Contract Out Picture

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There is a perception that employers use contractors to avoid the cost of benefits and employer side taxes. Contractors have less job security and no employer provided training. Employers are “taking advantage” of individuals in contractor positions. A study done for the Academy of Management on IT contractors came to a much different conclusion. The 7.4% of the workforce doing independent contracting are doing so by choice or because it is the most opportunistic alternative available to them.

This study found, “Contracting is more likely among workers whose careers are either just beginning or well advanced.” At the junior level, IT candidates might have the programming skills but not the project or process management or business related skills needed to get hired. As young workers they may place less value on the insurance and pension plans available through permanent employment. Taking a contract position allows them to get hired and develop the business skills needed for permanent employment. Workers contracting early in their career often do not continue contracting for very long.

Employees with high skill levels don’t value or need the employer provided training but do value liberation from office politics and greater control over their assignments and the management of their time. High skill level contractors tend to be older employees who will contract for extended periods without an intent of returning to permanent employment.

Interestingly this study also found that having a spouse with benefits does not seem to impact the decision to contract but having dependents does. The greater the family responsibilities the less likely an IT specialist is to pursue contract positions. Also, 86% of regular employees are eligible for severance pay if they are laid off but contractors are excluded from these plans. “Surveys have shown that IT firms provide employees with an average of 64 hours of training a year.” Contractors, typically, do not participate in any training.

Because contracting is so commonly associated with IT and IT is regarded as a”bellwether sector of the economy whose employment practices spread to other areas of the economy”, it is valuable to examine the motivations and needs of the potential employee or contractor.

Looking for a new job or a new employee in the IT area?  Contact Smith Hanley Associates Executive Recruiter, Riff Shaheen at rshaheen@smithhanley.com.


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