Direct Hire vs Contract Hire: Which one is Better for You?

Decisions, decisions.  You need to hire a new employee and you’ve already started doing some screening, but you can’t decide if you want to hire someone directly or have them start as a contractor.  This week’s discussion will hopefully give you a few things to consider when making a decision between hiring a contractor versus direct hire placement.

With the high-tech economy doing much better than years past, many employers are hiring to meet market demands and to position themselves for their next big wave of projects.  Staffing to meet these needs can get tricky when many of the best engineers, software developers, or technicians are not available.  In response, companies like to hire contractors for a trial period to make sure they’ll perform well and be a cultural fit.  While I see nothing wrong with this, there can be some drawbacks.

When good talent is scarce, I recommend hiring direct.  This discourages the new hire (contractor) from looking around during their contract period simply because they’re really seeking health benefits or maybe took the position just to get a job.  It’s really up to the recruiter and the hiring manager that review the resumes to determine the intentions of the candidates.

However, contractors can provide specialized expertise within your workforce, because they typically have a deep skill set that reduces your risk on large projects and can add greater capabilities to others.  If you go the route of using contractor staffing, I would determine upfront if they come with their own health insurance, and determine their comfort level for doing working a contract assignment.

In summary, when engineer recruiting becomes more difficult, I suggest employers hire engineers directly.  This way you don’t lose them during the early contract period and it focuses your contract hiring on those specific skill sets needed for critical projects.  Seasoned contractors for these types have their own insurance coverage and are used to that lifestyle.  But if you just need contractors to meet a spike in your workload, be careful to not hire contractors that don’t intend to stay as that can set your timelines back even further.

Engineering recruitment agencies can help you determine which decision is best based on the regional talent pool and your hiring needs.