We all know that contractors are a highly valuable resource for businesses, especially when it comes to project work. When skills need to be added quickly for a certain period of time, contractors are generally accepted as the solution. But what other benefits do they offer, and what risks do you need to know about before you engage them?

With contracting becoming increasingly popular in the technology sector as more and more employees move into contingent roles for a variety of reasons, it’s never been more important for IT employers to be clued up about the processes involved with hiring a contractor.

In the first of our two part series on contracting, we’ll be taking a look at the benefits that contractors can provide for your business. In part two, we’ll take a look at the other side and go over the challenges that engaging contractors can sometimes present.

Benefits

1. Flexibility

Being able to add skills to your workforce when required gives your business a great deal of flexibility, and gives you the ability to adapt to different sets of conditions on request. Contractors are a great option if you need to do this. With many companies shifting to project-based models, the flexibility they provide is perfect for responding to unforeseen opportunities or problems. It’s not just skills that this flexibility adds either, it is also a big help when it comes to adjusting labour volume for periods with spikes of high (or low) demand.

2. Permanent Risk Mitigation

Contractors are no longer just a temporary fix. In recent years, since the Global Financial Crisis, employers have been more apprehensive about hiring permanent staff in case another such situation arises. Due to the ease of releasing contractors, this makes them a more attractive proposition for an employer in a position where hiring large numbers of permanent staff may be untenable due to the financial commitment.

There is also far less potential for a messy situation in regards to the release of contractors. Contractors are not covered by the same laws as permanent employees, and thus cannot bring personal grievances to the table when released.

3. Easier Hiring Process

Contractors aren’t just easy to release either, they are also easier to engage. With a permanent employee, a longer hiring process needs to take place to properly vet them beyond their skillset and basic personality, figuring out whether they are a good fit for the company and the company is a good fit for them. Though this is still important with contractors, it is less so due to the lesser commitment on both sides of the agreement.

Many companies are now looking more closely at every worker they engage, even contractors, when it comes to cultural fit. As company culture has shot up the list of employee priorities in recent years, it has also become a bigger priority for employers to provide this to their staff. Part of that responsibility is to hire people who fit that culture, even if they are contractors. For many employers, a contractor who is the right fit for the company may have a slight upper hand on a contractor who has the better skillset. A contractor who feels at home in the company will provide more value as they will be happier, and more likely to help to train other staff before they eventually leave.

4. Reduce Labour Costs

When properly managed, using contractors can also reduce labour costs. With contract workers only being used when needed, the worker spends more time actively working when on company time. This makes your workforce more productive as a whole and more efficient too, as due to the nature of contracting you can avoid worker burnout by rotating or scheduling more effectively.

As contract workers do not expect benefits such as health insurance or superannuation, they can sometimes be cheaper than permanent workers when costs are accurately tracked, despite higher hourly rates. This has the added bonus of being easier to sign off, as contractors’ wages often come out of project budgets as opposed to general operational expenses. With contractors being responsible for their own training and education, they are expected to hit the ground running at each new assignment they pick up, which negates training costs and thus avoids the reduced productivity of new employees starting out.

Summary

There are many benefits to engaging a contractor, but there are risks you need to keep in mind too. Stay tuned, because we’ll be going over these in the next part of this blog series. In the meantime, if you want to find out more about how contractors can help your business, or if you’re looking to engage great contract talent, feel free to get in touch with RWA and we’ll be happy to help.