IT Contract Recruitment: Everything You Should Know Before Hiring IT Contractors

Are you looking into IT contract recruitment for your business, but have no clue where to start? Good news, you’re in luck!

With 14 years of experience in hiring IT contractors for my clients, I have seen it all. The good, the bad, and the ugly. People tend to overthink the difficulties of hiring and attracting IT contractors (no thanks to the number of changes to IR35!). However, IT contractors are a great addition to any business, and most will need them at some point in time.

Before you rush into the process, sit down with a cup of tea, and read everything I think you should know about IT contract recruitment.

Reasons why a company would be looking at IT contract recruitment over permanent employees

You may already know and understand some of the key motivations for businesses to consider hiring IT contractors. After all, you’re reading my blog, which means you probably have a reason yourself!

Whilst this is not an exhaustive list, these are some of the reasons I have found in my experience in IT contract recruitment why IT contractors may be the preferred choice over permanent employees.

They are often specialists

IT contractors are particularly useful if you require specific skills which you do not have in your current IT team. Due to the nature of contracting, IT contractors tend to be exposed to emerging technologies and updates much sooner than permanent members of staff. This often means that contractors can do the work in less time than it would take a permanent member with little experience in the area. Therefore, hiring IT contractors for your team could be a great way for you to get an advantage over your competitors.

They are flexible

IT contractors work on a fixed-term contract basis, so you can take them on for a particular project or during a busy time period. The contract can be renegotiated, which can include upscaling or downscaling based on your resources and need. It is also much easier to end a contract with an IT contractor than a permanent employee if you need to.

They can fill whatever gap you need

Whether it is working on a specialist project, performing BAU (business as usual) tasks, or temporarily replacing an absent staff member, you will be able to find an IT contractor to suit your situation.

It’s not all sexy tasks for contractors! If you are looking at how to retain your permanent staff, you might take the strategic approach to expose your permanent team members to exciting new tasks, training, and technologies, whilst utilising contractors to conduct the day-to-day business duties.

Furthermore, in a candidate-driven market, it is increasingly difficult to hire permanent IT professionals. For instance, 72% of businesses are currently finding recruiting tech talent challenging. We have found in some extreme circumstances where the client requires a particularly niche combination of skills, that the recruitment process can take up to 6 months. The longer you are without a professional in that role, the greater the damage to the business. Hiring contractors can help mitigate these risks.

They are cost effective

You may look at the daily rates and scoff. But in reality, IT contract recruitment can be much more cost-effective than permanent employees. With no hidden costs, such as pension and benefits, and only paying for days worked it can work out cheaper than a long-term employee. They are also much easier to budget and forecast as you know the parameters of the contract.

If you have found that you are overstretching your permanent staff during busy time periods as you cannot afford the long term costs of additional permanent employees, consider pivoting your strategy to attracting contractors who can take on the extra work for a shorter period.

They can help upskill current staff

As many contractors are specialists, you can take them on to lead departments, train current staff, help support projects – or a combination of all three! With technology changing all the time, the ability to bring in expert knowledge is very important. By hiring IT contractors, you can have specialist knowledge on a project or deployment, whilst also gearing up your permanent team members to do it themselves in the future.

The procedural differences between permanent and IT contract recruitment

Fast-moving pace

There are a number of reasons why the procedure tends to be a lot quicker for hiring IT contractors compared to permanent team members. Often, it’s because contractors are significantly more active on the market. With set end dates for their contract, they are actively searching for work near the end of their contract, ready to start a new role immediately or within a week of their previous contract.

There is also far less onboarding involved with taking on a contractor instead of a permanent member of staff, which is ideal if you require someone due to an urgent issue. Whether you need to cover a staff absence or fix a detrimental issue, a contractor can be on-site and ready to work within 24 hours if needed. In the past, we’ve had an urgent contractor request come through at 4pm, and interviewed, secured, and organised a contractor to arrive on-site the very next day.

Contract negotiation

As contractors work within fixed terms and conditions, there can be more negotiation than with permanent employees. It is important to cover all bases in the contract of working hours (including in circumstances of bank holidays or office closures) and duration. Contractors are used to dealing with different clients and often have lots of experience negotiating details and hourly or day rates.

Skill evaluation and cultural fit

Judging whether an individual is the right cultural fit often depends on the exact job they are doing. If they are working within your current team, then you need to make sure that they will work well with your other employees. However, if they are working separately for a short time period, it’s not as important.

The most crucial thing is making sure they have the right hard skills and technical knowledge you need. Some companies want to rush a 5 or 10-minute interview, however, this is not enough time to really assess the contractor’s skills. You don’t need the multi-stage interviews seen in permanent employee recruitment processes. However, don’t blindly trust what their CV says. Have a proper discussion regarding their skills and experience. You don’t want to have to replace them anytime soon.

Past experience and references

With the nature of their work, contractors often move around from company to company. However, having 10 different contracts in the past year could be a red flag. There could be a valid reason for this, but it would be a cause for concern. This is where I would say using an IT contract agency, like VIQU, with the knowledge and experience to know whether someone’s reasons are legitimate or not, really comes in handy.

Furthermore, it is important to conduct references from their most recent contracts, in order to ensure they do have the right skills and experience. Some businesses may miss out on this step, especially in favour of a quick turnaround. However, whether you are hiring IT contractors or permanent members of staff, collecting references is still crucial.

IR35 and compliance

For those of you concerned about IR35 – I’m sure you quickly scrolled down to this section. But honestly, IR35 is nothing to be feared. You’re probably thinking “Oh well it’s fine for you to say that!” but despite the real consequences of misclassification, there are a lot of resources to help you make the right decision. Essentially, the legislation regards how a contractor is classified in a company and makes the distinction on how they should be taxed.

The latest IR35 regulations instruct public authorities as well as medium and large businesses in the private sector to make the decision on whether the role is “Inside” or “Outside” IR35. Even if you are using a third party to hire a contractor, it is the end client/ hirer who makes the distinction. For example, whilst as an IT contract agency we are always happy to help support you, we cannot make the decision for you.

I’ve seen a rise in companies taking what they believe to be the safe route and classifying their contract as “Inside IR35”, thereby placing the contractor on the payroll. Whilst contractors are starting to accept “Inside” roles more, they will challenge companies that label the role as “Inside” if they think the basis of the role warrants it being classified as “Outside” IR35.

There are a number of resources available such as the CEST tool to help you make the decision. We also have an IR35 guide from our Lead Consultant, Storm Robertson, available for you to watch or read.

Payment types

In IT contract recruitment, contractors are usually paid by the hour or by the day. Although, by the day tends to be standard in the IT industry.

How they are paid is dependent on whether they are “Inside” or “Outside” IR35.

If they are “Inside IR35” they can be paid through an umbrella company that sorts out all tax and other payments compliant with HMRC.

For “Outside IR35” the contractor may set up a limited company and complete their own tax returns. You must be aware of these details before you take on an IT contractor.

Additional items for you to remember before hiring IT contractors

Through working in IT contract recruitment for 14+ years and counting, I have gathered a lot of tips, insights and pieces of advice along the way. Here are some key questions to ask yourself when hiring IT contractors:

• Do I have the contractor’s equipment ready to go?
• Have I given the contractor the right access to our systems?
• Is our management structure fully in place before the start date?
• Have I checked that either I or the IT contract agency I am using have done the correct Right to Work checks and have the correct insurance in place?
• Be ready for renegotiation – this is a great time to re-evaluate the contract and working relationship, but be prepared for the contractor to ask for a higher rate or change in conditions
• Did I rush the process unnecessarily? Make sure the contractor has the right soft and hard skills you need to be successful

Don’t worry if all of this information is overwhelming – it is certainly a lot! If you are considering hiring IT contractors to support your business, please do contact my IT contract recruitment team. We will be more than happy to provide you with bespoke and tailored advice on hiring IT contractors.