Most small and medium sized businesses face problems related to human resource. They find it difficult to hire and pay full time employees, especially if it is a onetime project. This is one of the reasons why companies are more open towards hiring temporary contract workers based on projects. This type of hiring is called project based hiring. It indeed comes with a number of advantages which we will discuss in this article. We will also discuss ways in which project based hiring is helping companies to grow in size and stature.
In fact, recent studies indicate that project based hiring alone is fueling a SME growth to a point where many companies are actively looking for temporary employees to work on individual projects. This has of course helped companies to meet their targets, reduce costs and focus their resources on innovating and growing their own companies.
Why project based workers are better?
There are obvious differences between full time employees and contract workers who are given certain projects. Full time employees are on your company’s payroll and they will work as long as they wish to, subject to labor laws.
On the other hand, project based workers are with you only till the length of the project and after which, the contract stands nullified. They work according to your rules and you will not have to trouble yourself with many tax and workplace rules. Full time employees on the other hand will require you to pay taxes, follow many labor laws that are cumbersome and also end up spending a lot of money than your company can actually afford.
Thus, independent contractors and project based hiring solutions help you to remain independent, as they are not entitled to benefits that employees usually get. You can also avoid a number of legal mistakes when you do not hire full time employees and instead choose to work with contract workers temporarily. This will give you peace of mind and allow you to grow your business, rather than worrying about labor laws and taxes.
How does a project based hiring contract work?
A project based worker signs a contract in which he or she agrees to work on just one or more aspects of your business, as you might mutually agree upon. For example, you may have a company that deals with construction business. However, you realize that your construction business also requires setting up an ERP in order to automate certain aspects of your business. You probably do not have an IT department who can do it for you.
So, you sign a contract with your ERP vendor to allow the professional on your premises, train your employees, install the software and also do a test run. When the ERP is all set and ready to be used, the contract comes to an end and you will no longer have anything to do with this particular individual. In other words, he is not your employee. He is only performing certain previously agreed duties for remuneration, after the completion of which, he is no longer obliged to you contractually.
One of the downsides of this is, you will not be able to instruct your project worker to do things that were not mentioned in the contract. For example, you cannot ask this particular professional to also design a logo for you, while he is installing the ERP. The costs will be additional and you may need to revise the contract, should you feel you need his services in other areas that were not primarily discussed.
While all this may seem quite clear to you, you might wonder how project based hiring is actually fueling SME growth. The answer to this question is quite varied, depending on whom you ask.
In this section, let us take a look at some of the ways in which project based hiring is fueling SME growth.
1. Reduced costs
It goes without saying that project based hiring helps you to cut expenditure. It helps you to cut costs due to lack of overheads and the lack of actual costs with respect to buying hardware or software. You just pay the individual for the work that he or she does and when the project is completed, you will no longer have to worry about anything. Also, by choosing not to hire full time employees, you will save a lot of money than you probably realize.
2. Allocation of resources
The time and resources that you save by hiring a project based worker can be allocated to something more important. Most companies choose to invest the money they save in something that is more important, such as marketing. Marketing investment will help you to reach a wider target audience and bring about an increase in overall revenue to the company. This is more important than hiring someone full time as that will unnecessarily cost you money.
3. Access to technology
Most of the times, small and medium sized businesses do not have access to technology. It is a well known fact that superior technology is a privilege that only the largest of companies can afford. This also means, only large companies are able to afford the kind of employees who are good at what they do. If you are a small company, you may not be able to hire a professional who is very experienced. When you opt for project based hiring, you will gain access to the best in the field. That certainly helps your SME to grow.
When you know you have access to the best technology and manpower, your confidence grows. It is well known that when CEOs are confident, their employees to feel the same confidence and end up working better. Thus, your own confidence acts as a productivity barometer of your company. By hiring project based workers, you can assure that you are saving money, time and also gaining access to the best that your money can afford. That alone boosts your confidence, which has a cascading effect on your productivity.
The scenario today
For small and medium businesses, project based hiring is indeed a blessing that is not even in disguise. Most venture capitalists and investors are actively encouraging companies to seek project based hiring processes instead of hiring staff full time. Of course, companies will still need to hire full time employees but that should be restricted to a few positions that are part of the core business activities. For everything else, project based hiring is just about what any company would need.