The pros and cons of hiring a contractor

What are the pros and cons of hiring contractors? As freelance professionals, contractors themselves would invariably do a good job of telling you!

But in our experience, as a business that places such candidates in professional roles across the UK, here’s what we assess to be the pros and cons of hiring a contractor, writes Matt Collingwood, managing director of IT recruitment agency VIQU.

The pros of hiring a contractor

The pros of hiring a contractor include: 

1. Skills transfer

When you secure a contractor, not only do you have the skillset you need to deploy or complete your project, you essentially have a potential teacher who can work alongside your less or alternatively skilled permanent colleagues, ‘upskilling’ them.

I remember speaking with a client who required a contractor to manage a project while training their existing developers. By bringing in the contractor, they reported back significant cost savings compared with if they’d brought in a third-party training provider instead.

2. Best in class

Say a company is intending to implement a new software platform. The company has the choice of assigning a permanent member of staff, who might lack knowledge of the software but will ‘have a go’ -- or the company can engage a ‘Subject Matter Expert’ contractor, who has done the same software implementation multiple times.

With experience often comes the knowledge of what works well and the issues to be mindful of. The business will have peace of mind that they are going to be advised and supported by an experienced individual, not someone who will work on a ‘trial and error’ basis.

3. Less internal/career politics

When a contractor comes into a business they have the luxury of avoiding office politics. As I’ve shared before, I personally know of contractors who chose contracting over permanent roles simply because of this ‘out-of-office-politics’ perk.

Similarly, being a temporary member of staff means that contractors do not expect to be considered for internal promotions or transfers. Contractors understand what they have signed up to deliver according to their contract, and tend to distance themselves from any sort of internal career drama.

4. No employer employee responsibilities

As the contractor is often self-employed, the client does not need to pay for holiday, sick leave, and other benefits. Their freelancer status also limits any risks of facing tribunals, which does occasionally occur with unhappy permanent employees.

5. Risk and reward

So-called ‘Statement of Work’ projects tend to work on a sign off/payment for a successful outcome basis. This reduces the risk for clients as if the outcome isn’t delivered, they have not lost any money/do not pay.

6. Visibly better P&L

Contractors appear on P&Ls as ‘operational expenditure’ instead of an FTE which is Capex. This makes P&Ls look healthier – the business does not have lots of permanent staff who have liabilities/risk attached to them.

7. Speed of project delivery

I remember speaking with a Systems Integrator who I worked with for over 15 years – he told me that his research into contractor usage and reliability found that projects were delivered 20% faster when they used a senior-level contractor to own projects.

8. Avoid the skills-scare market so you can get programmes over the line

With the ONS telling us there are now 1.2m unfilled jobs in the UK, and this number only expected to increase, a lack of permanent resource is slowing service and project delivery. A serious pro for using contractors is the delivery of projects that otherwise may have slipped behind.

The cons of hiring a contractor

The cons of hiring a contractor include: 

1. Reliance

I’ve seen it happen a number of times where the client becomes totally reliant on contractors!

It’s rare for contractors to become as emotionally invested as permanent staff. Therefore, they do tend to move on, more often, which can come as a major blow to some clients.

For instance, a large retail bank we worked with is a good example of a business that is heavily reliant on contractors. Unfortunately, there are risks associated with this.

When IR35 legislative changes came into play, their contractors left in droves due to the bank blanketing everyone as ‘inside IR35.’ This decimated the bank’s projects and delivery schedule. A business should never be totally reliant on contractors – rather, there needs to be a careful balance between permanent and contract.

2. You’ll need expert interviewers

Interviewers should ensure they do a thorough interview with a contractor, and that may strain your internal resources if you don’t have good inquisitors and testers. With the average contract lasting 13 months, contractors will interview at least once per year generally.

If I put a contractor against a permanent candidate at interview stage, it’s very likely the contractor will impress more. After all, they have probably attended more interviews, and have experience on their side. Some can give a great account of themselves at interview, which unfortunately does not always follow through once they start.

3. Exploiting WFH risk

Additional flexibility is expected by contractors. However, we’ve seen this privilege be abused on a number of occasions, unfairly damaging the reputation of all contractors.

4. Know what you want

I’ve seen clients secure contractors to deliver a project or service and then attempt to move the contractors around, sometimes changing the requirements/goal posts to do so. The clients are then shocked when the contractor rejects this and gives notice. Most contractors will want to avoid mutuality of obligation.

5. Negative perception

There is still a perception that contractors are more expensive than permanent staff – it may even lead to scoffs in your department when your new shiny contractor arrives for work! The truth is, if you consider the value and flexibility that contractors provide, they are actually great value for money.

Lastly, Sam is a contractor. Be like Sam

So Mark may be more proficient at ‘x’ than Ian; Lou might trump Remi on ‘y’ and Jan excels at ‘z.’ But unlike these five, Sam is a contractor, and while his contractor status brings with it a handful of disadvantages, as you can see, the many positives of hiring a contractor over the five other candidates far, far outweigh the negatives.