Hiring Employees vs Contractors

If you are an employer, you could be in a dilemma when it comes to hiring permanent employees over contractors. Your company is growing, and you want quality people in your organization. The nature of your business is such that you want employees for a longer period of time. But some departments in your business need staffing only for a few months.

Adding to your human resources helps you create revenue. It can also create overheads. You need to tread the line safely. The following pointers assist you in making a decision.

Advantages of hiring a contractor

Reduced overhead

When you hire contractors, you do not pay other benefits than the salary. You generally do not pay for health insurance. In some companies, contractors do not get facilities like the travel service. You also do not pay bonuses. Contractors do not have yearly appraisals. They only have contract renewals.

But hiring a contractor can be expensive at first. Over a period of time, you break even with the cost associated with hiring a contractor.

You save on health insurance costs

You don’t provide contractors health insurance. In some countries, the cost of buying health insurance for employees is a serious burden on the employer’s coffer. But when you hire contractors, you don’t incur this cost.

On demand hiring

You employ contractors for a period of time. After the contract is over, you and the contractor severe the agreement. If you require the services of the contractor again, you re-initiate a contract process and specify the months of the contract.

Advantages of hiring employees


You expect employees to perform exceedingly well considering that their loyalties are with your organization. This may or may not be the case always. But the general consensus is that hiring full-time employees increases loyalty and associated performance levels of the employee.

Performance levels

Since employees are provided health benefits and other types of benefits, employees are expected to perform well. Contractors on the other hand, have absolutely no kind of emotional relationship with the organization. They may not go the extra mile to add value to the organization.

Multiple functions

Employees can be trained to take multiple roles in the organization. Contractors are expected to finish a type of job within a timeframe.

Knowledge retention

In certain types of businesses, knowledge is the key driver to change. Having employees enables this. As the employees spend more time in the system, they gain more knowledge. In time, they start producing the results.



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