What’s the Best Hiring Option? FTE, Contract, Outsourcing….
An IT manager welcomes a group of contract workers, as a hiring option.

Hiring skilled professionals is a critical aspect of any effective business plan. Of course, there are a number of factors that determine exactly what constitutes a “skilled professional” for your business. For instance, one of the most common dilemmas that employers face is what kind of professional they want to bring onboard for a specific role. What is the best hiring option? Should it be a full-time employee (FTE), a contract professional, or a contract-for-hire? And should the company only look for employees who live in the country? Or should the search be expanded to include nearshore and offshore talent?

If you’re currently facing this dilemma, don’t fret! Below, we provide a detailed overview of what you should know about hiring options. Specifically, we’ll look at these options in the context of tech roles.

Full-time employment (FTE)

Hiring a full-time employee clearly comes with the highest level of commitment from your organization. Of course, you want to make sure that you’ve done your due diligence. That involves screening, vetting, and interviewing candidates — particularly those applying for positions in management or senior leadership. 

If you choose to engage a recruitment agency to help with your search, you gain several advantages from the partnership. For example, there are two primary options when engaging a firm for a FTE search — “retained search” or “contingent search.”

Retained Search

Retained search means that the agency will take on an exclusive search to identify a selected candidate. The agency will take on the responsibility of identifying potential candidates with the skill set to match your open positions. This includes applicants who have applied directly to your website.

Contingent Search

The contingent search arrangement is when the firm will only be paid when their selected candidate is hired. (Retained search is more common when filling executive-level roles because it ensures one-to-one communication and a more private selection process.) In both cases, the agency will leverage their current network of talent, as well as previous and prospective candidates who may be interested even though they’re not proactively searching.

Targeted Search

The agency will also perform targeted searches based on your industry vertical, in conjunction with traditional methods. The firm will likely use resources like general job boards, specialty job boards (like DICE), the Leadership Institute, etc. After they work with you to define what an ideal interview process would look like, the agency professionals will ultimately present the top handful of candidates to you for your consideration.

The beauty of this arrangement is that, if there’s a full-time need, you’ll only pay the agency if they find the right candidate for the position. (The fee is a “retainer,” or a percentage of the candidate’s first-year salary.) If you decide to go this route, our experts at The Doyle Group recommend working with no more than two or three firms at a time.

Contract

You can also engage with a recruiting agency for a specific project that requires external support. The agency can help you find skilled professionals who have specialized in similar work in the past. For “hands-on” tech work, these may include experienced analysts, programmers, developers, etc. For more senior-level roles, it may be helpful to retain one or more contractors as consultants for the duration of the project.

Interestingly, it may be more cost-effective in the long run to hire a consultant instead of a full-time employee. For instance, one study found that the total annual cost of working with a freelance developer could be almost 50% less than the cost of retaining a full-time employee. Moreover, offering a contract position may attract talent that would otherwise be overlooked. This is true since 20% of staffing employees cite schedule flexibility as a primary reason for choosing temporary/contract work, according to one recent survey. (Of course, it should be noted that you may lose the interest of other prospects who are fixated on the perceived stability that a full-time position offers.)

Contract-to-hire

Perhaps the most intriguing (and potentially beneficial) hiring option for staff-level roles for both employer and employee is contract-to-hire. This is similar to the contract option. The key difference is that the employer will have the option to bring on the contractor as a full-time employee at the end of the contract’s term. Many companies use this strategy as a way of identifying qualified professionals (think of it as a “working interview,” if you will).

If you have a position that requires FTE, but are open to the idea of filling it with a consultant who can later convert over, this option may be worth exploring in greater detail.

Offshore

The traditional offshore model for tech jobs involves engaging Asian and Eastern European workforces. These teams are hired at significantly lower costs compared to most of their North American counterparts. Perhaps the biggest benefit of using offshore talent (apart from the cost savings) is the ability to provide live customer support 24/7, without making frontline employees work overnight or at odd hours.

Of course, there are considerable challenges associated with this hiring option, too. For instance, rising costs in offshore areas have dampened the overall cost reduction benefits. Even more to the point, effective communication between time zones literally on the other side of the world can be difficult to maintain.

Nearshore

This hiring option is similar to the offshore strategy. However, it involves workforces in similar time zones (e.g., anywhere in the Americas). Of course, this closer proximity in itself can be a huge advantage in terms of communication and consistency. Moreover, companies that use this model still receive similar benefits to the offshore strategy, including access to an expanded pool of candidates across different countries.

One of the main factors that may determine whether you should go with offshore or nearshore talent is the nature of your business process and workflows. It’s important to consider whether your business process requires fairly sophisticated communication to run smoothly. If so, then nearshore or onshore candidates may be more attractive. On the other hand, if you have a repeatable process in place that doesn’t require a lot of continuous adjustment or oversight, you may be able to offshore it with no problem.

The Bottom Line About Hiring Options

In summary, there are many elements you’ll need to consider when deciding whether to hire FTE, contract, or contract-to-hire — and whether you should source your talent within your base country, or from other countries, near or far. If you’d like guidance on how to make an informed decision, reach out to our team of experts at The Doyle Group today to begin the conversation.