The Benefits of Contracting
Posted on 14 August 2013
In the first part of our series that put IT contracting under the microscope, we explored the reasons why it exists, and how it differs from regular full-time employment. This month we’ll look further at the benefits that can be enjoyed for both contract employers and contractors.
It’ll be no surprise that the drivers for the existence of contracting that we looked at last time are in effect the benefits that employers can gain. On the whole, the contracting space was created by companies, not contractors, hence the drivers and benefits are the same. A quick review of what these benefits are is below.
Contracting – benefits to the employer
Fewer constraints on employment terms – no coverage by the Employment Relations Act (2000) or the Holidays Act (2003).
Scalability - resize the workforce as need be, either larger or smaller.
Access to some of the industry’s best talent that can hit the ground running with deep skills and experience.
Bring new skills into the business and only for as long as is needed.
Lower risk approach to ‘getting the fit right’. Should a contractor not prove to be as impactful as hoped, termination of the contract with notice (variable on the agreement, but typically 2 weeks) is straight forward.
So what’s in it for the contractors themselves? Surely this isn’t a one-way street right? Well perhaps not surprisingly to experience these company benefits requires an equally appealing set of benefits for contractors, to balance both sides of the equation.
Contracting – benefits to the contractor
More money - yes money talks. Depending on their seniority and individual skill sets IT contractors tend to earn 30 to 50% more than fulltime employees. We’ll cover off comparative calculations on permanent vs. contract remuneration later.
Tax efficiency - Yes another money benefit - as a self-employed Contractor, you can reduce tax by claiming expenses.
Greater variety of work - Contractors typically are brought in for one key project and then they’re off to their next project. This leads to a broad range of experience, which is both enjoyable and valuable for their career.
Greater flexibility - Many contractors enjoy the ability to slot in holidays between contracts. Some even take several months off every year to pursue their hobbies or travel.
Often a more arms-length relationship - which generally means less involvement in company politics! Many Contractors prefer keeping to themselves.
Let us know if you enjoy other benefits, either as an employer or contractor that we’ve not mentioned here.