Contracting advantages

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This article examines the advantages of using freelance contractors over employees.

Contents

Advantages

In general, the advantages of using freelance staff are to lower the risk to your projects. These are the specific areas of risk reduction:

  • Lower cost
  • Greater experience
  • Increased stability
  • Professional attitude
  • Greater flexibility
  • Easier termination

Lower cost

At first glance, contractor fees seem higher than the costs of employing additional staff members to do the work. However, many of the costs of employees are hidden. Some of these costs depend on the national tax laws and may vary around the world.

In the UK, an employer has to pay a tax for each employee. This tax is called the employer's class 1 National Insurance contribution (NIC). The exact calculation of NIC for employers depends on pension schemes, rates, and allowances. As a rough example a typical employee earning £45,000 will cost an employer about £5,000 (see pay as you earn.)

Many employers also grant their employees (either voluntarily or by law) certain benefits, for example: paid holiday, sick pay, health insurance, pension, training, relocation, etc. A contractor's own company provides these so the related expenses are saved.

Finally, most contractors can provide some or all of their own equipment and their own premises if required. This represents a saving in time and effort as well as cost for the client company. A contractor supplying a good deal of their own equipment can be more productive from day one and not have to rely on the client company's IT department to solve problems. Although this may represent only a small saving, when combined with the other cost reductions, contractors can be much cheaper than they first appear.

Greater experience

Most contractors have a wealth of experience in the industry over multiple projects, platforms, and companies. To reach the same level of experience from an employee would require many years of investment and training.

Also, although most projects will not directly require the full set of skills a contractor could provide, that related experience often shortens development time and increases quality.

Increased stability

When an employee needs to take a break either through accident, illness, or family reasons the company has to deal with the shortfall. Many contractors can provide the services through the use of substitutes should their primary contractor be unavailable. This gives the client greater continuity of service than get through their employees.

Professional attitude

Because contractors are unconnected to your company they can easily maintain a professional detachment that employees find difficult to match. Contractors are unlikely to be affected by internal company disputes over pay, hours, credit, royalties, share prices, mergers, responsibilities, etc. This reduces the risk of staff turnover due to morale problems.

Greater flexibility

Because employees work all year round, they are limited in the amount of flexibility they can bring to their work schedule without seriously impacting their private life. Contractors, particularly those on short term contracts, can commit more time by taking their holiday days between projects rather than during.

Easier termination

Because contractors usually work on a project by project basis, if the project is cancelled, you won't need to pay for them during the down time.

Also, if the contractor is not working out on the project, a termination clause can be invoked and a new contractor or employee brought in very quickly without notice periods or redundancy pay.

When to use contractors

Despite the many advantages of contractors over employees, contractors may not always represent the best value for money. The following are situations where using contractors represent a better return on your investment.

  • Recruiting shortages
  • On losing key staff
  • Short term specialist requirements

Recruiting shortages

Because the industry regularly booms and busts, particularly around the release of new generations of consoles, recruitment regularly dries up. Contractors represent a recruitment pool buffer allowing companies to ramp up during boom periods and cut back during the busts without committing themselves to the long term costs involved with employees.

On losing key staff

Many game development teams rely on key staff members for specialised tasks. Recruiting a replacement specialist employee on short notice is often impossible. Contractors, with their wider range of experience and more immediate availability, can provide short term support until a replacement can be found.

Short term specialist requirements

Many projects suffer from similar problems at various stages of development. Memory fragmentation and graphics optimisations are two common instances. A short (or even very short) term contract is often enough to clear the problem and get the project back on track.

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