What is the Difference Between Contingent and Retained? A Comprehensive Guide

When it comes to staffing your company, you have the option to work with either a contingent or a retained recruiter. But, what exactly do these differences entail? Essentially, contingent recruiters will only receive payment if they successfully place a candidate into the open position. On the other hand, retained recruiters require a fee upfront and will work exclusively with the company until they have found the right candidate for the job.

While a contingent recruiter might seem like a more budget-friendly option at first glance, there are benefits to working with a retained recruiter instead. Retained recruiters bring a level of exclusiveness to the staffing process, which means they will work tirelessly on behalf of your company to find the perfect candidate. Additionally, with a contingency recruiter, there is often the chance they will cut corners on the hiring process to secure payment, while a retained recruiter has a contractual obligation to provide a thorough and successful staffing outcome.

All in all, it really comes down to whether you want to invest in the quality and exclusiveness of your staffing process. With a retained recruiter, you can expect a higher level of service and a higher chance of finding the optimal candidate for your open position.

Contingent Staffing

Contingent staffing is a hiring strategy that involves bringing in workers on a temporary basis to assist with a specific project or fill a short-term need. This type of staffing can provide a number of benefits to companies, including cost savings, flexibility, and access to specialized expertise.

Contingent staffing can be broken down into two main categories: temp-to-perm and contract staffing. Temp-to-perm workers are typically brought on for a trial period, during which time the company can assess their skills and determine if they are a good fit for a permanent role. Contract staffing, on the other hand, involves bringing in workers for a specific length of time, such as for the duration of a project.

Some of the advantages of contingent staffing include:

  • Cost savings – Contingent workers are typically paid hourly or by the project, which can be more cost-effective than hiring a permanent employee with benefits.
  • Flexibility – Companies can bring in workers for as long or as short a time as needed, and can adjust the size of the workforce to fit their needs.
  • Access to specialized expertise – Contingent staffing can provide companies with access to specialized skills and expertise that may not be available in-house.

However, there are also some potential downsides to contingent staffing that companies should be aware of. These can include:

  • Lowered morale – Contingent workers may feel less invested in the company and its mission, which can lead to lower morale and productivity.
  • Less control over work quality – Companies may have less control over the work quality of contingent workers, who may be less invested in the company’s long-term success.
  • Potential legal issues – Companies must be careful to ensure that they are complying with applicable labor laws and regulations when using contingent workers.

Retained Staffing

Retained staffing is a form of recruitment where a company hires a staffing firm to find suitable candidates for a specific position. This is different from contingent staffing, where firms only receive payment if the candidate they recommend is hired.

With retained staffing, the company pays a fee upfront for the recruiter to begin a comprehensive search. The recruiter is working exclusively for the company until the search is completed, as they are responsible for finding the best possible candidate to fill the position.

  • Timeframe: Retained staffing typically takes longer than contingent staffing due to its in-depth search process. It can take several weeks or months to find the perfect candidate, as the staffing firm will actively search for and screen relevant applicants.
  • Compensation: Retained staffing fees are higher than contingent staffing fees due to the agency’s extra effort in finding the right candidate.
  • Commitment: Retained staffing requires a longer-term partnership with the staffing agency, as the firm is responsible for finding the best possible candidate for the company.

The process of retained staffing usually follows several steps that include a comprehensive needs analysis of the company by the recruiter, which includes looking for candidates in the industry and the creation of a search strategy. The recruiter will then advertise the job opening to a broader audience, including through their existing network of contacts. After identifying potential candidates, they will conduct thorough interviews to assess their suitability.

Once a suitable candidate has been identified, they will contact the company to assess their interest. The staffing agency will present the candidate, and if the company decides to hire them, the process will be completed.

Retained Staffing Advantages Retained Staffing Disadvantages
Exclusive focus on finding the best candidate for the company’s position Higher fees
Long-term partnership possibility Longer search process
Thorough search process Commitment to the staffing firm

Retained staffing is an excellent option for companies who want to take their hiring process seriously and find the best possible candidate for a position. The process takes longer, but the candidates are well-vetted, and the company gets to work with the staffing agency to find the perfect candidate.

Recruitment Process Outsourcing (RPO)

Recruitment Process Outsourcing (RPO) is a type of business process outsourcing where an organization outsources some or all of its recruitment activities to a third-party recruitment specialist. The RPO provider manages the entire recruiting/hiring process, including job profiling, candidate sourcing, applicant tracking, candidate screening, and more.

  • RPO helps organizations improve their recruitment processes, reduce recruitment costs, and decrease time-to-hire.
  • RPO providers can help organizations scale their recruiting efforts and deal with high-volume recruiting needs.
  • RPO providers also help organizations to build their employer brand, so they can attract top talent and reduce time-to-hire.

There are two different models of RPO: contingent and retained.

In contingent RPO, the RPO provider is only paid for successful placements. The provider works on a contingency basis and charges a percentage of the candidate’s salary as a fee. This means the RPO provider is only paid if they find the right candidate. This model works well for organizations that have sporadic hiring needs but still need to maintain quality hires.

In contrast, retained RPO is a more strategic model where the RPO provider is paid upfront to manage the entire recruitment process. The RPO provider is paid whether or not a placement is made, but the focus is on finding the perfect candidate. This model works well for organizations with high-volume recruitment needs or those looking to fill critical positions.

Contingent RPO Retained RPO
Only paid for successful placements Paid upfront whether or not a placement is made
Works well for sporadic hiring needs Works well for high-volume recruitment needs and critical positions
Provider works on contingency basis and charges a percentage of the candidate’s salary as a fee Provider is paid upfront to manage the entire recruitment process

Both contingent and retained RPO models have their benefits, and organizations must carefully consider their recruitment needs before choosing which model to go with. Ultimately, RPO can offer organizations a range of benefits, including improved recruiting efficiency, reduced cost per hire, and increased access to quality talent.


One variation of contingent staffing is contract-to-hire. This arrangement is a hybrid of two hiring models in which a contract employee works on a temporary basis and then has the potential to be hired permanently by the company. This hiring option is popular for mid-level positions where the company needs to assess the candidate’s skills, work ethics, and fit with the company culture before making a long-term commitment.

  • Contract-to-hire allows companies to evaluate the employee’s performance and skills before offering a permanent position.
  • This hiring model can be less expensive than direct hiring, as the company doesn’t have to invest in training and development until the candidate proves themselves during the contract period.
  • It’s also a lower risk than direct hiring, as if the employer isn’t satisfied with the employee, they can end the contract without incurring the high cost of terminating a permanent employee.

Contract-to-hire is ideal for candidates who want to try out a company before committing to a permanent position. It allows them to explore different roles and responsibilities while still receiving a steady paycheck. This hiring model can also be an excellent opportunity for candidates who are looking to transition into a new industry or career.

Pros of Contract-to-Hire Cons of Contract-to-Hire
Allows companies to evaluate candidates before offering a permanent position. Contracted workers don’t receive the benefits that permanent employees are eligible for.
It can be less expensive than direct hiring. Contracted workers may feel uncertain about their job security.
It’s a lower risk than direct hiring. Contracted workers may have to adjust to new job responsibilities or company culture quickly.

Overall, contract-to-hire is an attractive option for both employers and job seekers. It allows companies to test the waters before committing to an employee while giving job seekers the opportunity to gain valuable experience while still having the flexibility to find the right permanent role.

Direct Placement

Direct Placement is a type of recruitment service where the recruiter is hired to find a candidate for a specific job opening. The process involves finding and screening potential candidates, presenting them to the client, and assisting with the employment negotiations. Direct Placement is different from other recruitment services in that the client is only charged a fee if a candidate is successfully hired and starts working for the company.

  • Direct Placement is a good option for clients who have a specific job opening and want to fill it quickly and efficiently.
  • This service is also useful for those who do not have a dedicated HR department or time and resources to manage the recruiting process.
  • Direct Placement is typically used for mid to senior-level positions, where the client requires specific skills and experiences from the candidates.

The Direct Placement process differs from Retained and Contingent recruitment because it is not an ongoing process. Once the candidate is hired, the recruiter’s job is complete, and the client does not owe any additional fees. The Direct Placement service fee is usually a percentage of the candidate’s first-year salary, and the percentage can vary based on the level of experience and job requirements.

Here is an example of the Direct Placement process and timeline:

Step Description Timeline
Requirement gathering Client shares job requirements and specifications with the recruiter 1-2 days
Candidate sourcing Recruiter searches for and screens potential candidates 1-2 weeks
Candidate presentation Recruiter presents potential candidates to the client for further evaluation 1-2 weeks
Interviews and evaluations Client schedules interviews and evaluates the candidates 1-2 weeks
Employment negotiations Recruiter assists with salary negotiations and onboarding process 1-2 weeks
Candidate hire Client hires the candidate, and the recruiter’s job is complete Immediate

Overall, Direct Placement is a valuable recruitment service that allows clients to quickly and efficiently hire candidates for a specific job opening. The service fee is paid only if a candidate is successfully hired, making it a cost-effective option for mid to senior-level positions.

Staff Augmentation

When companies face temporary resource shortages due to vacations, sudden project demands, and increased volumes, they opt for staff augmentation. It is a flexible workforce solution that enables businesses to hire extra resources quickly and conveniently without committing to long-term contracts. Staff augmentation allows organizations to work with freelancers, contractors, and temporary employees without incurring the expenses associated with permanent employees. By utilizing staff augmentation services, companies can expand their workforce when needed and avoid the hassles of recruitment and training.

  • Benefits of Staff Augmentation
    • Flexibility: Companies can react quickly to changing business requirements by augmenting their staff with the right skills and experience.
    • Cost Savings: Staff augmentation can reduce recruitment, training, and development costs that come with hiring permanent employees.
    • Scalability: Companies can easily scale their workforce up or down as needed without having to worry about legal or administrative complexities.

Staff augmentation is an ideal solution for businesses that need short-term help or have seasonal work demands. It provides them with the skills and expertise they require to meet their deadlines and maintain productivity without the burden of full-time employment.

Here is an example of how staff augmentation can work to the advantage of companies:

Scenario Solution
A company has a software project that needs to be completed within four months, but their in-house development team is already working on other projects and cannot take on additional work. The company decides to hire a team of remote developers through staff augmentation services, allowing them to complete the project within the deadline without compromising the quality of their work.

Staff augmentation offers flexibility and scalability, making it an ideal solution for businesses that need short-term help or have seasonal work demands. Using staff augmentation services can save companies time, reduce costs, and increase productivity.


Temporary-to-Permanent (TTP) is a hiring strategy adopted by companies where they first hire employees on a temporary basis and then, based on their performance, they are offered permanent positions. This hiring practice is commonly used by staffing agencies to provide temporary workers to companies. TTP gives the employer the ability to assess the temporaries for not just their technical skills but also their fit with the company culture. While it may seem like temporary work is an uncertain situation for the employee, TTP often turns out to be a gateway to a full-time job for those who perform well during their temporary tenure.

  • TTP is a cost-effective strategy for companies to evaluate a candidate’s job performance before offering a permanent role.
  • TTP minimizes the risks of hiring a full-time employee who may not fit the company culture or job requirements.
  • Temporary employees who perform well during their initial stint tend to be offered permanent positions, thereby increasing their job security.

However, it is essential to note that temporary-to-permanent positions are not legally binding, and employers can extend the temporary tenure indefinitely without any obligation to offer a permanent role. It is also important to remember that even though the temporary employee has been working with the company for a while, they still need to go through the hiring process and complete all necessary paperwork when transitioning to a full-time position.

Pros Cons
Employer gets to evaluate the skills and fit of the temporary employee before offering a permanent position The role may not turn out to be permanent after the temporary tenure
Reduces the risks of hiring a full-time employee who may not fit the job requirements or company culture The temporary tenure may be prolonged indefinitely
Offers an opportunity for temporary employees to secure a permanent role based on their performance There is no obligation for an employer to offer a permanent position after the temporary tenure

Overall, temporary-to-permanent hiring is a beneficial strategy for companies looking to hire new employees. It provides the employer with a way to assess the candidate’s compatibility with the company culture and job requirements before offering them a permanent position. For the temporary employee, a temporary-to-permanent role may end up being an opportunity to secure a full-time job based on their performance.

What is the difference between Contingent and Retained?

Q: What are Contingent and Retained?
A: Contingent and retained refer to means by which recruitment firms are compensated for their services.

Q: What is Contingent Recruitment?
A: Contingent recruitment is a type of recruitment in which compensation is based on the fulfillment of specific conditions, such as successfully placing a candidate in a client company.

Q: What is Retained Recruitment?
A: Retained recruitment is a type of recruitment in which compensation is received regardless of whether a candidate is eventually placed with a client company.

Q: What is the main difference between Contingent and Retained?
A: The primary difference between Contingent and retained recruitment is the timing of payment, with Contingent being paid upon successful placement, and Retained being paid in advance.

Q: Which is better, Contingent or Retained?
A: There is no clear answer to this question as it depends on the situation. Contingent recruitment may be better suited for companies with smaller budgets or less specific recruitment needs, whereas Retained recruitment may be better for companies with larger budgets and more complex recruitment needs.

Closing Thoughts

Now that you know the difference between Contingent and Retained recruitment, you can make a more informed decision about which type of recruitment firm best suits your needs. Thanks for reading, and be sure to visit us again for more insights and information on recruitment!