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Spring,
2008 Newsletter
Technical
Contractors – A Competitive Advantage
Most hiring forecasts for
2008 have called for growth in job creation, albeit at levels below those
of 2007. Given some uncertainty in the economy, many companies are
choosing to be conservative in their hiring of permanent or direct
employees, but still find that they have critical projects that must be
staffed.
Why
Contractors?
In its 2008 job outlook,
CareerBuilder.com cited growth in contract staffing as a major trend for
the year. There are many good
reasons for this. Companies using contractors have the ability to add and
reduce staff rapidly and without administrative burden. Contractors
provide this benefit with little risk, as companies may terminate their
services at any time.
Additionally, as the contractor is an employee of the staffing
firm that recruits and assigns him/her, the staffing firm is responsible
for all payroll functions, employer payroll taxes, insurance/liability,
and benefits.
The Bottom
Line
Companies that use
contractors may realize significant benefits to their bottom line:
·
Contractors allow a company to 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 the company is
charged one hourly rate inclusive of all costs associated with the
contractor. The staffing firm pays
workers’ compensation insurance, the employer portion of FICA and
Medicare, federal and state unemployment taxes, and liability
insurance.
·
Contractors help a company limit
benefit expenses, which are often 20-25% in excess of payroll. The staffing firm provides contractor
benefits which may include paid holidays/vacations, 401(k) plans, and
access to group health plans.
·
Contractors provide companies the
opportunity to shift a significant portion of the administrative
burden. By using technical
contractors, not only is a company avoiding the expense of payroll taxes,
insurances and benefits, but it is also off-loading the responsibility and
cost of administering payroll and benefits.
·
Companies avoid unemployment claims
when using contractors.
Terminating a contractor’s services has no effect on a
company’s unemployment tax rate, whereas terminating a permanent
employee very often does.
·
Contractors may decrease a
company’s risk of making costly hiring mistakes. As many companies use the contract as a
trial period and eventually extend a direct employment offer to the
contractor, they can be more assured that they are hiring the right individual.
For these and other
reasons, contractors are an ideal resource in many common business
scenarios. The following are the top three scenarios our clients cite
when using contractors: To staff project-level work when the required
technical expertise does not exist in-house; to manage short-term
business fluctuations; and to fill critical personnel gaps while
searching for direct hires.
Triad Engineering Corp
has specialized for almost 40 years in helping clients fill
their technical staffing needs on a contract, contract-to-direct and
direct hire basis. Triad is
locally owned and operated and offers the most personalized service
and experienced staff available. Please contact us at 781-273-1880 or
visit www.triad-eng.com for more
information.
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