Why use IT contractors over employees in changing times
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16 July 2020

 

Why engaging contractors is the best option in a volatile market

 

Contractors are not employees or part of a company’s permanent workforce. Engaging contractors allows organisations to deliver business outcomes in a more flexible and cost-effective way.
save-money-using-contractors

 

Save money & reduce fixed costs

It is a fallacy that contractors are more expensive than full time employees (FTEs). You can, in fact, save money by hiring contract resources rather than carrying permanent positions, also gaining numerous benefits that you wouldn’t get from a static workforce.

 

Hiring FTE employees ties up capital and headcount, as well as incurring many expenses that are not required for contractors. On top of salary there is holiday and sick leave, training and development, Kiwisaver contributions and statutory holiday pay are mandatory, with many employers offering additional benefits such as health insurance, unlimited sick leave and the like.

 

In the event of another Covid-19 outbreak, employers may be legally or morally bound to pay for extended sick leave. Not so with contractors – you only pay for days worked.

 

Contractors are a cost-effective option when compared against the fixed costs of hiring FTEs, offering a flexible way to progress business initiatives. This is especially relevant where there is no budget for permanent hires, or there is not enough of a workload to justify a full-time employee, so engaging a contract resource on a part-time basis (or as needed) is an optimal solution.

 

Additionally, hiring contractors offers budget flexibility throughout the year, allowing companies to bring on contract resources only when really required.

 

Pay only for what you actually need, when you need it.

 

 

 

Scale up and down quickly

#OrganisationalFlexibility

 

Switch contract resources on or off as required, providing the ability to pivot at speed to changes in the business or market.

 

When a contractor is engaged, there will be a termination clause allowing for the employer to end the contract by providing the specified notice, without giving a reason. This is not the case when a business needs to fire an employee or make them redundant.

 

  • With an underperforming employee, it can be challenging and time consuming to work through the process of letting that person go.
  • If a contractor is not meeting expectations, it is much easier to part ways from a legal, cultural and team morale perspective – simply define the notice period required in the contract for services. No hard feelings. No HR involvement.


Cashflow and forecasting benefits

Engaging contractors as per project resourcing plans capitalized under the project business case can support a lower operating cost base and assist management with cashflow forecasting.

 

 

 

Engage the right skills at the right time

Adapt quickly to changing demands
 

Flexible resourcing allows businesses to engage ‘fit for purpose’ contractors and subject matter experts – the exact skills you need, exactly when needed.

 

Contractors are usually brought in to fulfil a specific requirement for a specified period of time. They come in, complete the required services and move on to the next assignment. For a business in a rapidly changing environment, this is a massive positive.

 

If business needs change faster than anticipated, simply let the contract resource go and replace them with a resource better suited to the new requirements.

 

 

 

Access to the best talent 

Fast access to new technical expertise

 

As organisations look to ramp up new programmes of work and business initiatives, securing the best available talent will become competitive.

 

Immigration is now at near zero, with a limited pool of resources available in the local market. With the proven ability for resources to work remotely, companies in New Zealand will find themselves competing on a global scale for talent in a booming recovery economy.

 

Highly specialized resources and the best in the market will often opt for contracting over full-time employment in a competitive market. By opting to engage a Contractor over hiring a FTE, the opportunity to secure the best available talent in the market will be far greater.

 

Hiring top contractors offers the additional benefits of access to specialised expertise and knowledge transfer to permanent employees.

 

 

 

Immediate productivity

  • Contractors are used to ‘cold starts’ so can come up to speed quickly to add value.
  • Contractors require a much less involved onboarding process.
  • Contractors are already skilled in the services you need, alleviating the need for training.

No headcount approvals required

Most organisations have much less stringent policies around hiring contractors versus hiring FTEs. Engaging contract resources via an accounts payable relationship may result in significantly less overheads for the hiring manager.

 

 

 

Less management input

Contractors are industry professionals who take a great deal of pride in delivering a high quality of work. They are invested in doing a great job, as a positive referral will help them obtain their next engagement. Contractors, once provided with the outcomes expected, tend to be self-directed and require minimal training or daily guidance.

 

 

 

Contractors offer diverse work experiences and innovative ideas

Contractors offer a unique quality that few permanent employees can: a large volume of diverse work experiences. This means that contractors can give insights into current best practices, trends and technologies being utilized by other businesses. They may be able to suggest innovations that are entirely new to your industry – providing serious competitive advantage.

 

 

 

‘Try before you buy’

A company may wish to engage in a contract-to-hire model, engaging a contract resource with the view to converting them to a permanent employee as headcount becomes approved or available.

 

This offers the employer many benefits, which include:

  • Gauge whether the resource has the necessary skills, is suitable for the role and a cultural fit before making a long-term commitment.
  • Observe the resource performing in the role – much more effective than a traditional interview process.
  • Access and onboard talent quickly without the need to involve HR, then convert to permanent at your convenience.

Factors to consider when engaging contractors

Recruiting contractors

  • Partner with a reputable contracting services provider. They are well connected and will be able to tap into talent that you would not be able to access otherwise. They will take the time to understand your business and team, saving you time and effort by providing pre-qualified shortlists of suitable resources to consider.
  • Hiring Managers should do the hiring. The best outcomes for the business will be if the direct manager hires the contractor themselves, every time. They know the skills they need, the person required and the exact role and deliverables needing to be filled. 90% of the time HR will not be equipped to qualify skilled resources for specific pieces of work.
  • Interview carefully, using tools like Zoom or Teams if a face to face meeting is not possible. Unlike when hiring for a permanent FTE, multiple interviews involving many different people are not needed when hiring contractors. The key is to utilise the right person in your business to assess whether the contractor has the pre-requisite skills to do the job you need them for – and then move quickly to secure them. The best contractors are in demand and often have several options open to them at any given time.
  • Do check the contractor’s references – in particular check what previous clients have said about the contractor’s work and how that might be relevant to your assignment. Don’t be afraid to ask to speak to referees directly to validate specifics. If possible, informal or ‘off the record’ references are a great option also – seek referrals from people you know and trust.

 

Onboarding contractors

  • Set and agree clear expectations of what is required – outcomes and deliverables, hours, place of work, team meetings needed to attend, reporting, etc. This will minimise confusion and allow the contractor to settle in and become a productive member of your team quickly.

 

 

Contractor engagement

  • While Contractors may have different needs than FTEs, this does not mean that the way you engage with them requires a different approach. To get the best value from contract resources, listen to what they have to say, get to know them personally and professionally and provide them with what they need to do their job effectively, whether it is tools or access to stakeholders or decision makers.

Talk to us

Lexel’s Resourcing as a Service (RaaS) team offers customised, flexible resourcing solutions to meet our clients’ ever changing needs.

 

We are specialists in the IT and Digital sector and have a very large and diverse talent pool of contract resources who have been pre-screened and referenced, available for engagement.

 

We would love to speak with you about your specific requirements and how we can help your business to benefit through engaging flexible resources.

 

Please contact us to set up a time to chat. Alternatively you can email Amanda van Ryn, General Manager Resourcing as a Service.

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