Organizations have many options today when determining how
to staff a project team. You can use existing employees, hire a new employee,
use contract resources, or you may just decide to outsource all or portions of
the project. These choices are the result of advances in communications and
technology, as well as the desire of companies to be more flexible in their
hiring options.

Your organization should have a Staffing Strategy that
provides guidance on when to utilize employees, contractors and outsourcing
options. If your organization has a strategy, you should be able to apply your
project situation and determine what type of staffing approach makes sense.

Where to begin

Perhaps the place to
start is to understand whether there are employees available in the timeframe
needed for your project. It usually doesn’t make sense to hire contract people
when you have employees that are available and otherwise would have nothing to
do (assuming the employees have “close-enough” skills).

Things to consider

Let’s assume for the purposes of this article that you do
not have current employees available to staff your new project. Let’s also say
you work for an organization that is open to utilizing contractors or hiring
employees depending on the needs of the specific project. Let’s look at some of
the criteria that we can use to make the hiring decision. (Similar criteria may
be found in your organization Staffing Strategy, if it exists.)

  • Urgency –
    If you need to get started very quickly, you may need to hire contractors. In
    most organizations you can put a call out to the local contract companies and
    be interviewing people in a couple days. Most organizations can’t (and don’t
    want to) hire employees that quickly. You may look at options to bring
    contractors in quickly and then ask for a right-to-hire option in the
  • Length of
    the need –
    If you need a resource for a short, finite duration, then a
    contractor may be the way to go. You can bring them in for a short contract and
    then release them when the work is done. If you have a full-time, long-term
    need, an employee would make more sense.
  • Strategic
    vs. non-strategic work –
    Many companies identify certain types of work to
    be more strategic that other types. For instance, many companies chose to staff
    the senior project positions, like the project manager, with employees, and are
    more willing to use contract labor to assist with programming, testing and
  • Skills
    and knowledge needed –
    Many companies make decisions about staff based on
    the type of skills needed. For instance, if you are moving into a new
    technology, you may want to hire employees to start seeding these skills into
    the organization. Similarly, if you are installing new software, you probably
    want some employees on the project to make sure that the knowledge stays in the
    company when the project ends.
  • Confidentiality
    Most companies will chose to staff positions with employees if the project
    team will handle confidential or proprietary information. There is a sense that
    the information might not be confidential once the contractor leaves the
  • Cost –
    In general, the hourly cost of a contractor is more than the corresponding
    fully-burdened cost of an employee. However, usually the long-term cost
    implications are just as important. With a contractor, you typically pay a
    higher hourly rate, but only for the length of time they are needed. Employees
    may cost less in the short-term, but you are taking on a long-term cost

If you look at the decision criteria above, you can see that
much of the answer for using employees of contractors comes down to risk. If a
project is short, it might be risky to hire an employee since you may not be
sure if you can keep the employee busy long term. If the project involves core
skills to your organization, confidential information, or is strategic to your
business, it may be too risky to hire a contactor.

Balance your needs

Organizations tend to keep a leaner staff of core employees
these days. The core staff stays relatively constant from year to year, while
increases in workloads are staffed through contract resources. You just need to
make sure that the employees are generally hired to work in the areas that are
more important to the long-term success of your business. Additional needs for
staffing non-strategic, low risk, generic positions can be staffed with
contractors or outsourced entirely.