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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.