Engaging an independent contractor to contribute specific skills to a project, help develop a new line of business, or assist in building out a new market is often much more cost-effective than spending the time and resources to recruit a full-time employee for the same need.
Cost Differences Between Independent Contractors and Employees
There are many advantages to incorporating independent contractors into your workforce strategy. Many of these benefits center around cost savings. Independent talent, for example, can offer staffing flexibility and access to skills that might be hard to find among your existing employee base.
Because independent contractors are responsible for paying both the employer and employee side of taxes, one area companies can see immediate cost savings in is paying a contractor’s bill rate versus paying a full-time employee’s salary complete with benefits such as insurance and vacation time.
Independents are experts in their respective fields and bring this knowledge to the project they are engaged to complete. This means that they often help companies save both time and money on training, onboarding, and management.
The majority of independent talent will have a set bill rate. When you engage an independent contractor, you will work together to discuss their bill rate and create a contract that defines the scope, methodology, requirements, and total cost of a project.
These financial factors are the motivation for many businesses today to engage independent workers. Below, we take a look at three cost-savings benefits independent professionals can bring to your business.
1. Access to In-Demand Skills
In a tight labor market, it can be difficult to find full-time employees who have the skills your business needs to thrive. However, there are more people than ever before who have decided to build careers off of the specialized expertise they offer clients.
Today, more than 64 million people report working independently. This style of working appeals to many people because of the autonomy, control, and better work-life balance it provides. This model also appeals to enterprises because these workers have skills that are highly sought after in competitive areas such as IT, marketing, engineering, biotechnology, and consulting.
More companies are shifting towards a blended workforce that includes both independent contractors and employees. This helps managers fill gaps in important projects, better manage employee turnover, and boost productivity when needed.
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2. Flexible Talent Management
Engaging an independent contractor to contribute specific skills to a project, help develop a new line of business, or assist in building out a new market is often much more cost-effective than spending the time and resources to recruit a full-time employee for the same need. Hiring a new full-time employee or even upskilling an existing employee can quickly add to payroll costs.
With independent professionals, businesses don’t have to worry about costly benefits packages or the expectation of continued employment after a large project is completed. Independents already know their stuff, so there’s no need for in-depth training. This can help reduce onboarding time and let managers get to work on projects faster.
Independent contractors are also free to decide how, when, and where they complete their work—unless otherwise state dint heir contract. Many work remotely, which can help save valuable office space. They also tend to need much less oversight, which means that managers don’t have to drastically change how they work when contractors come on board.
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3. Combined Workforce Expertise
Independent professionals are increasingly working together in teams—with other companies, vendors, contractors, freelancers, and business partners. Teaming up allows independents to bring combined expertise to a business to complete large projects or solve big-question problems. A team of independent talent can approach a project request from all different angles, contributing multiple viewpoints, areas of expertise, and fresh perspectives.
Over the past 12 months more than ¼ of independents report teaming up with other independent workers or microbusinesses and another 30% say the plan on teaming in the next year. Hiring teams from a business perspective is often a good investment. These smaller groups of independents mimic the offerings of a bigger consulting firm, often at a lower cost.
The majority of independent talent, whether they work individually or as a team, will have a set bill rate that you can see ahead of time and will work with you to create a contract that defines the scope, methodology, requirements, and total cost of a project. Overall, independents tend to be very cost-effective resources because they can be engaged for a set period of time and can contribute specific expertise that may be difficult to recruit for or find among your current employee base.
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