Contract Staffing and Permanent Staffing: What’s the Difference?

Many companies interchangeably use the words contractor and employee, though they mean two very different things. You don’t engage with a contractor the same way as you do with an employee. Permanent and contract staffing cannot be used interchangeably, because they mean two very different things.

But it is not just about the difference in terminology. Both come with their own set of benefits and there is little overlap. Permanent staffing is another term that also means recruitment, where the people hired are permanent employees of the company whereas contract staffing is not. In contract staffing, the person the company engages with is not an employee, but a contractor.

And why do companies need both permanent and contract staffing? Permanent staffing helps a company meet its long-term needs in departments such as sales, operations, finance etc., which are the core functions of the company.  The same company would use contract staffing to hire contractors quickly, when they are falling behind in certain requirements, reduce the cost of hiring, and have flexibility in the hiring process.

What is Permanent Staffing?

In permanent staffing, the company hires people to serve on a permanent basis, and on the company payroll. They are entitled to all the benefits that the company provides its employees, including leaves and other reimbursements and tax benefits. They work fixed hours and have shift allowances as well.

What is Contract staffing?

The process of attracting, selecting and absorbing individuals for temporary or contract work is called contract staffing. In contract staffing, the person hired is referred to as a contractor, and as implied he/she is bound by the terms of the contract generally signed with the mediation of a staffing company. The contract will last for the duration specified and the benefits provided will be as per the terms mentioned.

What are the Advantages of Permanent staffing?

Permanent staffing has several advantages. Some of them are mentioned below:

1. Permanent staffing ensures that the employee will be with the company for a very long period. Such retention could be crucial for the growth of the company.
2. The company has the freedom to decide on the compensation and is not bound by any contract that is predetermined.
3. Permanent staffing can lend a company much-needed stability. This is because knowing that employees will be there for the longer term helps with better workforce management.
4. The company culture will be built in a better manner over time as more employees are retained, happy and productive.
5. The employer’s reputation also improves a good deal as permanent employees will leave behind positive reviews for the organization.

Is Permanent Staffing Right for My Business?

This is a question you will need to answer in consultation with your HR team or with them and your investors and other stakeholders if it is a bigger company. They will help you decide whether permanent staffing is good for you based on your current needs and how your company is growing, and what culture and branding you are trying to build. The good news is that there are plenty of companies providing permanent staffing services, but finding the best should be a priority for you.

What are the Advantages of Contract Staffing?

Just like permanent staffing, contract staffing / temporary staffing has its advantages too.

1. Contract staffing ensures that the finer terms of employment are well-defined over a period and agreed upon by both parties.
2. A contractor need not be offered the benefits that are generally offered to employees. This can save the company a lot of costs in the long run
3. The terms of the contract remain unaffected by changes in policy by the government. These changes affect only permanent employees.
4. The contractor needs to be offered a fixed remuneration depending on the hours worked, and this helps bring more clarity to work and work productivity.
5. One can hire quickly with contract staffing, especially because the hiring is happening through a staffing partner.
6. Contract staffing allows companies to hire people with certain skills which their permanent employees may be lacking.

Permanent Staffing vs. Contract Staffing

Though we discussed both permanent and contract staffing in good detail, it helps to have the differences set out in a table. The differences between permanent and contract staffing are summarized in the table below:

Permanent Staffing vs. Contract Staffing: Which is Better?

We wouldn’t pick between permanent staffing services and contract staffing services. To us, both have their set of advantages and disadvantages, and it is necessary to pick the one that suits your business the best.

If you want employees that stay on, abide by your rules and regulations, then permanent staffing is the way forward. If cultural fit is a big thing for you, then go for permanent staffing. If you don’t want to offer the benefits that you generally offer your other employees and want to hire faster, then go with contract staffing.

Your best bet is to discuss your needs with a staffing partner. As a staffing partner, we have both recruitment services and staffing solutions. Alp Consulting has over a decade of experience hiring and onboarding candidates for several top companies the world over. Talk to us today to get our support with recruiting the candidates your business needs.