“Why are IT contractors so expensive?”
This is a perfectly valid question – and one regularly asked by CEOs, HR professionals and finance directors. But a sensible reply could be, “compared to what?” In virtually every professional discipline, a contractor is generally paid more than a permanent equivalent.
Some reasons include:
- Contractors don’t attract the benefits of a permanent employee and need to be compensated in other ways.
- Brought-in skills, rather than using the limited skill set that’s available in-house, will always come at a premium.
- Contractors are paid for their skills and knowledge, bringing in an experienced professional for a special project or short-term stint usually signals a knowledge deficit in the organization.
- Contractors are available to start immediately, without having to provide several months’ notice to a permanent employer elsewhere, which is a benefit to a new employer who needs urgent help.
All combined, this means employing a contractor to do something that no one else in your organization can do will certainly cost money, but that doesn’t mean that they are “expensive” in relative terms.
At the same time, there are ways to make the money you spend on contractors efficient and manageable. Here are five tips to follow when hiring.
1. Pick the Right Consultancy
The barriers to entry into the recruitment industry are relatively low and “IT specialist consultancies” are launched from bedrooms and basements around the world. Armed with a phone and budget PC, they position themselves as authorities in the IT recruitment space, leaving their clients in the dark about how little experience they have or contacts they know. An established, professional recruitment agency will offer greater professionalism, actually meeting and vetting candidates, checking references and carrying out employment and due-diligence checks. This approach is what you want to put your money on.
2. Use the Right Selection Process
Many employers hope to set up a contractor in their internal HR system, the same way they manage permanent candidates. But engaging with a contractor is, in reality, much more like engaging with an external firm of auditors, investment managers or lawyers – not only do you lack the time to go through a three-interview process and competency based assessments for a short-term contractor, but there is loads of research to do on compliance and insurances like public liability and public indemnity. Typically, these covers are automatically included in the contracts of permanent employees but are completely different for contractors. The right recruitment agency will have processes, compliance knowledge and third-party contacts in place to make the experience seamless and safe for all.
3. Make Sure There Are No Surprises
A contractor needs a clear outline of the project, just like any permanent employee. Don’t expect a contractor to just “get it.” Often, the client expects the contractor to “get it” and the contractor expects the client to “get it,” but they each have different interpretations of the end result. The contractor is just as liable as the client in these cases, but it’s the employer’s job to make sure the contractor understands the spec, because it’s the employer’s money on the line. As a handy tip, you could ask a contractor to write an “assignment brief” to explain what they understand to be the key deliverables, timescales and stakeholders at play. Often, this becomes the roadmap of the project that everyone works toward.
4. Remember, Contractors Are Humans, Too
There are many stories of impolite and exclusive behavior around contractors – no invite to drinks on Friday night or no greeting on Monday morning. A professional contractor who values their reputation in the market will still deliver what they’ve agreed on, but people will generally do a better job when they’re treated with courtesy and consideration. The more engagement that the employer offers, the less likely you are to find your IT specialist pulling out four weeks before the end of the project after receiving a better offer.
5. Don’t Go Cheap
Try to sidestep the common pitfall of envying contractors for their pay, and consider contractor rates in business terms: ultimately, paying $600 a day for three months on a successful project at a total cost of $36,000 is a better value than paying $400 for six months to deliver the same project at a total of $48,000. You usually get what you pay for, but you always don’t get what you don’t pay for!
Click on the links below for more information on how we can support your hiring needs:
- Upload a job brief
- Contact a Michael Page Human Resources consultant