Permanent staff vs contractors: Which is best for business?

The rise of freelance and contracting work in recent years has been well documented, with both types of working proving to be appealing for professionals across the UK and further abroad. Indeed, nearly half of millennials are already freelancing, with the future workforce expected to gravitate towards flexible roles.

But what about for employers? The new year presents a prime opportunity for organisations to take stock of their talent base and fill gaps, whether that’s with short-term contractors or permanent employees. Find out which is best for your business.

Scalability matters

Scalability is an important consideration when deciding what kind of talent to take on in your business. If your organisation can scale up or down to accommodate growth and workloads – particularly when taking on large projects – you’ll likely require more contract staff than permanent employees in order to react quickly and efficiently. The advantages of this include being able to increase or reduce headcount in line with workloads and urgency, adapting to business challenges and being able to accept opportunities that organisations with a more stable headcount may not.

Meanwhile, organisations that have a steady workforce – that is, where the headcount tends to remain fairly stagnant and staff work on a permanent basis – benefit from having a more permanent resource with trained, qualified and vetted staff who can work across multiple projects at once. Productive employees can provide more of a profit margin to organisations, whereas companies tend to make smaller profit markers on contractors – however, there are not as many onboarding and administration costs associated with contractors compared to employees.

Training and development

Organisations that hire permanent employees tend to have a greater degree of control over their work, including how, when and where they perform that work. Employees can be trained in specific areas that will benefit your business in the long term, eventually becoming specialists that can be deployed across multiple projects and tasks.

Contractors come to your organisation trained, qualified and ready to hit the ground running, providing a short- or medium-term resourcing solution to fill gaps and provide specialist expertise. They require less management, training and development from organisations, however this means they may not further develop their skillset within your business as readily as long-term employees. Employees can grow enormously during their time with your company, whereas contractors can come to you at a higher level of experience but may not develop as much.

Loyalty across the board

As permanent staff members, employees often build up company loyalty and feel personally invested in organisational goals. This can lead to higher productivity and a lower cost to the business over the time, as talent can be nurtured and retained for years. While contractors may not feel as connected to the company culture, they can be as – or more – productive as permanent employees, thanks to their ability to start work immediately without extensive training or inductions. The key here is ensuring any new talent you bring on, whether contract or permanent, is properly vetted by your recruitment partners and hiring managers.

That’s not to say contractors won’t be loyal to your business, however. Contractors can be taken on for long-term projects and may take up extensions or back-to-back contracts, and can sometimes even become permanent employees on the back of a successful contract. While some may choose not to get involved in the culture and social life of an organisation, many contractors enjoy this side of working on projects, particularly when they have taken up international contracts that involve relocation.

Choose a mix that suits your organisational requirements

For many businesses, a mix of permanent staff and contract resource is the best way to respond to market fluctuations and demand while maintaining an in-house knowledge base and loyal staff.

Quanta contractors work with us – and our clients – time and again, ensuring your business gets the best talent on the market. We vet all our contract and permanent candidates thoroughly and only put forward those we know can do the job well. Find out more about our client services and how we can help you meet your resourcing requirements, no matter how niche.

Read about Moving into a permanent position: what you need to know