As we come to the end of 2022, many companies are starting to evaluate how they will meet next year’s business goals and demands during uncertain economic times. Decisions made now will impact the ability of managers to meet their teams’ commitments, and companies are starting to ask questions and plan for the future.
A critical component of annual planning is a talent strategy outlining what new hires will be needed to sustain and grow a business. And, when it comes to hiring, bringing on new employees can be a time-consuming and costly investment with a long-term commitment which might not be the right fit for every business right now.
If you find yourself needing talent for next year’s projects, but a permanent employee isn’t a solution, here is why you should consider utilizing contractors.
The cost of traditional employees falls under a company’s capital expense (CapEx) budget, which includes all of a company’s investments and costs intended to provide value for a long time. On the other hand, companies use their operational expense (OpEx) budgets for the short-term, day-to-day expenses necessary for the smooth operations of the business. Increasing operational costs is a less risky move when the economy is uncertain.
Here’s an analogy for how to think about these different budgets. Imagine your car is totaled, and you’re suddenly in the market for a new one. Do you decide to lease or buy a new one? It depends on whether you’re in a secure position to spend your money or need to save it for future stability, as well as whether you’re looking for a long-term or short-term solution.
Like a leased vehicle affords flexibility by avoiding a long-term commitment and saves money on upfront costs, so do contract employees. Contractors are a contingent workforce that will ensure you can progress your in-flight and mission-critical initiatives without committing to expensive onboarding or years of overhead expenses. You can expand and contract this workforce in response to changing business needs and economic conditions. Like leased vehicles, the operational expense of hiring contractors is higher since their salaries are higher than W2 employees. Still, their long-term cost is lower because you haven’t invested nearly as much in them.
By utilizing contractors, companies can shift their focus from using their CapEx budget to an OpEx budget. In this way, they ensure they can sustain current initiatives and take care of pressing demands without committing to long-term resource investment that they can’t support in the long run. This shift helps give them the runway to weather whatever storm may be coming.
When it comes to managing the OpEx and CapEx budgets for 2023, it’s vital that managers understand what’s going on and engage in conversation with your leadership team about what opportunities there are to utilize a flexible workforce solution.
Take this opportunity to ask your direct leader about plans for your team for next year. As a team leader or manager, it is your responsibility to understand the company’s staffing plans and how those will impact your team’s roadmap and outcomes. If you’re not having the conversation with your boss now, you’re already late to the table. Some questions to ask in these conversations include:
Tapping into the contract resource pool for specialized knowledge and skills can help organizations complete critical projects on time and on budget. If it sounds like a flexible workforce solution is a good fit for your team, a recruiter can help you plan for this conversation with your manager and find the perfect contractors to help you meet your team’s goals.
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