Direct Hire vs Contract Employees - Time to Rethink the Status Quo
Why you need to let go of your preference for direct hires over contractors.
Here’s a conundrum for you. By all accounts, the “non-employee” population—which includes independent contractors, freelancers, and outsourced providers—represents almost half of the total workforce these days. And Canada’s temporary staffing industry grew 11% last year to reach $9.2B. And yet…
Direct hire employment is still the default
The dream of a full-time, long-term, fully engaged employee is alive and well. It’s what our clients often tell us they really want. Direct hire is also the standard by which consultants are compared. Do they “fit”? Will they understand “the way we do things here”? Are we paying them too much?
But the old way of hiring doesn’t fit the new way of working. As people seek out a series of meaningful career experiences, the nature of work itself changes in tandem.
Trend watch: how work gets done
Work becomes less role-based and more project-based.
Iterative and agile methodologies extend beyond the IT team into operations.
Organisations become flatter and more fluid as teams convene and disband.
Tenure becomes a potential liability, requiring upskilling or retraining.
A strategic mismatch
In tech, an emphasis on team continuity may actually be counterproductive. Highly specialized contractors deliver impactful expertise directly at the point of contact. There’s less ramp-up, more transparency.
Organisational politics and outdated policies don’t matter—the contractor is there to do a job and to do it exceedingly well. And then move on. Accessible expertise at every single stage of a project mitigates the risk of team transitions. Why buy the whole Swiss army knife when you can pull out the toothpick or tweezers just when you need them?
Stop limiting your talent pool
Prioritizing direct hires also risks cutting out a big (and getting bigger) portion of the talent market—people who only want to work contract. Our consultants absolutely love working on a diversity of projects and tech stacks. It keeps them motivated and up to date.
Simply stated, there’s an opportunity cost to insisting on direct hire. You won’t necessarily get access to the best and brightest in the market, or if you do, it’ll take you a lot longer.
S.i. Systems’ recruiters know the companies in the market that value expertise, and the consultants flock to them. Project-based work doesn’t diminish your employer brand; it can enhance it by positioning you as a magnet for innovation and performance.
Speed as a risk management strategy
Direct hiring is slow. When roles go unfilled for weeks or even months, projects bog down. Employees get burned out. In the time it takes you to source, screen, and onboard a direct hire, you could be halfway through your top project with contractors. And don’t overlook burden: benefits make up 32% of an employee’s total compensation in Canada.
In this context, the next evolution of the contingent workforce becomes much more than a “just in time” talent strategy. It becomes a strategic choice that impacts how candidates evaluate opportunities; how hiring managers distribute workloads; and how tech roadmaps get built. It also requires better planning, better communication, and a willing and qualified talent pool.
Independent contractors are best viewed as a source of innovation and expertise, not as a necessary evil or stopgap measure for full-time employees. They’re a critical component of a project-based workforce ecosystem. Changing your mindset can change your outcomes for the better.
Take a look at the other changes and challenges S.i. Systems is tracking for tech hiring in 2022.
Ready to explore adding contractors to your team? Contact us today.
2023 Canadian IT Hiring Trends & Salary Guide
In a candidate-driven market, offering competitive rates is critical to getting your foot in the door with top talent. Our 2023 Canadian IT Hiring Trends & Salary Guide gives you not only the rate data but the expert insights and market trends you need to successfully staff your IT teams.