The gig economy isn't just for Uber drivers. Companies are also turning to contract employees for skilled work, including in the technology industry. There are several reasons for this outsourcing:
Contract employees offer companies flexibility.
Companies today need to be able to respond to changing business demands and scale up or down quickly. Through using contract employees, companies are able to add or shed workers easily in response to growth or other changes in the business environment.
Technology enables remote work.
The internet, virtual desktops, and video conferencing all mean that people don't need to be in the same place to get work done. Documents and other resources are easily shared no matter where people are located, so companies don't need all their employees working in one office.
Contract employees offer special skills.
Companies sometimes need a specific skill for a short time, to fill a specific gap in their teams. If they don’t have many projects that will utilize that skill, it's difficult to justify adding a permanent employee just to add that skill to the team. By bringing in contractors, the employer gets the skills they need without making a long-term commitment. Employers also use contractors to help train their existing workers when there's a mismatch between the skills they have and the skills they'll need going forward.
Hiring contractors is cost-effective.
When companies hire contractors, the contractor is paid for their work, but the hiring company doesn't have the expenses of benefits like health insurance, 401K matching, unemployment insurance or contributing the company's share of Social Security taxes. Companies also don't withhold taxes on behalf of the contractor.
There are different legal obligations between employers and contractors than there are between employers and employees. One of the main legal obligations employers have is to classify their workers correctly; companies cannot simply call a worker a contractor in order to avoid paying unemployment costs. In order to avoid the risks of being accused of misclassifying workers, many companies prefer to hire contractors who operate as employees of a contracting agency.
The Armada Group helps companies fill their staffing needs whether they want to hire permanent employees, use a contract-to-hire model to help evaluate potential employees, or add contractors on an as-needed basis. Contact us to learn how our services can help your company grow.