Do Contract Workers Hurt Full-Time Tech Hiring?

Hiring in tech is unencumbered by contract workers.

The conversation around tech employment tends to focus on the linear process of interviewing and hiring full-time employees. But contract workers are also a huge issue. Should tech pros be afraid that companies’ use of contracted engineers and developers is hurting full-time hiring?

Employee-placement service Adecco once posited in a blog posting that hiring budgets are the root cause of companies’ embrace of contract workers. Many jobs also don’t have enough of a workload to justify a full-time employee; for example, if a company’s mobile app only needs an occasional tweak or bug-squash, a manager may hire a developer to check the code out on a periodic basis, as opposed to onboarding someone to sit at a desk full-time.

As Adecco’s posting also pointed out, companies may leverage contractors in a temp-to-hire situation: “They want to make sure that a candidate has the necessary skills and is a good culture fit before employing them directly… Employee turnover is expensive – and if a contractor is terminated, the staffing agency is responsible for the unemployment costs.”

In some ways, this is more effective for onboarding workers than the traditional interview process, which is long and often unattractive to teach pros, who often don’t feel like the rigmarole of a whiteboard interview is worth their time.

Indeed, many companies use contracting to quickly expand their hiring pool and hasten the on-boarding process. On paper, it’s a win-win scenario for the employer: a company gets talent, quickly, but doesn’t have to immediately offer benefits to a new hire. But for the workers, there are some potential downsides.

A recent Wharton School paper titled ‘Is the Rise of Contract Workers Killing Upward Mobility?’ touches on this issue. It argues that contract workers are attractive to companies because they’re not a fixed cost: Instead of maintaining an employee indefinitely, a firm can bring in a contractor for a task, then allow the contract to end whenever the time is right. But that just leads to uncertainty and instability for the tech pro, including (but certainly not limited to) a lack of opportunities for promotion.

Wharton professor of management Claudine D. Gartenberg paints an unflattering picture: “This is what the American Dream is built on — upward mobility. Contract work and outsourcing, among other factors, appear to be disrupting that engine, and it is not clear what the best policy response, if any, should be.”

Whether or not more Americans are being promoted, all signals suggest that hiring as a whole is up. A combination of old technologies (cloud, virtualization) and new ones (artificial intelligence, machine learning) are breathing new life into the tech industry. Nonprofit trade association CompTIA says 2016 saw a three percent rise in tech employment, and a two percent increase in tech jobs across all sectors.

If the core question is whether contract employment hurts traditional hiring practices, the answer seems to be no: tech jobs are still being added, a healthy portion of them full-time positions. But how many people within the overall pool have the opportunity to climb to the upper-level positions they want?

One Response to “Do Contract Workers Hurt Full-Time Tech Hiring?”

  1. Rathernot

    Contractors make often unreasonable compensation offers after they take their cut when offering positions on behalf of a company which makes it difficult for people who choose that path to work with degrees to pay for.