencies use a markup model. Instead of a one-time fee, they charge an hourly markup on top of the temp worker’s wage. This fee typically covers payroll, taxes, insurance, and administrative costs.
For example, if a worker earns $18/hour, the agency might charge $24/hour to the client company. Markup percentages can vary based on the job type, duration, and how quickly you need the employee.
While it may seem more expensive per hour, the flexibility and reduced administrative cost can be a major benefit, especially for short-term or seasonal staffing needs.
For example, one of our clients, a contract packaging company, faced high turnover, compliance problems, and difficulty planning for changing labor needs.
We stepped in with on-site support, better scheduling, and a performance system for their temp staff. This helped them stick to schedules, reduce compliance issues, and lower hiring and overtime costs while speeding up training for more than 200 new workers.
Overall Verdict: Which Should You Choose?
Now that we’ve compared services and costs, the next question is: which solution makes the most sense for your business?
Choose a staffing agency if:
- You need to fill permanent positions.
- You’re looking for a direct-hire solution.
- Your hiring timeline is flexible, and you want the best-qualified candidates.
- You prefer your business to be the employer of record.
Choose a temp agency if:
- You need to fill temporary or seasonal roles.
- Your hiring needs are urgent or unpredictable.
- You want to outsource payroll, taxes, and benefits.
- You’re open to temp-to-hire arrangements.
Still unsure? The good news is that you don’t always have to choose one or the other.
Temp Staffing Inc. is a staffing firm that offers both staffing and temp agency services. Whether you need reliable short-term workers or long-term hires, we help you meet your workforce goals quickly and efficiently.
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Conclusion
So, staffing agency vs temp agency: which one is right for you?
The answer depends on your hiring goals, timeline, and budget. Staffing agencies are best for permanent placements and specialized roles, while temp agencies are better for short-term, high-volume needs.
But in today’s hiring landscape, reputable staffing firms, such as Temp Staffing Inc., offer the best of both worlds.
From temporary work and temp-to-hire placements to full-time employment, we help connect businesses in the Indianapolis and Chicago areas with the right talent, fast.
