“We don’t hire contractors; they’re too expensive!”

As someone who specialises in placing IT and Technology Contractors, Talent Spot can tell you that we hear this line at least once a day.

But while some employers are instantly put off by a quote of a few hundred pounds a day, it turns out that the actual cost of a permanent member of staff can sometimes be higher to your organisation than a contractor!

Let’s say you are looking to hire a Senior .Net Developer for contracting work in London. Their rates are, on average, between £350 to £450 per day (inclusive of Agency Fees), possibly higher if you’re looking for a specialist with a niche skill set.Let’s go with the median figure - £400 per day. That’s roughly £2,000 a week, £8,000 a month, £96,000 over a year. Ouch.

Is that figure really a true reflection though?

 An employer does not pay NI or pension contributions for a contractor. Furthermore, if the contractor takes a day off, you do not pay them for that day. If the contractor is off sick then, guess what, no pay for the contractor.

Add to this that to recruit someone through an Agency, you inevitably have to pay a fee - normally calculated as a percentage of the candidate’s salary. However, when recruiting a contractor, the fee is inclusive within the day rate quoted - meaning you don’t pay any “extras” once the contractor has been placed.

It suggests that after taking into account their basic salary NI contributions, holiday pay, sick pay, pension, benefits, bonuses etc, the actual cost of a permanent member of staff can sometimes be higher per annum than a contractor!