Why Contract-To-Hire Is A Reliable Solution To Scale Your Remote Developers
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Why Contract-To-Hire Is A Reliable Solution To Scale Your Remote Developers

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Why Contract-To-Hire Is A Reliable Solution To Scale Your Remote Developers

There has been a drastic upsurge in the number of employers looking to hire contract and temporary employees since the covid-19 pandemic. According to recent Monster survey data, in light of the coronavirus pandemic, 92% of respondents said they think now is a good time to look into the gig economy. Among those:

  • 57% said they would take some kind of gig job while they’re in-between jobs.
  • 52% said they would like long term contract with flexible hours
  • 39% would want a short-term contract or temporary work.

Hence, the gig economy that consists of temporary workers, contractors, and freelancers has continued to flourish in 2021. According to a poll conducted by National Public Radio (NPR) and Marist, 1 in 5 American jobs are held by a worker under contract. Contract hires and freelance positions are predicted to make up half the workforce within a decade.

Pandemic has brought tough times for most of the businesses of the world. But flexible companies adjust in difficult periods and learn to take advantage of the situation while pushing for their goals rather than just surviving. 

What is Contract-to-Hire?

When an employee is hired for a short-term position for a particular time period, with the possibility of hiring him/her full-time at the end of the contract, it is called Contract-to-Hire. It is also known as temp-to-hire. It enables a company to try out a remote developer before committing to full-time employment. It can also be understood as ‘try before you buy’ for a healthy employment relationship on both sides.

76% of hiring staff say attracting quality candidates is their biggest challenge”

Contract-to-hire positions are very different from self-employed independent contractors. A contract-to-hire employee is still under contract to work for a company, but is technically employed by an agency that recruited them.

Employers can set out a paid trial period, which can be between 1-3 months or even up to a year (according to the employer’s preference). During this period, the remote resources will work as regular employees. But the employers can let them go at the end of the trial period without hiring them full-time. They can also offer full-time employment opportunities if they are satisfied with the employee.

Contract to Hire VS Freelancer VS Agency

Contract-to-hire is very different from that of hiring freelancers or hiring developers from an agency. The most significant difference is that the developer will work just like a regular employee while following the same enterprise policies.

A huge advantage is that the remote software developer won’t be working for other people on the same side like freelancers. They will dedicatedly work for enterprises to achieve their goals. Along with this, organizations can secure their talent for the long run by offering full-time contracts later.

Unlike freelancers who manage their own taxes, employers need to pay taxes for contract-to-hire employees. But the employers can save costs by escaping from the full-time employee benefits like sick days, health insurance, paid vacation time, severance packages, etc. 

Contract-to-hire employees are not temporary workers that can be hired for a particular project or seasonal work. In contract-to-hire, employers look at how an employee integrates with the organization, decides upon their work quality, and then decides if they are a good fit to join as a full-time employee.

Using Remote Developers Contract-To-Hire to Thrive Post-Pandemic

A lot of tech enterprises are choosing the contract-to-hire model of employment to stay ahead in this current economic landscape. 

As the coronavirus has started spreading across the Globe, Mike Knoop, co-founder of Zapier, announced via Twitter on 13th Feb 2020 that their company management would continue hiring remote engineers, including on a contract-to-hire basis.

The number of contract-to-hire and other contract workers is currently more than the full-time employees at Google. Since the upsurge of the Global Pandemic, Apple also expanded by hiring contract-to-hire employees.

The founder of Automatic, Matt Mullenweg also stated that they first go through a contract-based trial process before hiring anyone. Such employees can do the work at night or over the weekend, so they don’t have to leave their current job in the meantime. He stated,

“We pay a standard rate of $25 per hour, regardless of whether you’re applying to be an engineer or the chief financial officer.”

Pros of the Contract-To-Hire Model

Budget Friendly

Contract-to-hire positions can offer a great monetary advantage when working with a restrained budget. Employers can work with a full-time employee into the budget while still getting the work done. Contract-to-hire employees typically do not receive benefits like health care plans or insurance until they become full-time employees at the end of the contract. 

The median annual salary for a full-time developer is around $113,000. However, you have to pay an extra $37,500 more in mandatory employee benefits! It’s an increase of 32.3% above their basic salary. With contract-to-hire developers, employers can save this 32.3% and utilize it for more important things. 

Employers can hire remote software developers at a much affordable rate. For instance, Matt Mullenweg’s policy of hiring is $25/hour for the trial process. Of course, enterprises can decide for themselves but can save a lot as compared to full-time developers. If budget is one of the major factors deterring any enterprise from hiring a full-time developer, a contract-to-hire position can minimize upfront hiring expenses.

Offers Great Flexibility

Uncertain times like the pandemic require organizations to adopt flexibility in order to succeed. Being over-staffed and paying salaries and benefits to the employees can be a big no-no for any enterprise. At the same time, enterprises do not want to risk being understaffed and unable to complete their workload. Contract-to-hire enables companies to avoid these two extremes by meeting exact capacity that may fluctuate due to seasonal or project-based needs.

54% of hiring professionals say work flexibility encourages retention and 51% agree it attracts candidates”

Also, with the temp-to-hire option, enterprises have the flexibility to postpone full-time hiring decisions, while getting work done. This is equally beneficial to the remote developers as well. They can have greater flexibility where,

  • They can portray their value & hard work to the organization
  • Enhance their skills and qualifications
  • Can identify the company culture and how well they connect to the organization
  • Expand their professional network

Advantages From Current Market Trends

Although the pandemic has not severely affected the IT industry when compared to other industries, it has a negative impact.  The Bureau of Labor Statistics stated that,

“They have reported the highest number of losses in tech jobs i.e. around 112,000 with IT unemployment at 4.3%.

At the time of this blog publication, the startups have already laid off 88068 employees. Companies like Uber and Airbnb have laid off 6,700 and 1,900 employees respectively. Other companies like Zomato and Swiggy also laid off 13% & 14% of their staff respectively due to COVID crises. 

In such a scenario, contract-to-hire can work as a two-way solution. First to help the employers test the developers with greater flexibility and cost-cutting options. And secondly, it can give more opportunities to the remote developers while slowing down the economic downturn.

Savings on Specialized Skills 

Many times, completing a unique project requires an extraordinary skill-set and enterprises may lack it in-house. In such cases, it would not be beneficial to hire a full-time employee because it would lead to more staff and increased costs. Moreover, a specific skill-set is required to complete a short-term project.

Contract-to-hire developers can help complete projects that need specialised skills and experience. In this way, projects requiring an extraordinary skill-set can be completed in a cost-effective way. Also, the particular skill can be saved in the long run when an employee is hired on a full-time basis. Enterprises need not spend time and money training the employees for acquiring additional skills. 

Contract developers can help enterprises get the job done efficiently and effectively in a cost-effective manner, especially if the project requires highly in-demand or very niche skills 

Some Cons to Look For

Despite the various benefits of the contract-to-hire, enterprises must keep in mind some of the significant disadvantages as well. 

The Possibility of Starting Over

Although one of the greatest benefits of contract-to-hire for both employer and remote developers is to experience a trial run, there is always a possibility that things might not work smoothly. If at the end of the trial period, the employer doesn’t find the employee a good fit for the enterprise, the employee will not be offered a full-time job and a new search must begin. On the other hand, if an employee is not happy with the culture and policies of the organization, both employees and employers must find a better fit for the future. 

Lower Job Security

Job seekers may be hesitant about working on contract-to-hire positions simply based on expectations. Remote developers may be in great dilemma that they may lose their position after the contract ends and have to start the job hunt all over again, so they would rather go for a direct-hire position. This totally depends on the preferences and mindset of the remote developers. But overall, this option gives lower job security and financial security. But employers can simply reassure the developers about their intentions during the interview process.

Wrapping Up

The contract-to-hire option enables an organization to get more affordable, flexible, and skilled developers and is considered one of the safest hiring models suited to the current scenario. With a lot of benefits, employers also need to take care of some disadvantages to get the most out of hiring.

If you are looking for dedicated remote resources, and want to discuss different hiring options to suit your business needs, we are just a click away!

Jignesh Patel

Jignesh Patel

linkedin Icon linkedin.com/in/Jignesh Patel

Jignesh is a Tech-Pro who believes in tactical planning and strategizing while promoting technology convergence.

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