Hiring independent contractors seems to be a new trend in the recession recovery business era. Being an entrepreneur, if you want to cut down on human resources costs this seems to be one of the best available solutions for you because it comes with a lot of tax benefits and other overheads that you might have to bear on hiring regular employees. But personally I feel that your hiring decision should be based on your unique requirements, which is dependent on a dynamic interplay between different factors.

You might save up on the payroll and tax expenditures on your independent contractor. You don’t even have to give them the health care coverage that you are obliged to for employees. The advantage is that you can adjust the size of your workforce according to your requirements but make sure that you mention that clearly in your contract. When you have a lot of work coming, you can always hire more of them and during the lull you can always deactivate them, provided that is mentioned in their contracts. But an employee cannot be hired or fired owing to the work pressure. Another advantage that I see in hiring independent contractors is that since the contracts are usually short term, you can always try out new talents to work for you. Employees are hired for years and you can’t expect to try out new talents unless vacancies arise.

But on the flip side of the coin, there are some problems with hiring people on independent contracts. First, their rate is determined by the market rate. As you aren’t the only person they’re working for, you might have to negotiate a good amount for pleasing their inflated demands. What’s worse is that their prices might soar up from project to project depending on the quality of their deliveries. And if the independent contractor senses that you are relying heavily on him, you’ve had it! Your good old  employee on the other hand, delivers the same quality output, works full time for you and also you ramie his pay only once a year. So aren’t you saving up on costs that way? Also you can use your employee for different roles in your organization as and when required. An independent contractor will never do things beyond his very specific job description. Even if he does, he’ll charge you for each and every work separately. This is where you are saving a lot of money by hiring a regular employee.

As the senior manager of a company, I really know what it felt like getting work done from an independent contractor. First, though my hired contractor gave me what I wanted, I felt more comfortable with my official subordinate because I had more control over him. Secondly, my contractor worked for three more firms and I could see that the amount of commitment that I could expect from an employee is not possible with an independent contractor. Also a company does not only work with mere executives. There should be managers to supervise the workforce and make it work efficiently. That is more important. Can independent contractors become managers? Never! So before you get carried away by the hullabaloo that is being created for treating new hires as independent contractors just weigh your pros and cons and then decide!