The right hiring model can make or break a tech workforce. With the added shifts and new trends, the pandemic has generated in the employment market, it is becoming more challenging to source and retains talented tech workers.
Moreover, the rising global demand for tech workers is creating a massive shortage of talent. This complex and rapidly-changing dynamic in the tech world has prompted many businesses to shift toward a contract-to-hire model instead of conventional full-time permanent employment. Here’s why this trend is gaining traction and what this means.
Contractual professionals are not a new phenomenon in the global tech workforce. Even outside of tech, for instance, mortgage staffing agencies frequently source and place contractual employees. However, tech employment has seen an increasingly greater focus on contract models over the past few years. As such, tech businesses have also reevaluated the benefits of contract employment.
By extension, many firms have made efforts to restructure compensation and benefits packages within the organization. To understand why tech talent acquisition strategies are narrowing their scope more aggressively than other industries, let’s take a closer look at the advantages this employment model offers:
Access High-Utility Skills for Short-Term Needs
Contract workers, like consultants, are a great way to acquire high-demand skills for short-term business needs. For example, instead of hiring a full-time information security auditor, businesses can simply use a cybersecurity staffing firm to source one for a short-term engagement. These workers are typically experienced and have much smaller lead times during onboarding. Additionally, once the engagement is over, they can leave without any need for severance pay or the risk of a wrongful termination suit (unless there is a breach of the contract or employment agreement).
Onboard Niche or Specialized Experience or Skills
Specialized tech staffing needs are usually based on a contract model as well. Professionals often offer their services as consultants or contractors because it allows them financial and professional freedom. A contractor or consultant will likely earn more per day than the average tech employee. They may have worked on similar engagements for other employers as well, which helps them reach a higher level of expertise.
These professionals also tend to come with fewer training needs and onboarding roadblocks; they can hit the ground running right from the first day on the job. This helps make them very efficient additions to the workforce, especially where decentralized recruitment is not equipped to screen and onboard specialized talent.
In other words, specialized contractors require very little to bring them up to speed. Their quality of work depends on them attaining and maintaining expert-level knowledge and insights. Without this valuable and accurate knowledge, they cannot offer their services to various employers. Therefore, the conventional risks of a bad hire are relatively low among this demographic.
Drive Down Employment Costs and Payroll Expenses
Full-time employment is usually governed by legal frameworks, industry standards, and regulatory guidelines. For example, labor protection laws in the US like the FMLA guarantee paid time off and sick leaves per year. There are also additional considerations, such as health insurance, a 401(k) account, pensions, and growth/development programs.
While compensation and benefits are necessary to offer competitive opportunities and appeal to talented workers, they can place a lot of strain on payroll expenses and other employment costs. For contract workers, none of this is necessary, which means they cost far less to keep on the payroll than a full-time employee with comparable experience.
Dismantle Hiring Bias to Source Remote Talent
Businesses are used to local homogenized talent pools where that they can access through a staffing agency or professional recruiter. However, there are often other more diverse talent pools outside of geographical limitations. Hiring remote offshore workers is often the best way to get access to deeper talent pools with the same (if not better) experience, work ethic, and skill level.
Tech businesses can choose to onboard these workers through an experienced IT staffing agency. Because most employers are initially hesitant about remote work, they don’t have to be permanent workers. That, in conjunction with the costs saved on benefits, relocation allowances, sensitivity training, and teething issues, make a contract model far more practical.