Hiring developer on contract vs a full-time employee - comparison

Many startups and small companies that we work with are often confused about whether to hire a full-time employee or hire a person on contract, directly or via a company. Let’s look at some points regarding both. 

Developer on contract

  • Work flexible hours in most positions
  • Are usually experts in what they do/ don’t require much training to begin the work
  • Work usually for a specified length of time (3 months/ 6 months/ 1 year)
  • Work seasonally or only when a company has a need
  • Paid one-time payment for services or hourly pay
  • Work under adaptable procedures
  • Do not typically earn company benefits
  • May purchase their own equipment or tools to complete work
  • Are usually paid when work is completed and approved by the client
  • Work remotely or in their office facility in some positions

Full-time employees

  • Usually work within set hours
  • Work on an employee agreement year-round
  • Receive payments (salary) on a regular schedule
  • Requires training and often a lot of learning to get the work on track 
  • Receive internal training
  • Complete specific work procedures
  • Have taxes withheld and managed by the company
  • Earn company benefits
  • Use equipment and tools provided by the company

When to hire developers on contract from a company?

- You don't want to handle HR, Payroll, employee benefits, paperwork etc.

- You don't have the necessary knowledge/ time to train the employees on particular skills.

- You don't have expertise hiring developers, and doubt whether bad hire happens.

- You need multiple tech expertise and want to benefit from a team's knowledge.

- You don't want to worry about people resigning and employee engagement.

- You want someone or a team to work as your own team for a period of time.

Many consider only developer salary while comparing the expenses. But hiring a developer on contract from a specialized company is way cheaper considering the hidden cost that can occur due to the above points (hiring, training, maintaining people).

Both hiring full-time employees and developer on contract has its own perks and shortcomings. If the work is on seasonal projects/ you don't have requirements all the time, get a prototype or product developed quickly, need a person specialized in a technology or domain - hiring a developer on contract through your network or from other companies works well. If it is for long-term ongoing maintenance work that doesn't have tight deadlines or it requires full-time supervision or daily updates on the work, hiring full-time employees seems to be better.

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