A contract is an agreement signed between a company and a contractor, with the contractor agreeing to produce a desired result. But the idea of a contractor is not an entirely new concept. For ages in history, armies comprising individuals on contract have attempted at least to topple large kingdoms and powerful monarchs.
An example is that of the ‘Ten Thousand’ a group of ten thousand Greek soldiers who tried to help Cyrus, a Persian prince overthrow his elder brother Artaxerxes II, the then ruler of Persia.
Though this attempt was not a success, many mercenary armies have succeeded in history. In the true sense of the word ‘contractor’, mercenary soldiers were perhaps the first in history from an occupation that was ‘not construction’ to become contractors.
Contractors have existed in battlefields long before the corporate battlefield came into being, and some of the reasons for their presence in a modern-day company overlap with those from the ancient era.
When you hire a contractor for a role, it is, as Don Corleone said in The Godfather, all about “making an offer they cannot refuse”.
It could be a techno-functional consultant for your Oracle Netsuite or SAP implementation, a data analyst with experience in Microsoft’s Power BI or a network architect; companies are clearly on the lookout for such enterprising talent as contractors.
And this is so because it is not so easy to procure such enterprising talent in a regular job setting. But why exactly do companies hire contractors for certain job roles?
Whether it is a prince who has no time to waste in bringing his brother’s kingdom down or a company that has to battle the odds in as short a time as the project nears completion, both have promises to keep.
Many companies today are bound by tight deadlines on the projects they pick and sometimes, internal resources may prove difficult to manage or may not be dependable because of reasons that are very human and circumstantial. This is where a contractor can help you meet that difficult deadline.
Sometimes independent contractors tend to work better than regular full-time hires, because they bring with them a different viewpoint and different set of skills and learning they have acquired in long hours of work by themselves.
This talent is also accessible from anywhere in the world, which has led to a growth in the number of contract workers and jobs. So, it is not uncommon today as it was not to recruit Greek Soldiers in Ancient Persia.
You don’t need to train a soldier on how to use a gun. They would have already done it a hundred times as they have served in combat. You only need to offer them project specific knowledge, let them know what is expected of them, what the deadlines are and what you will offer them.
That’s it, and after that you take a step back and let them work their magic. Be it their superior skills at managing time or their uncanny ability to do some great problem-solving, they can help bring your project to completion.
Contractors today are brought onboard by staffing companies to ensure that the organization they are working for is able to meet fluctuations in market needs, bring the products to market faster, have flexibility in cost models and better manage their turnover and capital, as in the amount of money taken by an organization to manage its business during a period.
This is still very similar to soldiers adapting to changes on the battlefield at the spur of the moment, bringing their years of experience and their superior thinking and strategizing prowess on the field, when the nation they are fighting for most desperately needs it.
The Contract Labour Act of 1970, India’s law for contract workers defines a contractor as anyone who works to produce a given result and which does not involve the mere supply of goods or manufacture to the establishment.
An employee on the other hand is defined by the Minimum Wages Act as someone hired by the company to perform skilled or unskilled labour and provided with wages and other benefits. When a contractor becomes an employee, they:
If you do have a local entity in the hiring country, here are the steps you’ll need to take to convert your contractor:
When working in a country like India, it helps to have some HR services, or the above work outsourced to an HR consulting company such as Alp Consulting. They can manage payroll for your contractors’ turned employees and ensure that compliance is maintained as well.
If you do not have a local entity, then you can work with an employer of record in most countries around the world. The employer of record (or EOR) will employ the contractor as an employee on their record and will administer payroll and even take care of compliance for you.
Now that you have got them onboard, it’s time to rethink your workforce management strategies and how best to utilise the new talent. Converting a contractor to an employee has its benefits. And these benefits do not have to come at a loss of productivity. If you feel that your core tasks can be handled better by a contractor than people already in your company, we hope this article helps you make that choice. We wish you all the success in the corporate battlefield.