Contract-to-Hire Pros and Cons for Software Engineers

Contract-to-hire is a type of position in which a candidate works for an employer on a contractual basis. There is a shared understanding that the employer will convert the candidate to a permanent employee at the end of the contract.

These positions can be excellent opportunities for the right person. Before applying, however, software engineers should familiarize themselves with contract-to-hire pros and cons to make sure that they’re a fit.

Agile, our IT staffing company, has extensive experience with placing software engineers in contract-to-hire jobs. Technical recruiter Michael Macchio works with candidates to help them with the hiring process and advise them in transitioning from contractor to employee. He provides the following guidance to professionals considering this type of role.

Pro: You can try before you commit.

An interview might give you an idea of what to expect with an employer, but until you see the company in action, you can’t know for sure. As far as contract-to-hire pros and cons go, having a long time to test out the waters is a huge advantage.

Standard contract IT jobs last six or nine months. This is enough time to get a feel for a company’s culture, tech stack, hours, commute, and future plans before you decide to accept full-time employment.

Con: The employer can try before committing.

Many software engineers feel liberated by contract opportunities. They can focus on working at their highest level without worrying about office politics, the company’s future, or their career progression.

Contract-to-hire works differently, however. There’s an expectation that you and the employer are headed towards a full-time relationship, but employers are not obligated to extend an offer at the end of the contract term. So, making a good impression is important. You may need to spend more time getting to know future colleagues, supporting the team, and showing your interest in a permanent position.

Pro: Your salary may be higher.

Negotiating your salary is much easier as a contractor through Agile. Our IT recruiters work with you in advance to determine the compensation package you want.

Typically, your contract rate will include additional money for paid time off, since contractors don’t normally accrue PTO the way that full-time employees do. If you decide to not take time off, you will keep the extra money.

Contract-to-hire pros and cons include another big benefit: your full-time salary may also end up higher. Since the PTO bump increases your contract rate, you can base your annual salary on that figure when you negotiate for a permanent position.

Con: Your contract earnings may be less predictable.

Depending on your work hours, you may make more money during certain periods and less during others. This can make cash flow less predictable.

This may not be a problem depending on the terms of your contract. In the case of Agile, we work with employers to ensure that certain base requirements are fulfilled so that contractors know what they’ll be earning. (For more information about salary and careers, see our article, “Best IT Career Path for High Earnings”.)

Pro: You can get benefits, even as a contractor.

Agile provides its contractors with health, dental, and vision coverage. We even offer a 401K after contractors have spent a year with us. The benefits are nearly the same as what permanent employees of our company receive.

Cons: Contractor benefits may not be as attractive as those of full-time employees.

When you weigh contract-to-hire pros and cons, consider that benefits may be more expensive before you become a permanent employee.

Typically, Agile will price this expense into the salary rate to offset your costs. We can also advise you about aspects of the benefits package that you should consider in your negotiations once the contract period ends as well as provide you with other IT job search tips.

Pro: Your staffing agency can help with employment-related issues.

During your time as a contractor, you may have questions or concerns. Maybe you’ll feel like the work is different from what you expected. Maybe you’ll want to know how to approach negotiations for full-time employment. Maybe you’ll want to extend the contract before committing to the position.

Agile talks frequently with contract-to-hire candidates during their contractual period. We ask about ways we can help and communicate concerns to the employer. As a result, we are often able to resolve issues that might otherwise sink the relationship.

Con: There needs to be trust in the agency’s approach.

Less-qualified agencies may not take care of their candidates the way that they should. They may not ensure that their software engineers are happy with the job, that they are getting the money they are worth, and that they are working on projects that interest and challenge them.

One of the reasons that software engineers partner with Agile is that we do things the right way. Our priority is finding the best fit between employers and talent. This means that we’ll be responsive to problems you may experience, try to find a good resolution, and, if things aren’t salvageable, help you move on to the next opportunity. We welcome the chance to get to know you and to advance your career.

Find out more about contract-to-hire pros and cons and current positions through Agile. Get in touch.

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