As today's economy continues to flounder, you find more and more programmers/web developers/designers are becoming "contractors" or "consultants" to make ends meet. After all, 3 months of work is better than nothing, and 3 months of a pay rate your worth is MUCH better than 3 months of unemployment while you watch re-runs of Cheers on Netflix, right? But what are the benefits to the company doing the hiring?
Payroll
We're gonna use a 1 year project as the basis here. Let's say you are building a killer web app that is going to make your company a ton of money. You've decided that you will need 1 more web developer on your team to do the work. Let's break it down.
| |
Contractor |
Employee |
| Hourly Rate |
$50 |
$35 |
| Pay (2,000 hours a year) |
$100,000 |
$70,000 |
| Vacation (80 hours a year) |
$0 |
$2,800 |
| Benefits (401k, medical, sick time, etc) |
$0 |
$21,000 |
| Payroll Taxes (estimation) |
$0 |
$5,750 |
| Total |
$100,000 |
$99,550 |
Making Copies and Buying Laptops
The other thing to keep in mind is expenses that the employee will incur while he/she is under your roof. Every copy they make, the electricity they use, the coffee they drink, the water they use, the laptop you need to provide them with. All these thing add up and they add to that $99,550 cost above. Obviously, if you require the contractor you hire to be on-site every day, they will incur the same costs, but if you hire a contractor to work from their own office - they incur all those costs.
Toby Flenderson is the Devil
Well, at least according to Michael Scott, anyways. Seriously, though, if you hire an employee, you have to abide by the rules of hiring, firing, and laying off that HR has put in place (b/c of the state & federal rules & regulations, of course). There's paperwork to fill out, sign, duplicate, get another signature, and so on when you hire an employee. If the employee doesn't perform up to standards, has a mental issue, or the project gets killed, it won't be do easy to just let them go. With a contractor - all of that goes away. You do some homework at the beginning to find a good contractor (or you hire an agency to do that for you), and then you're off to the races. If the contractor doesn't perform up to your standards, call the agency and get a new contractor.
Guard the Secrets
Former contractors don't usually blab about the good or bad things they saw while working on your project. They are building their own business, so they need to keep all clients (good or bad) happy - word of mouth is a very good thing. There are usually contracts they sign that says they won't share secrets. Former employees might be the weak link here. Someone who happens to just "work for the man" doesn't think clearly; if you let them go, they might talk about things they saw (just how does that software work). Better yet, they're having beers at a friend's house and they talk about some stuff they've seen.
The Small Business
Chris Harrington Interactive is perfect for a small business that is building a new app or re-freshing their website. We promise that we won't bug you to become a full-time employee. We are web developers, that's what we do - and we do it as a contractor; which probably works out best for you :-)