Contractors – Providing a Competitive Advantage

In this difficult business environment, many local companies are finding it challenging to improve profitability. If your company is seeking cost savings along with the flexibility to respond quickly to changing market conditions, contractors may provide the solution.

Why Contractors?

During this current economic slowdown, our clients cite staffing critical projects with experienced technical resources as the primary reason for using contractors. Some clients have been through a layoff cycle and suddenly find themselves needing qualified staff to help complete a new project. Other clients have not had layoffs, but still find themselves in need of specific technical expertise to ensure success on an important project. In both cases, they have resisted hiring permanent staff given the market uncertainty and instead have turned to contractors.

Contractors provide the ability to add and cut staff efficiently, allowing you to rapidly respond to your business environment. Contractors provide this benefit with little risk, as you may terminate their services at any time. Additionally, since the contractor is an employee of the staffing firm that assigns him/her, the staffing firm is responsible for all payroll functions and costs, insurance/liability, and benefits.

The Bottom Line

Companies using contractors may realize significant benefits to their bottom line:

· Control labor costs by converting labor, typically one of the largest fixed costs, to a variable cost. The true cost of the contractor is easily identifiable, as you incur one hourly rate inclusive of all costs associated with the contractor. The staffing firm pays workers’ compensation insurance, the employer portion of FICA & Medicare, Federal/State Unemployment Insurance (UI) and MassHealth.

· Limit benefit expenses, which are often 20-25% in excess of payroll. The staffing firm – not your company – provides contractor benefits which may include paid holidays, 401(k) plans, and access to group health plans.

· Avoid unemployment claims. Layoffs of direct/permanent staff increase your company’s UI rate. However, when you let a contractor go, the staffing firm – not your company – incurs the UI rate increase.

· Minimize the risk of making costly hiring mistakes. Many companies use the contract time as a trial period and ultimately extend direct employment offers to contractors. Given the opportunity to ‘try before you buy’, you can be more assured that you are hiring the right individual.

· Shift a significant portion of the administrative burden. Not only avoid the expense of payroll taxes, insurances and benefits, but also off-load the responsibility and cost of administering payroll and benefits.

Triad Engineering Corp has specialized for almost 40 years in helping our clients fill their technical staffing needs on a contract, contract-to-direct and direct hire basis. Triad is locally owned and operated, with a large network of qualified engineering professionals throughout New England . Please contact us at 781-273-1880 or visit www.triad-eng.com for more information on how we can help you achieve your technical hiring goals.

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