Contract staffing is a growing trend. According to the CareerBuilder, 42% of the employers are planning to engage contract workers in 2014. In India also similar trend is seen. In the early days of IT boom in India only the MNC would use the contract staffing to manage the number of employees, costs and  the  statutory obligations. In the recent times the SMEs have joined the band wagon.  The reason behind this growing trend is the economic uncertainty & fast changing technology trends.

The top 5 industries in which the contract jobs are growing are : IT (Information Technology), Manufacturing,  Healthcare,  BFSI & BPO/BPM.  With the advent of Digital marketing, contract staffing in the areas like Content Creation, SEO & Social Media is also seeing a unusually high growth.

Before we get into the advantages & disadvantages of  FTE and Contract staffing, Let us understand the terms (these terms have slightly different meaning/perception in different  countries):

FTE ( Full time Employment/Equivalent) - FTE is employment in which a person is required to work fulltime (30-45hrs/week depending on the country) & qualify to get  benefits like  health insurance, & retirement benefits like PF.  FTE   may be restricted from working for other employers.

Contract Employment (or Independent contractor) -  Contract employer provides services under a specific contract for a specific duration and may or  may not have minimum/maximum hrs/week specified in the contract ( in the later case it may be  work specific  with flexi hours).  Contract employer is free to work for multiple employers at a time.

Pros & Cons of Contract staffing:

Here are the Pros of contract hiring:

1)      Speed: Because of the temp nature of the Contract job or possibility to get a replacement for unsuitable candidate, employers are quick in making the decision & as the candidates are readily available, as there is no notice period required,  the engagement starts quicker than FTE.

2)      Less Risky: If the candidate is unsuitable the contractor will replace a non performing candidate. Because of this  there is less risk to the project.

3)      Cost savings: Although contract staff may be paid more than FTE in terms of per hour,  the overall cost may be less because there are no expenses related to employee benefits & hiring cost

4)      Short term projects: Contract staffing is an excellent option for a short term project (one off) which may not be in one’s core competencies or where quick turnaround is required.

5)      Flexibility: Contract staffing provides the maximum flexibility in terms of starting & stopping of an engagement or increasing or decreasing  the number of contract staff on roll.

Here are the Cons of contract staffing:

1)      Lack of control: Unlike FTE you have less control over the contract staff.

2)      Long term availability: In case you require some specific candidate/s for long term ( longer than originally envisaged), these candidates may or may not be available for the extended assignment.

3)      Security: Some people think that by using contract staff one may take risk of not protecting sensitive data or innovative processes; which may not be true. The risk is same(or more) with FTE once they leave the organization.

Advantages of Contract to Hire model:

In this model you have advantages of both FTE & Contract staffing and more. You can TRY BEFORE YOU BUY with no strings attached. If you do not like, replace or cancel the contract as per the contract terms & if you like the candidate hire the candidate for some commercial terms. 

In this model, both the employer & the contractor (candidate) can check out  each other. Employer can get a feel of  the knowledge & skills of the candidates as well as some of the intangibles like his/her work habits, how he/she get along with the peers or the boss etc. The candidate also can get the feel of the organization, culture, working environment & his/her peers & the boss.  If both of them find this as a perfect fit, employer can convert the candidate to FTE.

Also it is observed that employees coming through this model will have a long lasting employment compared to conventional methods of hiring FTEs.

In conclusion, the Contract to Hire model give you the maximum benefits with minimum risk.

If you are looking for Contract staffing or Contract to Hire, please contact us or click here to know how we can help.