The modern world is experiencing changes at the speed of light. With numerous other factors to consider when recruiting, the debate about hiring employees vs contractors is never-ending. However, by taking some aspects like finances, requirements, and the nature of the role into consideration, you can make this decision in a flash. For certain job roles, the pros of a contractor might outweigh those of the employee and vice versa.
It is essential that you are able to differentiate between an employee and a contractor or to outsource the work to BPO services. While the future of job roles may go in the favor of the latter, the need for an amalgamation of worker types is often imperative.
Full-Time Employees vs Contractors
There are numerous differences between a full-time employee and a contractual worker, even though they can be equally qualified and work in tandem. These may include differences in reference to their tax and law requirements, financial risk, and the level of control an employer possesses. As an employer, you may find yourself in a scenario where choosing between a contractor and a full-time employee can be tough. This is so because in some cases like contact center services, an employee or a contractor might both fit the job description equally. But educating yourself about the differences between the two can help make this decision easier.
Employees
An employee is a worker who typically works under a manager or a higher authority under an implicit contract. The work done by an employee, their training, and their loyalty are all controlled by the employer. Since the federal government and states regulate salaries, work rules, and overtime, employees come with a lot of regulations and laws. Moreover, with a full-time employee, you sign up for a handful of responsibilities including paying half the FICA taxes, insurance, and payroll tax requirements.
Contractors
Contractors are hired to carry out specific tasks on a per-need basis. Instead of being directly employed by your company, contractors enter a service contract with you on partnership terms. They dictate their own terms in reference to working hours, compensation, and project timelines, unlike employees. Another contractor option is to outsource the work to a Business Process Outsourcer, who will manage the work and the staff in accordance to an agreement and be directly responsible for delivering the agreed upon outcomes.
Pros of Hiring Employees
For certain job positions, the pros of hiring a full-time employee may exceed those of a contractor. These can vary according to the nature of the job and your budget at hand.
Brand Loyalty
In comparison to independent contractors, full-time employees are prone to show more loyalty and long-term commitment to your business. Providing employees with full-time job benefits portrays your concern towards investing in their development and growth. This in turn motivates them to stick to your company and support your growth.
Streamlined Training
Even though contractors are already thoroughly trained, unlike an employee, that ultimately falls short on benefits due to frequent turnover with short-term contractors. However, with long-term employees, the need for recurrent training is eliminated as turnover is almost nil in comparison to contractors.
Brand Ambassador
Full-time employees eventually become brand ambassadors for your company since helping your business to grow and develop is their prime interest.
Quick Adaptation to Change in Responsibility
Changing the scope of an employee’s role or objectives and goals is much more convenient than in the case of a contractor. This is so because of rapid adaptation to changing priorities and unpredicted crises giving business owners flexibility.
More Control
Companies have a higher level of control when they bring in employees, with respect to their output and working days. This may prove fruitful for projects where you require delivery in a set time frame or if the employee needs constant supervision by senior personnel.
Cons of Hiring Employees
While full-time employees reap various benefits, they also lag behind in certain aspects.
Less Flexibility
Hiring employees can take a serious toll on your flexibility as you cannot hire them for a few days or hours only. Where it is easier to fire contractors, it may be difficult to terminate an employee.
Employee Benefits
Apart from the hourly salaries, employees require additional expenses along with taxes, pensions, and other benefits. Moreover, full-time employees expect a lot of benefits like vacation time, health care, leaves, and fuel coverage.
Pros of Hiring Contractors
Since contractors are mostly working on short-term projects, they usually come with a lot of benefits and flexibility. Additionally, as per specific outsourcing services, they fit best with reference to timing, like managing customers 24/7 through an omnichannel contact center or live chats.
Cost-Effective
Contractors typically cost more than full-time employees, but they do not incur extra expenses such as taxes, benefits, and office space, like in the case of employees. This is where the majority of the expenses are saved.
More Flexibility
When hiring and dismissing contractors, employers possess a greater level of flexibility. It may prove convenient for various employers as they easily dismiss contractors once they finish a particular project, in accordance with their contract.
More Competitiveness
Businesses can take advantage of a vast talent pool when hiring contractors with diverse skill sets. This automatically improves their competitiveness as well.
Decreased Liability
Hiring an employee comes with a lot of legal rules and regulations which may include workplace safety, unjustified termination, minimum wage, protection from employer retaliation, and employment discrimination. However, in the case of a contractor, the employer gets to set the terms of the employment relationship, consequently reducing the liability of any claims made towards them.
Improved Efficiency
Contractual workers are often fully trained and offer specialized skills. They can concentrate better on their tasks and be more productive as they are not required to attend any company meetings or other business tasks.
Cons of Hiring Contractors
Contractors benefit a company in various ways, but there are always certain job roles and companies that require full-time employees for better productivity.
Less Control
Contractual workers decide their own ways to complete tasks, project timelines, and required equipment as they operate independently. This gives employers less control over them as the contractors manage everything at their own pace and time.
Temporary Staff
Once a contractor is done with their designated task, they move on to another job. Hence, they do not spend enough time with one company to develop loyalty to them. This is why employers sometimes prefer hiring full-time employees. If they want to depend on the same people for a continuing project.
Conclusion
For long-term success, improved efficiency, and increased employee retention. It is essential that businesses focus on elevating their workforce management processes. Since they need to forecast labor requirements for these processes. It is crucial that employers learn to establish when employees and contractors fit a job role better.