Contract Staffing is an industry practice of hiring people for specific tasks or projects for limited timeframes. This type of hiring is in contrast to a full-time role where employees are hired and trained from scratch to suit business needs and permanently retained by the employer. While it is used by both established players as well as start-ups, contract staffing is especially beneficial for start-ups since it helps them conserve and judiciously use their limited resources.
At Saransh, our staffing experts list out 4 important reasons why start-ups can benefit greatly from using contract staffing, as follows:
Allows Better Financial Planning
The main difference between traditional businesses and new-age start-ups is that the former is built on a strong financial foundation, whereas the latter typically starts merely as an exploration of an interesting business idea, funded by enthusiastic bootstrapped founders. Naturally, both require different financial planning.
With start-ups, since finances are often hand-to-mouth and considering that the flow of work may not always be consistent, hiring employees who draw monthly salaries may not be a smart move. In this situation, contract staffing allows start-ups to precisely calculate and fix staffing expenses, based on in-coming work.
This kind of contract staffing based at-actuals approach ensures that the money spent on staffing is justified and, at the same time, fair wages are paid to those working on the projects. It also helps start-ups save precious resources during slack periods, when less work or no work is coming in. The resultant equilibrium enables start-ups to function efficiently and meet targets without burning out, due to a salary-heavy business model.
Entails lesser Legal Compliances
Employment related legal compliances, in any jurisdiction, are quite vast and complicated. For the bigger business entities, their own legal departments can take care of such compliances. However, for start-ups, its often a back-breaking burden to ensure that the organization is up-to-speed with all such compliances. If the start-up does it by themselves, it unnecessarily consumes their time. If they outsource it to legal professionals, it eats into their finances. If they don’t do it, they run the risk of flouting the norms and facing penalties. Whichever way it goes, most start-ups only stand to lose from it.
Contract staffing, therefore, emerges as a viable alternative. Since most legal compliances pertain to permanent employees, start-ups can use contract staffing to fix up legal compliances that suit both the parties, while retaining a workforce that is capable of serving their needs.
Helps to do away with the need to extensively train Staff
Any organization, when it hires personnel, must put them through appropriate training, so that they are equipped with the right skills to perform their jobs. However, since such training may well go on for several months, depending on the job profile, businesses usually compensate employees for such training periods, even when employees in training may not immediately benefit the business. Of course, such employees eventually do become assets, but this is only possible because such businesses are able to sustain themselves through the training period. In addition, apart from employee compensation, the training itself also requires resources in the form of hiring trainers, organizing workshops, distributing training related literature, etc. all of which comes at a cost.
However, with contract staffing, the need to train newcomers can be done away with entirely, since contract staffing allows start-ups to directly hire trained professionals on project-by-project basis. Since significant resources are saved, it works as a win-win for the start-up as well for the temporary staff.
In scenarios where a temporary staff and a start-up have become a good fit, owing to many projects done together, such staff can then be made permanent at any later stage, if it works. Even in such a scenario, start-ups benefit from having access to seasoned personnel, whose performance is already established.
Allows Start-ups to be Asset-light while benefitting from a Remote Workforce
When big businesses hire on a large scale, they also need to invest in physical office spaces that can accommodate such employees. Conversely, since such businesses invest in such assets, they require their employees to work in-office, so that their investments are justified and put to proper use. With start-ups, based on their type of business, since they neither always require permanent employees who attend office physically each day, nor do they have enough work for such permanent employees, contract staffing offers a viable alternative.
With contract staffing, those who are hired usually work remotely, using their own spaces and other resources such as their laptops, desks and chairs, Wi-Fi etc. This saves a start-up cost of investing into such physical assets. At the same time, payment being dependent on project outcomes, contract staffs are as sincere about work as any other employee and, therefore, the start-ups don’t have to worry about constantly monitoring their staff and can focus on other important functions.
Contract staffing is a result of a dire need to balance interests of seedling start-ups as well as people looking to work with such organizations. It saves start-ups a mountain of resources and allows them to use such resources for other critical business functions. This results in the ability to make business work without burdening themselves with unnecessary employment-related costs and, at the same time, ensuring the right talent for the right work is found and hired.
If you’re looking for contract staffing as an option for your start-up and want to start hiring, reach out to us at info@saranshinc.com and our staffing experts can help you build your team.