How does the morbid expense of contracting employee make sense for the employer?
Aug 30, 2018
8 Comments
I have a co-worker, a contractor for the company, earning $120k with 2 yoe, no MS degree. According to him, the staffing company he is employed thru probably charges the employer close to $200k for his service.
Compare that to another coworker, FTE on the same team, doing the same job with an MS and 4 yoe for $100k.
What are the reasons for a company that force it to hire an expensive contractor?
comments
2) costs for employees are accounted for differently than costs of contractors, so the bean counters who do the quarterly Wall Street filings can make that $200k look less bad than you realize
Plus, most companies give managers more flexibility in hiring contractors. It is very difficult for me to get new headcount approved. But as long as it it fits in my budget, I can pretty much hire contractors at will.
There are many reasons (good and bad alike) that drive the market for consultants/contractors. It spans from cost clarity/budgeting strategy to inability to find/retain talent.