Contractors Vs FTE? Why use one over the other?

I worked for a client not long ago that HATED consultants.

Almost weekly, someone would bring up our day rates in disbelief.

Some of the staff - some very senior staff even set out to sabotage the team, blocking access to systems, requiring us to go through extended training, and excluding us from meetings - all in the hope of us blowing a deadline. They had severe issues with their systems and hadn't taken any action to rectify things in four years, yet they believed that they should have taken on the work - not contractors.

"We'll save so much if we just do it ourselves," an IT manager told the CIO.

Consultants get paid a lot - debunked

Consultants get paid appropriately.

If you'd worked to learn a skill, were hired only for a short time, were given no sick pay or annual leave, no guarantee of future tomorrow, and assigned the most complex problems businesses face would it be fair to ask for more compensation?

Throw in that you have to:

Run your business, insure yourself, pay for subscriptions, certifications, equipment, a location to work, and your tax.

$1000 a day is starting to look pretty reasonable.

People are narrow-minded when it comes to dollar figures. They see $1000 a day and forget everything else from that.

The actual cost of full-time employees

If a consultant's day rate throws you off, let's analyse the cost to a business of employing a full-timer.

From the narrow-minded view we mentioned above, it may look like a case of an FTE salary. But let's not forget about the following:

• Superannuation (401K)
• Insurance (workers comp, etc.)
• Payroll tax
• The office you need to house them in
• Admin and HR
• Staff benefits

Now I'm not saying one is right and the other is wrong. The point is:

Sometimes consultants are appropriate, and their day rates are too...

When hiring consultants is the optimal choice.

A simple way to decide is based on whether there is a deployment to do or not. Are we implementing something, or is this just a BAU role?

Deploying a Power BI solution would best suit hiring a consultant.

Deploy, build, train, depart.

Assign a BAU staff member to be the new Power BI SME, and they carry on with the monitoring of the solution.

Consultants are also great at repair jobs. If something has gone wrong, you can offer up a week or two for someone to come in and fix things - think of them like a plumber or an electrician if something goes wrong with your data platform.

Benefits of hiring consultants

A complete list of benefits that come with hiring consultants:

• Accounted for under CAPEX, not OPEX (shareholders much happier with CAPEX than increased OPEX as OPEX is permanent and difficult to reduce because it is mainly made up of FTEs)
• Able to remain agile. If things aren't working, consultants can be moved along easier than FTEs
• More specialised expertise.
• Refined scope - consultants are here to do one job. Rarely will they get caught in office politics.
• More professional. Their livelihood depends on it.
• They provide an outsider's perspective
• Onl;y pay them for work they do
• No training or development needed

When hiring a consultant, you get a lot of bang for your day-rate buck. Your only responsibility is to utilise them efficiently and know what you want.

So when you next hear of a consultant's day rate, remember the rest that comes with the deal.

You'll find it's a lot fairer than first impressions.