Reply to: Would you hire a contractor?

[Bagpuss]

the old on one site for years brigade yet also see themsleves as a small business

[Francko]

I am not sure about the intentions of the poster but for me is point is quite clear.

If you want to have somebody working for you for several years, treat him from all aspects as a permie employee, including involment into office politics, etc. Why would you pay the premium that you have to pay for a contractor? (sure it's not twice but it is certainly a bit more on a daily basis).

Yet there appears to be many permacontractors around...

[Moscow Mule]

Contractors do not "do" deliverables, they are paid on a "T&M" basis. Although many contractors will indeed "deliver", the construction of the contractual agreement does not reflect this.

Mine has a list of deliverables, but on a T&M basis.

As to the OP's Q - I would, but only where I had a specific piece of work to do or if I needed a bum on a seat for 6-12 months where the cost of a permie would be prohibitive. Ideally, I would hire a temp but there aren't many temps who can do Java dev.

[Churchill]

Contractors do not "do" deliverables, they are paid on a "T&M" basis. Although many contractors will indeed "deliver", the construction of my contractual agreement does not reflect this.

FTFY!

[DodgyAgent]

You are joking, aren't you?

A senior developer might only get 60K, but you'll be paying NI, holidays, pensions and all the other perks and overheads that a permie expects - and that's a damn site more than 60k...

And a contractor working 9 - 5??? What about a contractor who delivers what they say they're going to deliver?

It's all about deliverables in Contractor Land matey, and I'm not sure if you've quite twigged that....

Contractors do not "do" deliverables, they are paid on a "T&M" basis. Although many contractors will indeed "deliver", the construction of the contractual agreement does not reflect this.

[singhr]

Contractors are good for morale, they tend to be brighter, more animated and interesting individuals than the 'lifers' who inhabit most IT depts I've passed through. They won't interfere with the politics and always get their round in first, take you out for a slap up meal from time to time too. How can you put a price on that Captain Birdseye?

[Tarquin Farquhar]

Yet another reason international companies hire contractors is if they are or may plan to close offices in certain socialist countries such as France where union laws prohibit layoffs if permies are to be hired elsewhere (even in another country) to do the same job.

Yet another reason is that a PM who staffs a project internally generally has to pick from the pool of candidates already in the company and not on a project; if he staffs with contractors he gets to pick for himself from the whole market.

[bobhope]

The real question is not about 'cost' but whether hiring contractors matches the business case.

Anyway, hiring permies is sometimes just not an option, for many reasons. The real business competition many contractors actually face is consultants who are at least twice the price.

Yes, I think your question should really be: "why hire accidenture, eds, etc?"

[xoggoth]

In the technical/manufacturing sector we get about half that. They should hire us instead. Big financial database, aircraft control system, what's the difference?

[OwlHoot]

Understood but my post was around contractors in finance (which is where I work) staying for years and years at one company or coming and going...

Generally speaking a specific project is not usual - Normally theres a bulk of work to be done and support for the forseeable future.

Employing contractors in this case is in my opinion dumb. Now I am not complaining as I am earning double what I was before but I am still struggling to understand how managers justify this

Something else I'm not sure anyone has mentioned is that companies can pay contractors out of a different budget than they have to use for permies. They may even save some tax that way (not sure). It relates to end-of-year accounting and assets and all that mumbo jumbo.

Yet another reason international companies hire contractors is if they are or may plan to close offices in certain socialist countries such as France where union laws prohibit layoffs if permies are to be hired elsewhere (even in another country) to do the same job.

[swamp]

The real question is not about 'cost' but whether hiring contractors matches the business case.

Anyway, hiring permies is sometimes just not an option, for many reasons. The real business competition many contractors actually face is consultants who are at least twice the price.

[lje]

Just worked out for Nov a contractor on 500 a day would bill for 17K (inc VAT)

That is more then some people earn a year....

Are you seriously saying that contractors are more cost effective then perms??

Seriously??

17k? Sure - if they worked every day including weekends... More like 12k if you include VAT and 10k if you don't.

[Tarquin Farquhar]

Just worked out for Nov a contractor on 500 a day would bill for 17K (inc VAT)

That is more then some people earn a year....

Are you seriously saying that contractors are more cost effective then perms??

Seriously??

VAT on my invoices does not cost the client anything, if they are VAT registered.

My own calculation was based on my own position, which involves expenses of travel from my base to client's site in other country, expenses which are included in the contract rate. Obviously as a permie doing the same thing, someone is covering those expenses, whether it be the employer or the employer's client. Your case may be different, and I am not trying to analyse your case, I am comparing like for like in my case. The evidence of Heathrow Airport on Monday mornings suggests that my case is quite common.

But whatever the case, you are falling into exactly the standard fallacy, by overestimating billing days by ignoring public holidays, annual leave, sick time, training time (and, I may say, daily rate in these times), and by totally forgetting about many substantial costs that a permie brings and a contractor normally doesn't, including Employers NI, training, pension, bonus.

Your own figures may vary, but your "A perm at 60K might end up at 70 after pension and bonus" is frankly ludicrous. Do you even know how much Employers NI costs?

[joey122]

Well in a 52 week year, you have say 2 weeks of public holidays. Plus 6 weeks of vacation. Plus what, a week on average of sick pay? That needs to factored into your calculations, before you even consider an employer has to pay NI and perhaps 5% extra on top of your salary for your private pension.
In banking, there's also a bonus to consider... what % of salary would that typically be?

Even then, on a month-by-month basis a contractor should probably end up more cost to the company. But they buy the company flexibility... no redundancy payments or notice periods.

I have many regrets in life but my biggest regret is probably working as a grad for 35K at a large bank in Canary Wharf and NEVER taking one sick day off.

I feel completely screwed

[Zippy]

Even then, on a month-by-month basis a contractor should probably end up more cost to the company. But they buy the company flexibility... no redundancy payments or notice periods.

... or bitching or sex discrimination cases