Hosted Temporary Agency: A Miracle Solution?
Temporary employment agencies are increasingly offering hosted agency solutions. In 2019, there were around 400 such agencies in France, generating a turnover of one billion euros, accounting for 4.5% of the temporary employment market. These agencies primarily target industries such as manufacturing, logistics, and agri-food, where HR services face significant pressures. However, do these hosted agencies truly provide a miracle solution for companies? Let's take a closer look.
What is a Hosted Temporary Agency?
A hosted temporary agency primarily caters to companies with significant temporary labor needs (managing at least 60 equivalent full-time interim workers).
It operates similarly to a standard temporary agency, with one crucial difference: an operational team is stationed at the client company's site and is entirely dedicated to serving that client.
This team, composed of one or more recruitment officers overseen by an account manager, is typically accompanied by a process manager whose mission is to supervise multiple agencies and monitor performance indicators.
The 4 Key Advantages of a Hosted Agency
Enhanced Proximity
The operational team of the hosted agency has direct communication with the client's production and HR departments. This enables them to anticipate recruitment needs and respond to urgent demands swiftly.
Targeted Recruitment
Thanks to their understanding of the client's industry and work environment, the hosted agency can efficiently source candidates and create a specific talent pool for the company.
Improved Integration of Interim Workers
The hosted agency facilitates the integration of interim workers by providing them with precise instructions regarding work organization (schedules, badging, changing rooms, etc.) and safety guidelines (internal rules, protective equipment, etc.). Additionally, the agency can implement tailor-made training programs to meet the company's unique needs.
Reduction of Indirect Costs
Operating closely with the client, the hosted agency contributes to process improvements and the reduction of certain indirect costs (interim worker turnover, absenteeism rate, work-related accidents, etc.).
Hosted Agency: Pitfalls to Avoid
Neglecting Legal Risks
As the Ministry of Labor, Employment, and Insertion reminds us, a temporary work contract "must not have the object or effect of permanently filling a position related to the client company's normal and permanent activity." Consequently, the stronger an agency's presence and responsibilities are at the host site, the greater the risk of deviating from the legal framework of temporary employment.
Moreover, if the personnel of the hosted agency were to work under the authority of the client company, the latter could be found guilty of an offense known as "marchandage" (defined in Article L. 8231-1 of the Labor Code).
Best Practice: Keep the agency in its role as a supplier. Do not assign any tasks that fall under your responsibility to them and ensure that they have their own workspace, equipment, and external email address. Also, avoid subjecting their personnel to your management.
Overestimating Sourcing Capacity
Although the hosted agency possesses a good understanding of the client's industry, its sourcing capacity may be inferior to that of several competing temporary agencies.
If the agency struggles to replenish its candidate pool, the client company may need to seek other suppliers and establish new collaboration processes.
Best Practice: If your industry faces talent shortages and recruitment challenges within your local labor market, maintain relationships with multiple suppliers and engage an independent specialist in outsourced HR management (Neutral Vendor / Managed Service Provider) to efficiently handle these various partnerships.
Lack of Oversight on the Work Performed
In the absence of control and competition, a hosted agency may become complacent and commit administrative management errors. Non-compliance with obligations outlined in the Labor Code could lead to severe penalties for both the temporary agency and the client company.
Best Practice: Implement control and traceability procedures. Furthermore, retain responsibility for contract control, hour reporting, and invoicing.
Entering a Dependent Relationship
The more responsibilities an agency assumes, and the more it imposes its processes and work tools at the client's site, the more dependent the client becomes. In case of contract renegotiation, the client may find itself in a vulnerable position and face difficulties in switching to a different supplier.
Best Practice: Keep in mind that you should be capable of changing suppliers at any time. Define your own temporary labor management processes and ensure the use of your proprietary tools, including a dedicated platform for temporary labor management.
