Contract to hire staffing can be defined as an intermediate staffing solution where a candidate is hired for a job position on a temporary basis with an intention to hire him or her on a permanent role after evaluating his/her skills and capabilities for a specific period. Contract to hire staffing provides the client organization an option of hiring the candidate after an initial (usually) three to six months contract on a permanent basis. The contract to hire staffing enables the client organization utilizing these services an opportunity to review the candidate’s core skills as well as the on the job interpersonal and presentation skills prior to making a hiring commitment.
Contract to hire staffing services is a boon to IT organizations as it avoids them the risk of hiring the wrong candidate who is unfit for the concerned job position. The business of IT sector entirely depends upon the performance of its employees and any wrong hire would affect the company’s goodwill as well its profit margins. A survey published during 2012 by Career Builder showed that about 35% of businesses using temporary or contract IT staffing services have planned to hire contract workers on a full time basis. The risk and cost of bad hires are the two major reasons that are turning IT businesses to contract-to-hire placement as their preferred IT staffing service destination.
There are three important risks or key factors involved in Direct Hire IT staffing and these are:
1. Financial risks: Direct hire or in-house IT staffing involves significant costs that include recruiting, on boarding and training. The other costs like salary, benefits, insurance, equipment and costs related with bad hires is also to be taken into account. The cost of lost productivity, severance pay, training costs all adds up as financial risks.
2. Cultural risks: Full time hire also have substantial impact on company’s culture in case, the hire (employee) does not work out as expected. The contract-to-hire staffing placements although are not fully integrated into the company culture proves a valuable safety net for the businesses as they evaluate their IT staffing placements for potential full time hire.
3. Legal risks: There is always a legal risk embedded within direct hire staffing process because of termination or any other employee exigencies. However, with a contract to hire IT staffing arrangement, candidates have no expectations or guarantees about they being hired. The employer off record in contract-to-hire staffing is often a staffing firm that protects their client organizations.
Therefore, it can be said that contract-to-hire staffing services is offering the IT sector greater workforce adaptability. However, the advantage of “test driving” an employee through Contract to hire IT staffing position would be lost if businesses are unable to quickly identify the true talents among the contracting pool.