The Benefits of An In-House IT Team vs IT Contractors

Overall spending within the worldwide IT industry has been anticipated to reach a value of £3.63 trillion by the end of 2023, an increase of 5.1% on 2022’s figures. At the same time, research by Deloitte Insights suggests that organisations spend an average of 3% of their yearly revenue on costs associated with IT recruitment, transformation, and resourcing, including the hiring of IT contractors, with the banking and finance sectors spending the most on business-critical IT functions at over 7%. 

At the heart of this prodigious growth are the IT project delivery professionals who make it all possible—contractors and permanent employees alike.

With this growing market—and the increasing expense of digital business transformation amidst an uncertain economy—in mind, this guide explores the benefits of IT contract jobs against those of building an in-house IT team. We discuss why you might want to choose IT contractors, before learning why it could make sense for your business to begin recruiting for or expanding its in-house team. 

When You Should Choose IT Contractors

So, why might you want to choose hiring IT contractors over building an in-house IT team in 2023? 

The answer is slightly more complex than you may have initially thought—whilst recruiting for IT contract jobs can be a cost-effective way to implement digital business transformation and large change projects without the need to permanently onboard staff, there are a range of other benefits which businesses can leverage, even if they already possess an in-house IT function. 

• Significant Cost Savings

Utilising contractors for project work or to plug short-to-medium-term skills gaps within your existing workforce can indeed be an effective way to reduce the personnel spend associated with IT professionals. 

Hiring IT contractors can save an organisation between 20% and 40% of the cost of building an in-house team—an increase on the 9% savings offered by these services in 2019—enabling you to focus on your business's core, revenue-generating aspects. 

As a study conducted by McKinsey & Company has shown, effective contractor comanagement coupled with a shift towards performance-based partnerships has resulted in cost-savings of around 20% for one major chemicals corporation, which relied on the implementation of detailed planning processes to ensure that business leaders were able to estimate the cost of work before contractors carried it out. This requires you to define your roles and the scope of a project before you carry it out, but the results on your bottom line are clear to see. 

• Eliminates the Need to Advertise for Roles

 Working with a dedicated recruiter of IT contractors will mean that you gain access to a network of qualified, time-served professionals who are actively searching for roles and ready to start working, significantly reducing time-to-hire. 

It’s in a recruiter’s best interests to fill your vacant roles quickly, which means that working with one can give you the confidence that they’ll get suitable candidates to you as quickly as possible. At the same time, if you’ve never utilised contractors before, a recruiter can help you navigate the increasingly complex process of onboarding contractors and ensuring that you comply with local laws.

With the expense and time-consuming nature of advertising for IT project delivery jobs, working with a contract recruitment provider can help you continue focusing on your business activities without maintaining an effective programme of reaching out to actively searching candidates. 

• No Training Costs

IT contract jobs will attract candidates who already possess the unique blend of skills and abilities that you require for your digital business transformation project—meaning that you won’t have to pull your other staff away from their duties to onboard and train contract hires. 

Unlike permanent employees, IT contractors are often in the later stages of their careers. If you’re working in close partnership with a provider of IT contractors, you can be certain that your project will have a clearly defined scope and job descriptions, meaning that you can target your search to only the ideal candidates that match your precise requirements. 

Whilst the average cost of getting a new employee up-to-speed varies from sector to sector, it tends to hover around £1000—not an insignificant sum if you require high-volume staffing for a large digital business transformation project.

• Only Pay for Project Delivery

Leveraging contract employees means that you can remunerate based on your IT project delivery requirements, rather than the full-time salary and benefits that hiring a permanent employee would entail.

As these contractors are not employees of your company—operating instead as self-employed workers who operate independently—you don’t need to worry about paying a monthly wage or local income tax requirements, instead only needing to consider the fee you pay them on a project-by-project basis. 

The amount that your business pays for digital business transformation projects will depending on the project type and the anticipated length of time it will run for. A provider of IT contractors will be able to advise you on a competitive rate of remuneration for the scope, the experience you require, and the cost of similar projects—enabling you to work out the progress payments you’ll make at regular intervals during the schedule.

Alongside these benefits, IT contract jobs can also provide a staff augmentation function for roles that are a challenge to recruit for due to the technical skills shortage currently impacting the IT talent market. 

At least three-quarters of executives that responded to Deloitte’s Global Outsourcing Survey 2022 noted that they currently use contractors or third-party vendors to support their cybersecurity and data analytics initiatives, whilst only 48% noted that they were confident they were able to handle the increasingly broad range of cybersecurity threats that present a risk to businesses over the coming years.

In short, IT contract jobs provide organisations with a great degree of flexibility and adaptability, enabling them to easily pivot to meet consumer requirements, seasonal demands, and fluctuating market conditions. Providers of IT contractors will partner closely with your business to understand your urgent and anticipated talent needs, ensuring you can scale up or down the number of personnel you have access to as requirements dictate. 

When It Makes Sense to Build an In-House IT Team

Whilst contracting works for many IT experts, the bulk of early-to-mid-career professionals are searching for permanent roles where they’ll be empowered to develop and grow their careers with cutting-edge companies. A LinkedIn Talent Solutions study found that most IT contractors—over 90%—are in the later stages of their careers. This can present an issue for businesses that are looking to build a loyal IT team for succession planning purposes, especially given the time-limited nature of IT projects.

With the benefits outlined in our previous section in mind, it would only be natural to ask why an organisation would want to build an in-house team. Again, there is a broad range of reasons why business leaders might opt for an internal team of IT project delivery experts over hiring contractors for their digital business transformation initiatives and product work.

• Access to Early and Mid-Career Candidates

If you’re interested in building an IT team within your organisation that will stay with you over the long term, it’s probably wise to avoid contractors at first. 

You need to ensure that you’re considering your internal development pathway for IT staff, and ensure that there’s a career ladder in place to motivate them to perform at a high level. 

Whilst hiring permanent employees may be costlier than bringing contractors on board as and when they’re required, it’s a valuable long-term investment if you’re looking to build a talent pipeline which will ensure the future of your organisation—and the training they require will mean that you can begin implementing a learning and development culture which will encourage future candidates to consider your employee value proposition. 

• Greater Customisation of Roles and Responsibilities 

IT contractors will be hired for a specific function or digital business transformation project, often due to their precise skillset. On the other hand, an in-house IT team gives a business the ability to tailor the workload and duties of their employees to meet their specific needs.

Permanent employees will be committed to your business over the long term, meaning that you can develop them as you require to meet your unique business needs, giving you flexibility in the direction they take—and allowing you to move them between departments, giving you an opportunity to match their responsibilities and role with broader requirements, operational goals, and shifting customer demand.

• Deeper Knowledge of Company-Specific Systems

An in-house IT team will possess an inside-out knowledge of all of the systems required for their employer’s company to function effectively, reducing the time it can take to resolve technical issues, enabling them to ensure that internal, business-critical systems are tailored to the needs of staff in other departments and managed with continuity and consistency.

Permanent IT employees will clearly understand your business processes, goals, and objectives, allowing them to become familiar with your culture and ensure that they collaborate with other departments to develop custom solutions to the problems they’re encountering. 

You can encourage your in-house IT team to develop this knowledge by ensuring they’re building strong working partnerships with internal stakeholders, management, and employees in other departments. Moreover, your permanent employees should be leveraged to maintain and update the documentation on IT systems and processes, creating a knowledge base on which further training initiatives and updates can be rolled out.

• The Ability for Your IT Team to Lead by Example 

With cybersecurity becoming a paramount concern for organisations in all sectors, an in-house IT team that works closely with other departments can act as an exemplar for information security. 

At the same time, an in-house team will communicate product and system updates with colleagues via internal platforms, helping sales, marketing, and support function staff gain a deeper appreciation and technical understanding of your products and services. 

An IT team can help you to minimise the risk of data breaches—and the subsequent harm that can be done to your business reputation—by consulting and guiding staff in all departments. Meanwhile, in the worst-case scenario, having permanent employees in place means you can respond to incidents rapidly, with a report from the IT governance association ISACA noting that in-house teams' response times are faster than outsourced counterparts.

Whilst the cost of advertising for a range of roles—as well as providing onboarding and training support for your new recruits—can be higher when it comes to creating an in-house IT team in comparison to leveraging the short-term services of IT contractors, they can give you a great deal of control over the development of your staff—and a wider scope for the expansion of duties as your business evolves. 

Of course, partnering with an expert IT recruiter can reduce the expense of searching for and evaluating talent. Much like their colleagues working in contractor services and IT project delivery solutions, consultants working with candidates who are on the lookout for permanent or contract-to-perm positions will possess an extensive network of active and passive talent at all levels of seniority, enabling you to reduce the cost of building an in-house team. 

If you’re interested in learning more about IT recruitment, see our recent guide on How to Build a High-Perfoming IT Team for expert insights into how you can leverage your existing data to drive talent acquisition and retention, and enhance the diversity and equality of your workforce.

What Kind of Hires Should You Choose?

In conclusion, the decision between hiring IT contractors or building an in-house IT team is critical for business leaders looking to navigate the evolving landscape of the industry and uncertain economic futures. 

IT contractors offer a cost-effective solution, providing agility and fast access to specialised skills, making them ideal for short-to-medium-term IT project delivery or the augmentation of existing workforces, especially when it comes to change initiatives or digital business transformation. 

On the other hand, an in-house team provides a business with a greater deal of customisation and can develop a deeper knowledge of company-specific systems, alongside the ability to lead by example for the benefit of colleagues in other departments, offering long-term control and enabling succession planning. 

Partnering with an expert recruiter for IT contract jobs can streamline the talent acquisition process regardless of your decision, so, ultimately, the choice depends on your organisation’s unique needs and goals.

Experts in In-House Recruitment and IT Contract Jobs

At Fruition IT, our dedicated consultants are ready to facilitate your digital business transformation initiatives. We provide IT project delivery professionals on a contract and permanent basis at all levels of seniority, from early career to executive, meaning that you can gain access to the abilities and skills you need with speed and cost-efficiency. 

If you’d like to learn more about our recruitment services for IT contractors, or you’re looking to build an in-house IT team with the right blend of competencies to make an impact, get in touch with us today for a fuss-free discussion of your requirements.