Direct Hire vs Contract Hire - Which Helps Organisations More?

Sometimes companies need to recruit new employees for various tasks. However, they need to check the professional abilities and experience of candidates before finding the right fit for the role on offer. In the employment landscape, the terms - direct hire and contract hire - are very common. Yet many don’t understand the difference between these two. So, we have created a blog demonstrating differences between direct hire and contract hire and which one helps organisations more.

Direct Hire

Direct hiring is also called permanent hiring in which candidates recruit for the full-time role, as opposed to contract hiring for a limited duration. Finding and hiring full-time candidates has become more easy and effective with the best staffing agency in India. Permanent hires have opportunities to enjoy all the benefits and remuneration offered by the organisation. If organisations take help from the staffing agency, it provides a candidate but the employee is on the payroll of the client company directly.

Contract Hire

Contract staffing or contract-to-hire means the candidate is hired on a contract basis for a particular period and can be converted into a full-time employee when the contract ends, provided the candidate has achieved excellent performance during the contractual period. The contract allows both employees and recruiters to evaluate each other before the latter can consider having the former on a full-time employment. The employee is hired for the client organisation on a contract basis, but their payroll is basically under the staffing company. The staffing company involved in the contract hiring process handles tasks like sourcing candidates, reviewing resumes and shortlisting candidates. The final interview is conducted by the client organisation. The contractual period varies from one month to even a year. At the end of the contract, the client organisation has the option of either recruiting the person full-time, extending or ending the contract.

Contract Hire vs Direct Hire

When comparing the contract hire and direct hire process, companies need to know their advantages and disadvantages in detail.

Advantages of Contract Hire

Time to Access the Candidate

Contract hire gives companies opportunities to access candidates' work without putting them on the payroll. This helps companies check the cultural fit and effectiveness of contract staff before assuming the added costs of a new full-time hire. It also gives chances to candidates that they can assess the organisation. This lowers the risk of the wrong candidate ending up in a position where they’re not happy or productive.

Fast Hiring

Generally, contract staffing involves a shorter interview process. This helps recruit candidates faster in the company. Sometimes organisations need candidates urgently, so contract hire helps fill open positions faster compared to permanent hire.

Cost Benefit

Contract staff get their salary from the staffing agency until the client organisation decides to hire them. There’s no need for organisations to have these employees under the benefits program. Contract hires get paid for their hours worked and do not go on the company's benefits plan until they become a direct employee. It helps control costs for the company.

Help Adapt Uncertain Timelines

Some urgent projects or niche-based work make companies conduct immediate hiring. With contract hire, companies have opportunities to get someone up and running to fill their immediate need with the option to keep them on full-time if and when the demand for their skills persists.

Advantages of Direct Hire

Build Brand Loyalty

The main benefit of contract hire is that it makes employees feel comfortable and engaged from the first day of their work. This helps promote loyalty between the company and the employees and can lead to greater employee retention over time.

Skilled Candidates

Permanent hiring gives a greater sense of job security than contract hire. Direct hire is beneficial for passive candidates who may need more incentive to consider leaving their current job than those who are actively searching for jobs.

Critical When Finding Candidates for Senior-level Jobs

When hiring for mid and senior-level vacancies, direct hire can be pivotal as organisations want to have them for a long period. So, when it’s about finding C-suite candidates or related profiles, organisations will be better off having them full-time. Of course, they can take help from staffing agencies to fill such vacancies.

Conclusion

Contract hire has its advantages for the company. Whereas the direct hire has its own. If you want to hire any of these employees in your firm, shake hands with Kutumbh HRCare (Kaam matlab Kutumbh) - a reliable staffing company in India. It helps you provide contract staffing services India, permanent staffing services, executive search and many more. Contact Now!