Temporary vs. Permanent Staffing: Which Is Right for Your IT Needs?

As the IT sector continues growing and maturing, the staffing efficiency in IT firms plays a key role in their competitive positioning. Only companies that can address their dynamically changing staffing needs and have sufficient staff without skill gaps or over-payment for staff in the idle status will survive in the IT segment.

Obviously, permanent staff still remain the backbone of any IT business. These employees form stable team structures and shape the unique business culture of a company. However, temporary staffing may become an effective remedy to fluctuating workloads and project seasonality in the IT sector. Thus, it is vital to combine full-time and part-time, or contractual, staffing options to preserve flexibility and responsiveness.
This article introduces the concept of temporary staffing and provides a comparative analysis of permanent and temporary staffing peculiarities typical for the IT labor market. Read on to discover the pros and cons of both variants, identify the circumstances in which you should choose one or the other option, and capture the legal nuances of temporary labor staffing.

Temporary Staffing and Other Models Defined

The employer typically has several options for employing staff. Workers can be:

• Permanent
• Freelance
• Temporary
• Contract

Though freelance, temporary, and contract employment models have some legal and technical nuances, they may still be viewed under the umbrella term of temporary employment. Under each variant, you hire people for a limited and clearly predetermined period or with a specific condition (e.g., the temp is substituting a full-time employee on medical leave). Temporary employees’ wages are usually fixed at an hourly rate or a pre-negotiated contractual fee, giving this staff category limited access to healthcare or retirement benefits that full-time staff have. Temps also bear full responsibility for their tax reporting, which is done by the employer for full-time staff.

When Do IT Companies Resort to Temp Staffing?

While permanent staffing solutions are still popular in the IT sector as a method of building a core in-house team, temporary solutions come in handy for IT businesses in many situations. IT companies resort to temp hiring in the following cases.

• Flexible and responsive scaling. Resource workloads are dynamically changing in the IT business, especially if there is no pipeline of projects at various stages. Thus, a typical software project requires more design and analytical talent at the initial phase, while developers and engineers enter the stage after the design is ready, and QA testers and cybersecurity experts come into play closer to the end. This way, it is pretty hard to provide all experts with a steady workload throughout the entire project lifecycle unless your team is cross-skilled and can assume various roles at different stages. It’s also necessary to keep seasonality in mind, with peak development and support periods requiring different loads for various staff members.
• Access to rare technologies and tech stacks. It often happens that an IT project requires niche expertise or a rare tech stack in some emerging technology. However, you may not be ready to employ such a uniquely skilled professional full-time – it’s too costly and simply not relevant for your business. In these cases, temporary engagement on a project-specific basis is the best way to go.
• Cost-effective hiring. Short-term hiring is definitely more cost-effective on a temporary basis, as you will spend a fortune on contract termination or proof of reasonable grounds for dismissal. Thus, a temporary contract is the lowest-risk option that protects your interests and gives your employee full clarity about the scope and duration of their duties.
• Rapid staff integration. Staff deployment and onboarding can go much faster and smoother with temp staff, as these employees are used to such models of engagement and are ready to join the team on short notice. Such workers are adaptive and flexible, so they onboard pretty fast compared to permanent hires.
• Effective risk management. Temporary hiring gives your business additional agility in terms of adaptation to the changing market conditions and legal environments. It’s much easier to adjust and renegotiate short-term contractual arrangements than to make a strategic shift in the core staff.

Due to all these benefits, IT businesses grow more positive about temp staffing options and resort to these practices in many cases. But is this solution universal? Which skill gaps can be addressed with temp hiring? Here are the most effective solutions specific to the IT industry:

• Software development and programming. IT businesses often attract temp hires during peak software development periods, when they need to maintain, update, or troubleshoot the existing software and develop new projects at the same time. Non-IT companies also resort to temp programming workforce when they decide on launching a new website or app for their business and don’t need development staff on a permanent basis.
• QA and testing. Once the app or platform is ready, it should undergo rigorous testing that will detect vulnerabilities and flaws in the code logic. Since QA and testing tasks are time-specific (performed before the software’s deployment), these specialists face uneven workloads in one business setting. Therefore, they are often hired for a specific project stage to perform a comprehensive audit before the product’s launch.
• IT support and help desk analytics. Many companies have digital apps and websites that need to be updated and run by tech staff. Yet, the workload is insufficient for full-time hiring, as updates and troubleshooting are needed only from time to time. Thus, support staff is usually attracted to complete a particular task, such as a system update, user training, or hardware setup.
• Cybersecurity. No digital product can do without cybersecurity protections, as the online space is full of hackers and criminals. For this reason, many IT businesses have permanent cybersecurity staff on board and engage third-party specialists for additional, unbiased audits or rare technology checks. Non-IT businesses also engage temporary cybersecurity talent to set up security controls or respond to security breaches or threats.
• Data analytics. Every business needs to make sense of big data, which is a source of unique business insights and competitive benefits. However, only tech giants need permanent data analytics teams, and for many companies, such staff is simply non-affordable due to growing demand and skill scarcity. Thus, data analysts and data scientists are engaged on a temporary basis to analyze specific datasets and perform data cleaning, mining, and analytical tasks on demand.
• Cloud engineering. Many companies rely on cloud solutions today due to their cost-effectiveness and flexibility. Thus, it is a popular practice to hire a temporary cloud engineer to develop and set up a cloud infrastructure for various business types.
  Project management/Scrum. Scrum masters can aid any IT project, but one or two projects may be not enough for a full-time workload for these experts. Thus, IT companies can engage Scrum specialists and PMs on a temporary basis or troubleshoot the project’s processes and speed up its completion.
• UI/UX design. This aspect of software development plays a strategically important role at the project’s onset and declines by the moment the actual front-end and back-end programming starts. So, it makes sense to hire additional UI/UX staff for the initial stages with intense layout and design work, keeping only the core UI/UX staff in the team at later project stages.
  IT consultancy. Consultants can aid any IT business with underperforming areas or new technologies and processes. They may advise on the best IT infrastructure optimization practices and setup of new effective architecture designs that will boost business performance and success.

It’s noteworthy that not only IT-focused companies resort to hiring IT staff on a temporary basis. With a massive wave of digitalization observed in technically all industries, companies working in a variety of industries, from healthcare to real estate, need tech specialists to set up their IT infrastructures and move their operations to the digital space. Thus, temporary IT staffing is a phenomenon that is not exclusive to software or web development businesses and can be applied to many other sectors.

Temporary or Permanent Staffing? Selection Criteria

Importantly, not only businesses make a choice in terms of staffing solutions. Job seekers also determine what they want from their next workplace, and they use varied criteria when considering permanent or temporary staffing options. Those who opt for permanent job offers are typically guided by:

• Job security and stability.
• A comprehensive set of social benefits.
• Clear career prospects in one place.
• Better training opportunities.

Still, there are fans of temporary staffing as well. They prefer temp and contractual arrangements for the sake of:

• Flexibility in determining working hours and conditions.
• Networking opportunities for further career development.
• Access to unique workplace experience in a variety of industries, work roles, and business environments.
• Quick entry into the workforce.

Thus, both temp and perm jobs are appealing to specific sorts of job seekers, with some of them longing for long-term options and others valuing their flexibility and freedom in the job market. The trend towards temp hiring is gaining momentum among both employees and employers, as the workforce is getting increasingly remote and distributed. So, it’s important not to underestimate the appeal of temporary vacancies, which many young and dynamic IT specialists see as a great career entry variant or a flexible option meeting their work-life balance principles.

Pros and Cons of Temp and Permanent IT Staffing

Each IT business employs a mix of permanent and temporary specialists in a variety of roles. The percentage of each is defined strategically and depends on the budget, business growth plans, and the current workload. Yet, every staffing decision should be made with proper regard to the pluses and minuses of each hiring model.

Temporary Staffing

Temp staffing is an optimal solution for short-term projects and present-day business needs. It is a cheaper and quicker variant of hiring that helps you close the staffing gaps here and now without lengthy downtime or project delays. It is also an answer to skill-specific tasks that don’t require full-time staff but emerge from time to time at various project stages (e.g., QA or business analytics). In addition, it’s a great way to test an employee on a short-term contractual basis with no strings attached, offering them permanent employment after they check all the boxes in your checklist.

However, along with so many pluses, temporary employees may also be a source of risks and negative business implications. First, employee training still takes time, and hiring new staff for a month or two will still result in much waste due to training and onboarding. Second, senior-level, skilled IT specialists usually drop such offers because they find them unattractive, leaving employers with a limited selection of mediocre-level talent. What’s more, there is no guarantee of smooth temp staff integration in the core team’s processes and activities, which always comes with a risk of eroding morale and team disintegration. Temporary workers engaged on a part-time basis may be employed in several companies simultaneously, so you shouldn’t expect 100% commitment to your business success from them. Finally, managing temp staff may be a hard task, especially if you have a small HR department.

Permanent Staffing

A workable alternative is perm staffing, which has been a hiring standard for many decades. This model is more valuable for the employee, as it gives them stability and for the employer due to the continuity of work processes and team structures. Besides, spending time and money on great talent is always a good investment in the long run since it helps attract staff with social and pension benefits and contributes to strong, loyal relationships and retention. As a result, staff that stays with one company for years becomes a financially viable option, with the employer spending less on training, contract initiation and termination, and staffing agencies’ services.

Yet, this variant is also not ideal; otherwise, temporary workforce solutions would have no chance of survival. The cost of hiring one new IT specialist is pretty high, as it requires dedicated HR staff, time for resume screening, qualification tests, and the legal procedure of contract negotiation and signing. Besides, the cost of mistakes is very high in the IT industry, as it’s next to impossible to fire an underperforming employee without huge compensation expenditures and litigation. Therefore, full-time employment is far from flexible, often locking the employer in non-beneficial work relationships. The employer’s nightmare is the heap of social benefits, pension plans, sick and maternity leaves, and other expenditures they are obliged to cover for full-time employees.

Thus, each of the models comes with a unique set of pros and cons you should know and weigh carefully before making a job offer to your next employee. It’s vital to strike a balance between your interests and those of your staff, keeping your work relationship mutually satisfying, beneficial, and flexible.

The Legal Side of Temporary IT Staffing

As soon as you decide to hire temporary workers, don’t forget to factor in your jurisdiction and the legal framework governing such hiring arrangements. There are some regulatory differences to consider:

• In the USA, you should use either the 1099 contractor model or the W-2 temporary employee model for hiring temp staff. 1099 means you sign a contract with a self-employed employee, so you have no responsibility for their taxes and benefits. W-2 hiring means full-time employment with all taxes, benefits, and other expenditures lying on the employer (typically, it’s the temp staffing agency with which you partner).
• The EU law regulates temporary hiring on the basis of the Temporary Agency Work Directive (TAWD) basis, which presupposes full-time hiring by staffing agencies and further staff leasing to third-party employers for specific IT tasks. Employees can also sign fixed-term contracts directly with temp staff. These contracts should specify the duration and terms for employment, but during employment, the staff is entitled to the full scope of rights and protections that full-time workers have.

As you can see, legal conditions may differ depending on the country. So, you should either check the regulations or partner with a qualified staffing agency that knows all the ins and outs of temp staffing in your jurisdiction.

Benefits of Engaging Temporary Staffing Services

While temporary staffing is a solution to many legal and administrative issues, it can also turn into a lengthy and tedious process. Thus, instead of dealing with the hassle of temp staff search, screening, and onboarding, you can always hire a temporary staffing agency for these tasks. Such third-party services are rising in popularity because they remove the HR burden of addressing the changing staffing needs. Besides, tech staffing agencies have the right expertise and resources to select the right staff and close your staffing gaps quickly, with minimal training and onboarding.

The business benefits of working with a staffing agency for hiring temp staff are as follows:

• Quick access to a broad tech talent database.
• Ensuring steady coverage of short-term skill-specific tasks.
• Access to a wide variety of tech stacks and software skills.
• Competent consulting on dynamic workforce planning.
• Low impact of candidate availability bottlenecks on business processes.
• Strategic access to potential permanent hires.