In today’s digital world, constantly evolving technologies mean businesses are almost always in need of IT specialists who can shore up existing systems, replace them altogether, and help with general cyber security.
But should you hire an IT contractor or go through a recruitment agency?
The reality is there are benefits to both, and which you should choose really depends on your own unique situation, as well as your preferences.
For example, what kind of support do you feel like you need?
Let’s break down the pros and cons of each to help you decide.
What is an IT contractor?
Essentially, an IT contractor is a self-employed specialist, hired by businesses to complete a range of projects. This could include things like IT support, software development and network administration, normally contracted to work in fixed blocks of time (e.g. 3, 6 or 12 months).
This arrangement allows them to enjoy flexibility and freedom in their work, moving between different organisations once their contract is up.
Advantages of hiring an IT contractor
The first and most obvious advantage is that the majority of IT contractors are specialists in their field – which you’ll be able to benefit from directly.
Most of the time you’ll be looking for an IT contractor for a specific project or busy period – so the contract only needs to cover that time. This means you don’t have to worry about any hidden overhead costs like you would with a permanent employee in your business. (E.g. pension payments, National Insurance contributions, sick pay, etc unless your IT contractor was inside IR35).
Another big advantage is that you have greater flexibility, as you can engage the contractor for however long you need them, and it’s easier to terminate their contract if your strategy changes for any reason.
It’s also true that not every business requires a full-time, in-house IT specialist. By contracting the work out, you can pay a fixed rate for the duration of the project, as opposed to keeping someone on your books unnecessarily.
Disadvantages of hiring an IT contractor
You can generally expect an IT contractor to charge more in the short term, owing to the lack of job security and employment benefits.
They may also specialise in a particular area of IT, in which case the service they offer could be considered more bespoke (and so worth more).
In addition, while you can obviously read reviews and look at their CV/portfolio, there’s no getting away from the fact that hiring a contractor is still a bit of a shot in the dark, as you don’t know what they’re going to be like to work with.
It’s also worth noting, if a project runs over schedule and requires renewals, businesses must be careful not to blur the lines between a contractor and a permanent employee.
If the working relationship shifts to mirror regular employment, the role risks falling inside IR35. This would require your business (or the fee-paying agency) to process them via payroll, deducting income tax and National Insurance, while also paying Employer National Insurance on top of their rate.
What is an IT agency?
An IT recruitment agency specialises in connecting IT professionals with job opportunities at companies looking for talent.
They handle everything from sourcing candidates to screening CVs, so employers only see people who actually fit the role.
Advantages of using an IT agency
First and foremost, you’ll have access to a broader talent pool, as recruiters actively source potential candidates through various channels, such as job sites, social media, and professional networks.
This not only gives you more options, but also saves you a load of time which you can spend on other important tasks in your business.
Recruiters also assess candidates by looking at their CVs and conducting interviews, and so the risk of you hiring the wrong person is significantly reduced. (Consider for a moment the hidden cost of a bad hire: months of salary paid for underperformance, as well as management time spent resolving issues, etc.)
An IT recruitment agency can also provide insights into things like current salary trends, competitive intelligence, and other job market-related information that can help inform your hiring strategy.
Increased confidentiality might be another possible advantage depending on your situation, as you don’t have to advertise job openings when going through an agency.
Disadvantages of using an IT agency
One of the tradeoffs of the agency handling everything for you is you therefore have less personal involvement, and if you’re used to making all of the decisions in your business, then you may struggle with this.
Whilst you can choose how long you want the contract to be, you’ll be bound to the Terms of Business (ToB) contract with the agency – which could include things like restrictive clauses, where you can’t hire the individual directly without paying the agency a ‘transfer fee’.
On top of this, the agency will usually charge a percentage of the candidate’s first-year annual salary.
For standard or entry-level roles, this typically falls between 15% and 20%.
For specialist or senior roles, fees can sometimes range from 20% to 30%.
Exact recruitment fees can vary, and will be influenced by factors like location and role complexity (e.g. entry-level or specialist), with hard-to-fill roles requiring more targeted search campaigns.
So, should I go with an IT contractor or agency?
There’s no one-size-fits-all answer here – it really comes down to what matters most to you. If you’ve got a specific project in mind, a tight budget, and don’t mind doing a bit of legwork to find the right person, a contractor could be the way to go. But if you’d rather hand over the sourcing and screening to someone else, want access to a wider pool of candidates, and value the extra reassurance that comes with it, an agency is probably worth the fee.
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