4 ms·

Contractors can be cheaper than employees, despite paying a higher salary. The reason is that they don't need to do so much legal work or pay their insurances a

Contractors can be cheaper than employees, despite paying a higher salary. The reason is that they don't need to do so much legal work or pay their insurances and etc, etc. When a project is finished, they can just end the contract and avoid all of the legality. I've known many people that leave their job as employee and get contracted to the same company for those reasons (and more).

cpeterso 12y ago
And contractors don't get stock options. Microsoft has gotten in trouble before about their use of "permanent contractors".
- sirmarksalot 12y ago
  The stock isn't really a big deal anymore now that the company is stable, more or less. Back in the '90s, however, some preferred stock could mean retiring at age 35. And when the orange-badges started seeing their officemates buying mansions and supercars, despite not having worked all that much harder, they felt the need to get the lawyers involved.
  - r00fus 12y ago
    Is this the case? I mean, sure options won't be as lucrative, but RSUs are basically an extra way for companies to compensate employees, and still count as "velvet handcuffs". If the stock rises, that's magnified, but even while relatively static, RSUs count up.
crag 12y ago
Or it's about appearances. You know the government does this all the time. Congress mandates a department cuts their budget. So ok.. fine, the director lays off the IT department. Then all the "deferred" IT folk go to work at"some consulting company" who get the contract to provide IT services to the department. At twice the price the original payroll was. it happens all the time in government. And not just in IT.
Amezarak 12y ago
> Contractors can be cheaper than employees, despite paying a higher salary. The reason is that they don't need to do so much legal work or pay their insurances and etc, etc. Unless they're independent contractors, I've never understood how this can be true. Sure, the company paying the contracting company doesn't have to directly pay for that kind of thing, but the contracting company does, and on top of that, has to earn a profit, and that should all be included in the billing rate.
- busterarm 12y ago
  Having worked for several subcontractors, I can tell you there's a vast difference between the cost of Microsoft doing HR and a much smaller company doing HR. Microsoft probably keeps good records and actually has good HR staff. A lot of subcontractors don't keep very good records, outsource their HR staff to India and aren't against closing up shop and reincorporating with a new name. Edit: Out of 5 of these companies that I actually needed employment verification from after leaving, only 1 of them could actually locate a record saying I worked from them. I always have to go to pay stubs.
- mcguire 12y ago
  There are flexibility issues as well. I have contracted with IBM many times over my career, and when the project goes belly-up, the company reorganizes, the division you were working in disappears, and employment contracts aren't renewed. No muss, no fuss, no layoffs.

cpeterso 12y ago

And contractors don't get stock options. Microsoft has gotten in trouble before about their use of "permanent contractors".

sirmarksalot 12y ago
The stock isn't really a big deal anymore now that the company is stable, more or less. Back in the '90s, however, some preferred stock could mean retiring at age 35. And when the orange-badges started seeing their officemates buying mansions and supercars, despite not having worked all that much harder, they felt the need to get the lawyers involved.
- r00fus 12y ago
  Is this the case? I mean, sure options won't be as lucrative, but RSUs are basically an extra way for companies to compensate employees, and still count as "velvet handcuffs". If the stock rises, that's magnified, but even while relatively static, RSUs count up.

crag 12y ago

Or it's about appearances. You know the government does this all the time. Congress mandates a department cuts their budget. So ok.. fine, the director lays off the IT department. Then all the "deferred" IT folk go to work at"some consulting company" who get the contract to provide IT services to the department. At twice the price the original payroll was. it happens all the time in government. And not just in IT.

Amezarak 12y ago

> Contractors can be cheaper than employees, despite paying a higher salary. The reason is that they don't need to do so much legal work or pay their insurances and etc, etc. Unless they're independent contractors, I've never understood how this can be true. Sure, the company paying the contracting company doesn't have to directly pay for that kind of thing, but the contracting company does, and on top of that, has to earn a profit, and that should all be included in the billing rate.

busterarm 12y ago
Having worked for several subcontractors, I can tell you there's a vast difference between the cost of Microsoft doing HR and a much smaller company doing HR. Microsoft probably keeps good records and actually has good HR staff. A lot of subcontractors don't keep very good records, outsource their HR staff to India and aren't against closing up shop and reincorporating with a new name. Edit: Out of 5 of these companies that I actually needed employment verification from after leaving, only 1 of them could actually locate a record saying I worked from them. I always have to go to pay stubs.
mcguire 12y ago
There are flexibility issues as well. I have contracted with IBM many times over my career, and when the project goes belly-up, the company reorganizes, the division you were working in disappears, and employment contracts aren't renewed. No muss, no fuss, no layoffs.