Pros & Cons of Contracting from Employer's perspective

Question

What are the pros and cons of hiring contractors and consultants from the employer's perspective? If you are a manager, product owner, senior engineer, or someone higher up with the company's better interest at hand - are there any downfalls to hiring from consulting/staffing/recruiting agencies, whether just as contractor, or as contract-2-hire?

The following question answered the pros and cons of being a contractor (such as taxes, benefits, treatment at work, ect).

Major differences between direct hire and contract to hire?

More specifically, is there an affect that hiring contractors has on the product, company culture, or productivity level of team members? Are contractors more wild cards in terms of caliber, or are they not worth what they cost?

There may be a difference between hiring contractors in general, versus hiring from specifically staffing firms - so if you think I should break up this question, I will heed that suggestion. I ask it this way because I am interested in larger trends.

Answer 1

I have hired a lot of contractors in the software/dev fields. I am not sure I am authoritative but I can give insight.

Pros:

• You don't have a long-term contract for a potentially poor performing employee.
• Sometimes you aren't given money to hire an employee but a project allows budget for employee cost.
• Some contractors can bring a fresh prerogative to a group - I stress some. These contractors have worked for a few companies so may be able to bring some of their best practices over. I would not expect this.
• If a contractor does well you can often hire them full time.
• If you are hiring someone outside of your field - hiring a techie and you aren't technical the contracting company acts as a validation point. I work for a tech company that has many non-tech managers... many. I would almost suggest those managers only hire contractors to vet out their ability since they are so poor at interviewing for tech jobs. (I showed a new dev guy in another department how to map a drive last week... whoa)
• Let's say you are a PHP shop but have a legacy ASP app. You can hire a short-term contractor to makeover the ASP app without having to "fire" someone after this is done.

Cons:

• A lot of people are contractors because someone will not hire them full time. I have had some great contractors but that is not the norm. If someone is even close to as good as the average employee I would hire I would be extremely surprised.
• If you get a crappy contractor it totally eats up your time. Now you have to start documenting things and working with the contracting company. Whatever the contractor was doing might have to "start over". It might be easier to get rid of them but this is time consuming too.
• You have to manage these people more. They don't know your company, product, and other things. You have to basically micromanage them until they are rolling. Depending on what they are doing this could be a couple weeks or longer. Again this is time consuming and has to start over for each contractor.
• The contractor's personality will have to be learned by your team and vice versa. These interpersonal dynamics takes time with some people. This is a wild card and can effect a project greatly.
• Contractors are usually expensive. Also there is hardly ever a promise of quality of work in these contracts.
• When contractor leaves so does their knowledge. When your contractor worked on something they probably learned a great deal about your company and whatever they are doing. A FTE could pass this to peers. This is gone with a contractor.

How will employees view hiring contractors?

• This is neither positive nor negative. FTEs have jobs. They aren't super concerned whether someone is a contractor or FTE.
• If the contractor is coming in with a specific talent and the team is in need of that talent, then there is a good chance the team will embrace the contractor.
• If the contractor is coming in with the same talents as the team members but does not carry their own weight (most contractors are not as efficient in these cases as FTEs for obvious reasons) then employees may be disgruntled because they are spending time helping someone they won't know in a few months or helping someone who makes more than them.
• On the same note if the contractor comes in with same talents and performs almost as good or as good as current employees I am sure they are happy to have their load lessened.
• If the contractor comes in and doesn't have the talent promised this is probably bad all the way around. Team morale can get bad. I have had contractors so bad that team members literally wouldn't talk to them. Office was a nightmare and sometimes it was almost impossible for to prove quickly that they couldn't do the job to the agency. Know that some employees (especially a good group of techies) can sniff out someone who doesn't belong. They might know by day 2 that Jim the contractor is a dumbass. I might know this as a manager. I might not be able to do anything about it for weeks and our contract might only be 3 months.