What is Contract Staffing?
Contract Staffing as the name speaks is a method of recruiting required human resource on contract. This contract could take place between one company (mostly staffing firm) and an individual or between two companies. Contract Staffing helps organizations to quickly ramp up project teams with as few or many qualified consultants as are required to fill short-term and long-term needs.
Temporary Staffing Vs Contract Staffing
Contract staffing differs from temporary staffing in the sense that the staffing is done for each individual position and not for the function as whole. Contract employees are individually chosen and hence are generally more professional. The association between the organization and the employee lasts for fixed duration and is subject to renewal. Contract staffing helps companies add to the workforce selectively and in specific areas. Although Professional Services (PS) in Human Contracting is a fairly new concept in India, the PS market is fast maturing and catching up with the changing industry trends. Though only at 1%, it is a fairly significant share considering India can also be represented as using contract staffing when being compared with the figures of the US and Europe.
Why Contract Staffing?
The contingent employment industry is traditionally a leading indicator of post-recession economic conditions and a reliable predictor of future employment trends. Cautious employers hire temps first, hedging their bets on a recovery, recognizing it is easier to scale back if demand does not materialize. This cycle is no different, except that this time employers plan to maintain a larger portion of their workforce as contract employees even after business recovers.
During the recession, employers learned to refocus on their core business, realizing that a smaller core workforce that was well trained and technologically astute was more effective and nimble than their pre-recession staff. As firms emerge from the recession they are, of course, beginning to hire full time workers but they are also seeing a larger role for highly skilled contract workers who are engaged on an as-needed basis.
Some of the reasons cited for wanting to pursue adding contract placement to current business offerings include:
- Prior experience offering contract placement services, but unable to sustain the staff to keep it going. Now that things are getting better, would like to restart that business offering.
- Understanding that companies want to ‘test’ new workers, and they don’t want to pay all the benefits full-time employees are entitled to.
- Hiring contractors also helps companies reduce legal risk (and legal costs) because most of the liability for complying with employment laws falls on the contracting back-office.
Current Trends in use of IT Contract Workers
Managing a contract workforce is an important task for IT organizations. Staffing agencies, the Internet, and vendor management systems are making the job easier, but IT managers still need to determine the proper balance between full-time employees and temporary help. Today, a few organizations are making aggressive use of contractors, relying on independent contractors for more than half of the workforce. Other organizations make little or no use of contractors and temporary employees.
In the typical IT shop today, though, about 5% of the IT staff is composed of contract workers. In short, the use of contract workers varies predictably by organization size, with large organizations making more use of contract workers than smaller organizations. The recession caused many organizations to scale back on the use of contract labour, at least initially, halting an upward trend among large organizations and organizations that make aggressive use of contractors. Overall, however, the balance between contract labour and full-time employees has remained relatively stable for the majority of organizations, even through the recession. We anticipate that recovery will cause a slight rebound in deployments.
In the IT industry, earlier the positions that were largely outsourced were people at the entry level like programmers, software engineers, networking and system administrators, but the scenarios has been experiencing a shift now. From last 1-2 years, IT companies have started looking out for contract resources even for mid-level and senior consultant positions also. This shift has widen the horizon of contract staffing which earlier was very narrow and hence was not given that much importance it deserved.