16/01/2012

Why Subcontract?

Why should you subcontract your engineering resource?

A lot of people don’t consider below when employing employees;

HIDDEN EMPLOYEE COSTS.

1. There are a number of costs to consider when employing a full times member of staff such as the somewhat “hidden” cost of employer’s National Insurance, which at present is 13.8% of earnings over £136 per week.

2. In addition there could be a liability to pay Statutory Sick Pay (if an employee is sick for over 3 days) and Statutory Maternity Pay etc not to mention the TAX offset benefits.

3. Recruitment fees; 20% of salary and often want it up front!

Beyond the salary concerns, there are a number of costs which you ought to budget appropriately for:

4. Computer hardware & software (SW Licence £6000 / Microsoft Office 2010 licence costs close to £200 at present)

5. Ongoing training costs

6. Contributions to company benefits, such as pensions or private medical insurance.

For a comprehensive list read on;

Why Organisations Use Freelance Contractors

The use of Freelance or Contracting staff has grown dramatically and almost continuously throughout the last 30 years and it has become an acceptable career route for the individuals involved. There are many reasons why a person may choose to be a contractor.

However, Client organisations tend to use Freelance/Contract staff for a variety of reasons:

  • Non Political – the contractor knows that he/she is there to do a task and not to become involved in or distracted by the politics of the organisation
  • Independence – the contractor comes to the task without the legacy of being involved in previous decisions and history and can approach the task with a fresh independent view
  • Reduced Employer Responsibility – the client has little employment responsibilities towards the contractor and their consequential legal employment obligations and social welfare
  • No Emotional Ties – a contractor knows that they are there to do a job and then move on so the client does not need to feel concerned at the point of contract termination
  • Peak Demand/Gap filling – Contractors are ideal to fill the “hump” of resource requirement at peak demands of eg a project plan or filling a gap like maternity leave or short term skill gaps
  • No Training – Most contractors are engaged for their specific skills and therefore do not normally require the time and cost of training
  • Speed of Employment – a contractor can be searched for interviewed and engaged to start very quickly
  • Speed of Termination – equally a contractor can be terminated very quickly, simply by use of the notice period in the contract
  • Uncertainty – often resource plans are uncertain so it is more sensible to engage short term help rather than commit to someones career long term
  • Specific Skill – sometimes a project will require a specific skill for a limited period and the ideal approach is to engage someone with the specific skill for that short period
  • Knowledge Handover – when eg a new technology is implemented it can be advantageous to engage a specially skilled contractor to implement the technology and then carry out a knowledge handover to the permanent staff to carry on with the maintenance and enhancement.
  • Temp to Perm – some clients try to engage staff on a try and buy basis whereby they will take the individual on on a contract and if both they and the contractor enjoy the relationship and it is successful they may choose to offer a permanent role after a period of time
  • Lack of Career – some jobs have no onward career path (for instance sometimes it could be a legacy system maintenance role) and so a contractor is happier to come and carry out a role such as that where they have the specific skills
  • Ultimately cheaper – when all the costs of hiring, redundancy, management, training, sickness, holiday, National Insurance etc are taken into account it is often the case that the contractor is actually cheaper than the cost of a permanent staff member

 

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