The financial benefits of using contractors
Hiring the right team members is key to the success of any business. As your business grows and changes over time, so will your workforce – you will need a team that evolves and adapts.
But in some situations, it can be difficult to know if you should expand your team with a full-time employee or utilise a contractor’s skills.
As each hiring situation is unique, there will be many factors to consider before making your decision. There are numerous pros and cons associated with both types of hire, but opting for a contractor may be more beneficial financially in many hiring situations. One of the most expensive parts of running a business is the hiring and retaining of employees. Maintaining just one full-time staff member has a variety of costs involved in addition to the basic salary that we often forget to account for, such as sick days and holiday allowance.
There’s also the little things you don’t think about like the costs associated with office space and equipment. All these things add up, and as a result, businesses are increasingly looking towards more flexible employment methods to cut costs. With this in mind, it’s always important to remember that in some circumstances, employing a contractor may be your savviest choice.
Contractors can be a cost-effective resource for project-driven demands and an unexpected upturn in work and client needs. Outsourcing is an excellent way of saving money compared to taking on permanent employees as the overheads for contractors are lower as there are no PAYE or National Insurance contributions to administer.
There are also some other financial benefits associated with hiring a contractor that you might want to consider before deciding on which type of employee you’d like to join your team, these include:
When you hire a contractor, you have more flexibility in staffing projects and more freedom when it comes to letting workers go as workloads fluctuate. Hiring contractors for shorter projects or ones where the lifespan is unknown means you can worry less about planning for layoffs and firings. With increased flexibility, you and your team can say ‘yes’ to more work and more specialised projects without having to invest heavily in new permanent team members and specialised training.
Contractors can provide a quick fix for regular employee absences or gaps in staffing and skills that risk hurting team motivation and productivity. Whether maternity leaves, sick leave or peak season annual leave, contractors can be an excellent short-term solution rather than taking on new and costly permanent employees to fill any short term staff or skills shortages.
Due to their experiences and expertise, contractors can be assigned to the more complex aspects of a project straight away without risk.
More advanced and experienced contractors also understand the importance of running a project to a very high standard and achieving end-product quality assurance. An employee who is an expert in both risk and quality control can offer better value and satisfaction to all stakeholders involved.
Searching for the perfect fit to join your team takes time and resources, with the period between interview to offer stage often taking weeks. The notice for more senior staff can also be up to 6 months so critical work can often be delayed until they can start.
Contractors can fill the gap in the interim period and maintain the quality of work required whilst you wait for your new team member to join you. Contractors can also help take the pressure off so you don’t have to rush the recruitment process, ensuring you make the right decision and the time and resources you’ve invested in recruiting aren’t wasted because of an inappropriate quick hire.
Highly experienced contractors come with a wealth of knowledge and have worked across multiple industries, sectors and organisations. Their market knowledge can often far outstrip that of a permanent staff member who can usually be spread across multiple projects and tasks. This specialist knowledge enables contractors to add value to projects and means you’ll get more value for your money.
Through practice and experience, contractors will be able to bring critical and strategic thinking to a project. Strategic thinking is beneficial to any business as it drives growth and encourages innovation.
With the breadth of experience that most contractors have, they’ll likely bring leadership skills to the projects they’re working on. Outstanding leadership can inspire and motivate your existing team members, and it’s no secret that employee productivity is one of the essential building blocks of a thriving business. When your employees are engaged, they’ll be more productive and more efficient, leading to better financial performance in the long run.
As contractors bring their existing skills, it’s less likely that they’ll need in-depth training to get them started. Getting staff skills up to scratch can be costly; contractors will be productive immediately, eliminating the time and cost of training and skills development.
They’re also an invaluable resource when it comes to sharing skills and knowledge to your permanent team members.
Contractors can often be better performers than those in permanent positions because they’re not tied to the way things are always done within the team. Due to the various working environments, they’ve been exposed to they’re more likely to have the confidence to question the way projects are delivered and challenge the norm. Their fresh perspectives will allow you to gain new ideas which can be applied to all new projects.
That all depends on the project and your company culture. When deciding between a contractor and full-time employee, the key questions you need to ask are how each type of hire makes a valuable change.