An independent contractor can be just what your company needs to help you meet an important deadline or take on challenging new projects. Contractors aren't employees at your company, but they can fulfill an important requirement for your workplace if you use their services strategically. However, hiring a contractor has its pros and cons. Knowing what to expect from an independent contractor helps you make an informed decision on whether this is the right hiring move. This guide explores what an independent contractor is and the pros and cons of working with one.
What is an independent contractor?
Independent contractors are self-employed workers who provide services, labor, or goods to companies for a fee. They aren't employees and won't require the same benefits your hourly and salaried employees receive. Contractors work for themselves and often have several clients at once. These individuals usually have specialized skills or knowledge that can make them valuable. Companies work with contractors for several reasons, and you can recruit talent for contract work using job search sites such as CareerBuilder.
Should you hire a contractor?
Hiring a contractor is a big decision for your organization. Consider why you want to hire a contractor before moving forward with a search. If you're looking to hire someone temporarily to help you catch up on assignments or assist with a big project, then a contractor could be the right move. For more stability, you may want to hire a part- or full-time employee. A business that requires specific skills for a single project may benefit from working with a contractor. Companies that want a certain skill set permanently might need to offer a salaried position.
Pros of hiring a contractor
Working with a contractor offers these advantages.
Financial savings
Saving money is good for business, and you can reap some financial benefits when you hire a contractor. You don't have to pay them statutory benefits, withhold or file taxes, or provide a benefits package. Many contractors work from home or their own office, so you don't have to provide them with a workspace or equipment. You'll usually know up front what the contractor will charge for their work, so you can budget accordingly. Contractors won't need the same onboarding or regular training as your employees, which can reduce administrative costs.
Project scaling
Scaling projects is vital for business growth and expansion, but you can't grow without a team. Hiring independent contractors can boost your staffing temporarily so you can experience permanent growth when your business is ready. Having a team of contractors ready to work for you can ensure you complete the projects your company takes on without missing deadlines. This allows your organization to accept new projects before completing existing ones.
Time benefits
Hiring a contractor offers time-saving benefits. For example, a contractor works largely independently, so you won't have to waste management resources on their oversight. Working with the same contractors repeatedly can save you time in having to search for new workers or employees, as they'll already be familiar with your system and preferences. Contractors don't need a training period, so they can start work immediately after you hire them.
Access to talent
Using a contract employee gives you access to a global talent network. You can work with anyone from anywhere, which almost guarantees you'll find someone with the right talent for your job. This means you can search for a contractor with the exact skills you need to complete your project. Consider using AI technology to screen candidates you want to contract with to ensure you get someone reputable and dependable.
Flexibility
Working with contractors provides a lot of flexibility with your talent pool. Because you aren't hiring contractors for permanent positions, you can use their services, goods, or labor only when you need it. If your company just took on a big project that requires more help than you have access to, hiring contractors is a quick way to get the people you need to finish the job. When the job's done, you and the contractors can part ways until you need their help again.
Cons of hiring a contractor
Hiring an independent contractor has these potential downsides.
Instability
When you hire a contractor, it's temporary, which causes instability in the employment at your company. An employee base that swells and shrinks regularly can be difficult to manage and cause stress for full-time employees. Having a solid and consistent workforce can lead to better employee engagement and good working relationships. If you choose to work with contractors, communicate clearly with your staff about expectations so they can do their job efficiently.
Less oversight
You'll have less oversight of a contract worker than you have of your employees. This can cause problems if you choose the wrong contractors. A contractor who turns in assignments late could derail an entire project, tarnishing your reputation. An employee has a direct manager to ensure they complete assignments or delegate tasks, preventing missed deadlines. You'll also have less control over the way contractors do their work and its quality, which could hurt your brand.
Contract restrictions
Before you work with a contractor, you'll enter into an agreement. This employment contract provides details on the specifics of the project and expectations between the two parties. The contract will discuss the type of work, the expected compensation, and timelines so both parties understand their part. This ensures both parties hold up their end of the agreement, which is great unless you want to fire the contractor. You may not have this option without breaching your contract, so know the details of the contract beforehand.
When is it a good idea to hire a contractor?
Companies work with contractors for several reasons, including:
- They need to acquire temporary talent quickly for a large project.
- They need access to talent with a specific skill set that no one at the company has.
- They fall behind and need temporary help to get ahead.
- They can't afford to hire employees yet but are ready to scale.
- They want to avoid the hassles associated with hiring employees.
"Many contractors work from home or their own office, so you don't have to provide them with a workspace or equipment."
Why hire a contractor? FAQs
These are some common questions people have about why they should hire a contractor.
Will hiring a contractor save my company money?
Your company could see savings when you hire a contractor because you don't have to pay a lot of the costs of hiring a new employee. Because contractors are self-employed, they pay their own taxes. Your company can save in other ways as well, including on office space, computers, utilities, and insurance.
Do I have to provide any benefits to my contract workers?
Contract workers aren't entitled to company benefits because they're not full-time employees. You don't have to provide medical benefits, paid sick leave, or vacation time to contractors. These individuals must cover their own medical expenses and work time off into their schedules.
Where can I find contractors for my project?
Hiring contractors can be as simple as hiring full-time employees when you post your job on CareerBuilder or another job search site. These invaluable resources can help the right people see your job so they can apply and start the hiring process.
A contractor could be right for your company, but it's good to understand the pros and cons of working with independent contractors before you hire one. You could potentially save your company money on the hiring process and acquire the right talent to help you accomplish your business goals. However, the wrong contractor could end up costing your company more than just money. Consider why hiring a contractor is on your radar, and use this guide to help you decide if the pros of working with a contractor outweigh the cons.
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