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  • Sanjay Gupta

Full time employment or contracting?

Updated: Feb 5


Does this question cross your mind – am I better off approaching my work as an employee of an organization or a contractor?

If it does, you might want to read on.

Let’s first outline (though not a 100% precise) the work profile of a contractor and that of an employee

Contractors

To be able to contract work (and hence engage contractors), requires clearly defined work with measurable outcomes and schedules.

Work which is performed across many peer companies and is not company unique tends to be most amenable to these defined schedules and outcomes. Examples of this are accounting, IT, facilities management, legal, & logistics). Unsurprisingly, these are also the professions where one tends to find a large number of independent companies and individuals delivering assignments.

Employees

Employees can also be recruited to deliver defined and predictable tasks.

Aside of this, in processes, systems, or ways of working which are unique to any organization, companies are less likely to find those skills externally and will need to train resources. Having made this investment, any organization will want to retain the trained resources to deliver over time. Reciprocally, the trained individual gains proficiency in skills which are best deployed with her/his current employer and hence may see the advantages of a tenure with her/his employer

With this as a backdrop, think of the following when making the choice of working as an employee or as a contractor.

1. The profile of work which you want to do

2. Investments in ongoing training and development

3. The opportunity for job enrichment

4. Building a network of colleagues

5. Compensation and benefits

The profile of work which you want to do

If your interest and proficiency lies in work which is company/employer independent, then contracting is an option.

Pan industry tasks like IT, accounting, facilities management, or legal are examples of these. Once acquired, you can take on short or long term assignments and leverage and re-leverage those skills across companies.

On the other hand, if you want to work in areas which are unique to a company, then you will require training and development offered by that organization. Once learnt, since the skills are mainly relevant to the company which has trained you, you might want to think of commitment & tenure as an employee.

Investments in ongoing training and development

As a contractor, the onus of training and skill building lies with you. If you are a self-learner, have the initiative to continually enhance your skills independently, and can find third party centers of learning and training then contracting is an option.

Employees on the other hand will benefit from the skill and talent development investments of their employer. This is very beneficial if your job interests and skills are proprietary to your employer or are in a niche area where acquiring them from independent institutions is difficult.

The opportunity for job enrichment

Contractors are brought on board for work which they have done, and will do well again. The work which they get assigned will tend to have lesser variety and greater predictability.

While employees can also be assigned to clearly defined tasks, the higher performers will get opportunities to take on jobs with greater scope and scale on behalf of an organization. In addition, they can be put into engagements which are grey – the work involved may be more experimental and in new areas and ventures. These “risky” assignments are most likely to get assigned to tenured employees who an organization trusts and in turn the individual also has the confidence in her/his employer to take on.

Building a network of colleagues

You are likely to spend the largest chunk of the day at work. Over time, this allows the opportunity to build both a professional and social network with your colleagues.

This professional network can be very facilitative to the growth of your career, success in complex assignments, and the ability to find new work both within and outside your current employer (You might want to read (What are your professional assets?)

In addition, the social network of colleagues can be a mainstay of your after-hours life especially if you work in remote locations or small cities.

Contractors who deliver good quality work will also be beneficiaries of referrals from those who they have worked with or for.

However, since assignment tenures tend to be shorter, contracting does limit the opportunities to build deep social and professional networks within the organizations in which you have worked.

Compensation and benefits

Contractors get paid in full today. In cash and now with no additional benefits or long term pay

Employees will get paid a large chunk in cash, some in subsidized benefits (healthcare, paid vacation) and some in longer term compensation (401K match, stock options, pension).

If you need your full compensation today, think contracting.

You will also be able to write off some work expenses from taxable income, the benefit of which are unique to each individual situation but do explore when comparing the financials of contracting vs. employment.

On the other hand, if you can live well with part of your overall compensation today and have the option of deferring a chunk of it then full time employment is an option.

In closing

Should you approach your job as a contractor delivering a set of services for remuneration or as an employee who is looking to be vested with the employer?

The answer is there in the question itself. Are you looking to become vested with your employer? If you are, then approach your job with a mindset of an employee looking for tenure. If not then think of it as a contract assignment. You are responsible for delivering an output. Deliver it and get compensated for it today.

The table below summarizes the decision criteria you may want to consider.


Keep swinging !


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