Four reasons why companies will use more IT contractors in 2020
In association with Contracting Plus
We know the way people work becomes more diverse and more flexible with each passing year. The current environment has forced a lot of remote working; however, the ecosystem of the workforce itself has not changed drastically in the last six months.
Dynamic workforces made up of both employees and independent contractors is a proven recipe for success.
Prof Andrew Burke, Chair of the Centre for Research on Self-Employment and Dean of Trinity Business School, has published papers setting out evidence of increased performance of enterprises where at least 11% of their total workforce is made up of contingent/freelance talent. With such evidence available it is no wonder the contingent element of the workforce ecosystem continues to grow in popularity.
The external workforce (those who work with your company in a non-employed capacity) allow organisations to be agile. They can typically increase speed to market and side-step any political hurdles in developing or improving products and services.
As a company grows through the innovation of the professional contractors they engage, so too does their core employment base to service a higher customer demand. Entrepreneurism through outsourcing innovation on a project-by-project basis reaps tangible rewards.
Here are four reasons why Companies will engage more Independent Contractors during the remainder of 2020.
Flexibility in growing
Bringing the high-end skills of professional contractors into your organisation will allow you to act (and react) faster ensuring your offering remains competitive.
Sometimes, businesses need help solving an important problem, or want to pursue a one-off project, but simply do not have the ability to redirect their core group of employees away from daily operations.
Independent professional contractors are a great solution to this problem. Supplementing your full-time workforce with highly skilled workers means your company can focus on projects such as new development, investing in new markets or test new business lines without distracting employees from the core work of running the business efficiently.
Security & confidence
If the last six months has taught us anything, it’s that none of us know what the next six or 12 months will bring. Unlike employees, you have no obligation to professional contractors. Once the project is complete, you can part ways. If you decide to pull the project before completion, typical commercial terms allow the contract to be broken with just 30 days written notice.
Investing in the success of your project does not leave you with a large salary overhead on your P&L once the project is complete.
It is also common to capitalise the contractor costs as part of the overall project on your balance sheet which allows operational budgets to be maintained and profits are not adversely affected.
Expertise at a reduced cost
It’s a question often asked; if contractors earn more money than employees, why is it also cost effective for companies to engage contractors?
While the individual certainly receives more money as a professional contractor, the company has savings in many other areas. Employee benefit packages that are part and parcel of traditional employment have a cost. Add to that the IT hardware and software costs, holiday pay, sick pay, and the cost of providing a desk space. Together, these costs can become prohibitive for a company looking at growth.
You only pay the contractor for the days they work. You get skilled expertise for an agreed period of time and then all obligations end.
The benefit of a fresh viewpoint
There can sometimes be a little hesitation in sharing so much ‘inside information’ with someone from the ‘outside’. However, flip this fear on its head and consider the advantages of the fresh perspective a Professional Contractor will bring. Unbiased ideas with little concern around political manoeuvring will bring an objectivity unlikely to come from the inside.
A professional contractor will bring ideas of what they have seen work at other companies or on similar projects. Creativity can often just be an experience of a better way of doing something.
Independent professionals will give your business a competitive advantage in the project-based economy. Projects can be anything you want them to be, and they don’t all need to be big.
Once you find the right person, protect your advantage by ensuring the contractor has the right insurances, is operating through a tax compliant company and the fees you pay them will be properly taxed in accordance with the requirements of the Revenue Commissioners.
Jimmy Sheehan is commercial director at Contracting Plus and a fellow of the Institute of Certified Public Accountants in Ireland.
Contracting Plus is Irelands largest provider of Umbrella Companies for Professional Contractors and provide tax and accounting services to both Contractors and self-employed business consultants.