Contract Jobs: Pros & Cons

Looking for a way to add or showcase skills, gain experience, network, and learn more about a company’s culture? Pursuing a temporary or contract job could be a great option.

Perhaps you’re struggling to find a permanent, full-time job, or just want to try a different role or organization before committing to another full-time position. Working a temporary or contract role may be right for you.

And if you like change and are open to working several roles over a short period, then a temporary or contract job is the right fit for you.

“More and more professionals recognize the benefits of professional contract roles,” says Chris Dardis, President of Interim Solutions, Versique Search and Consulting.

“Employees are using interim talent to help solve immediate staffing issues, help deliver projects, and to help prove the value of new positions within the organization. If candidates can tolerate a little bit of ambiguity between assignments, contracting roles offer a great amount of autonomy, variety, and a sense of control over your career.”

Max Dubroff, Manager of HR Solutions for Sandia National Laboratories, a National Nuclear Security Administration research and development laboratory, agrees.

“Many people see a contractor role as a foot in the door with an attractive employer and an immersive opportunity to see if the company’s culture is a good match for them,” says Dubroff. “Many employers see contractors as an extended interview and hire the best contractors into their organization.”

Kimberly Tash, a Senior Career Management Consultant at Right Management and founder of Kimberly Tash Life Coaching, a career and leadership development practice, had a client searching for a permanent, full-time position in finance.

Within a short time, a recruiter asked the client if she would consider accepting a temporary position; this was the start of a rewarding career working contract roles. Tash explains the benefits:

She quickly found out these contracted positions gave her the opportunity to work on various projects within different companies, providing her with a breadth of knowledge much wider than what she would have achieved in a permanent job. She is expanding her skill sets, learning about the dynamics of different companies, and enjoying the novelty of each new project she takes on. Variety and rapid skill building are just a couple of reasons job seekers should consider accepting a contract role. 

What Is the Difference Between a Contract Role and a Permanent Full-Time Role?

Tom Welsh, Executive Coach and Senior Career Consultant with Right Management, a global talent management firm offering outplacement, career management, and leadership development solutions, helps break it down:

• If you’re a freelance contractor, you can negotiate your compensation directly. You are a vendor, not an employee. You’ll invoice the company and get a Form 1099 rather than a W2 at tax time. To streamline your invoicing process, you can use an invoice generator.
• If you’re working through a contracting agency, they’ll likely handle payroll and payroll taxes as your employer. The “contract” is between the agency and the company, not you. Benefits are a maybe. More staffing firms are offering benefits to employees to help attract and retain contract workers, but it differs for each one.
• If you’re a permanent full-time employee, you work for an organization and are paid a salary or hourly wage by that company. You are also likely offered benefits, health insurance, a retirement plan, and accrued vacation or sick days. You may have other perks such as flex spending accounts, health savings accounts, transportation discounts or passes, and more.

These perks and benefits, plus the continuity of having a permanent, secure role, provide more stability. This is the traditional employment model in the United States — even with the growth of contract roles, the gig economy, and side hustles.

But others may want change and the chance to explore different paths, companies, and opportunities.

“You may end up with multiple gigs over years which may be perfect,” says Welsh. “But, for some, this does not lend itself to professional continuity and career matriculation. Some contractors work for years for the same company. For some people, contracting lets you get in the game, and it sure beats sitting at home and waiting for the next full-time job.”

The Benefits of Contract Roles for Employers and Job Seekers

With contractors, employers can try before they buy. Hiring a contract worker allows companies to see if that person — or group of people — would be a fit for a permanent, long-term role with that company. Do they truly have the skills that match what the company needs? And do they fit the company culture — will they fit in with the rest of the team on a long-term basis?

That same benefit also holds true for the job seeker.

By working as a contractor, a person can test drive the employer, learn more about the organization, and determine if they’d actually like working there full-time or permanently. They can learn about the company culture, get to know more about their boss or coworkers, and determine if it’s a viable long-term fit. 

This information can really only be discovered when working inside the company. A Glassdoor or Indeed company review cannot truly determine what life is like inside the company. Everyone has different experiences and things that matter the most to them in a job or company.

“As an entrepreneur and career coach, I think it is critically important to look at contract roles for several different reasons,” says Tim Dix, a senior consultant with Right Management and the owner of multiple businesses, including a 501c3 non-profit. He explains:

Companies have changed the way they hire. Why buy when I can rent to own? More and more companies are bringing people in on a contract basis. They can check you out to see if you can do what you claim you can do, and they can also see if you are a fit for their culture. However, just as important, YOU can check out the company. Do you like the culture? Could you see yourself working for that company?

Dix has worked with clients and candidates in North America, Europe, the Middle East, and the Asia Pacific. He has seen first-hand the benefits of working a temporary or contract role for both job seekers and employers.

“I find that you tend to land faster if you are open to contract roles,” says Dix. “Even if your sole desire is a full-time job, being open to contract roles gets you into a variety of companies. It also helps you learn new skills, experience different company cultures, learn new systems, and more. And more times than not, a contract role leads to a full-time offer.”

The Pros and Cons of Working a Contract Job

The Pros of Contract Jobs

Vicky Oliver, author of 301 Smart Answers to Tough Interview Questions and Bad Bosses, Crazy Coworkers and Other Office Idiots, writes that a contract role may be easier to secure. Since it’s for a short, specified period, there will likely be fewer interviews and possibly even fewer resume and reference checks.

“The real pro for job seekers is that they will get paid, be able to add the gig to their resumes, and potentially build their skills,” says Oliver.

Other pros of working contract roles, according to Tash:

• Try before you buy: Not sure if you want to work at a particular company or within a certain role? Accepting a contract position will allow you to get a feel for an industry, business, or role to determine if it is a good fit before committing for the long term.

• Prove yourself: “If you’re attempting to get your foot in the door at a company that isn’t currently hiring permanent employees, taking a contract position is a great way to make an impression and prove your value,” says Tash.

• Build your network: Taking on contract work allows you to meet people from various companies or departments much quicker than working long-term at one location alone.

• Job security: Yes, you read that right. Contract jobs are secure for the period of the contract. For example, if you accept a three-month contract, the position is relatively guaranteed for that amount of time. These positions are less likely to be negatively impacted by a restructuring.

• Freedom to choose: If you don’t like the position offered, you have no obligation to accept the job.

The Cons of Contract Jobs

• Contractors may not be as valued by their peers: In some organizations, contract employees may not be treated as equals by their peers. Now, organizations with good leadership, onboarding, and who value the skills and role of a contract worker will work to ensure this doesn’t happen. But that’s not always the case. In some organizations, there may be “talk” of the job going permanent, but in reality, that may not be the case.

Oliver elaborates on these potential scenarios, saying:

The con, I believe, is that the contractor may not be considered a bona fide team member. Some information won’t be conveyed to the contractor — not through negligence but simply because the contractor is an outsider. 

Sometimes not having the information may impact the contractor’s performance. If the contractor wants to move to full-time work for the company, it may be somewhat challenging. 

Tash recommends job seekers consider these potential downsides to temporary jobs before turning their back on permanent employment:

• Fewer benefits: Contract employees typically receive fewer substantial benefits than permanent employees.
• More time searching for work: Every time a contract ends, you will have to start the job search over again.
• Less long-term job security: Most contracted roles last three months to one year. If you desire a position that will last longer, permanent employment may be better for you.
• Lack of personal connection: Less time working at a company — especially if working away from the office — may lead to feelings of isolation and an inability to build strong working relationships.

6 Reasons Companies Hire Contract Workers

There are several reasons an employer may hire for contract roles, including –

1. Large projects: They have a large project where they need extra help. This is popular in IT or digital fields for projects such as website migration or updates, large-scale software updates, or new product launches, among many others.

There isn’t an industry that hasn’t, at some point, needed contract employees. Banking, manufacturing, financial services, healthcare, retail, hospitality, construction, government, transportation, and trucking have all used contractors.

2. Specialized skill sets: A company may need to hire an employee with specialized skill sets for a project. Often, the best option is to hire a contract employee with those skills specifically.

These skills may include specific software or technology skills, data skills, or hands-on skills such as those in construction, manufacturing, or engineering fields. Skilled contractors can help a company fulfill a project or client request to help satisfy the client’s needs.

3. Employee leaves: When employees are going to be off for an extended period, employers will consider hiring someone for a contract role. This may be as a fill-in for medical, maternity, or paternity leaves, or sabbaticals, among others. Or in some cases, employees leave, and the company may need to take time to find a replacement and thus hire a contract/temporary worker.

4. New business development: As organizations see an increase in business, they may look to hire contract or temporary workers. They can adequately fill roles to help with workload demands without burning out or overwhelming existing staff or hiring too many permanent employees. Employers also hire contract workers to help with other business needs, such as with a merger or acquisition.

5. Lack of success hiring permanent employees: It happens. Some companies have either done a poor job filling full-time open roles or have too much turnover in a short period. They can’t continue putting in the time and effort to post jobs, interview, hire, onboard, and train. Hiring contract workers can help fill staffing needs and provides direct access to a pool of candidates with specific experiences and skills.

6. Save money: While today’s contract employees generally get paid a pretty good hourly wage for their work, they are not often as expensive as full-time employees who also get company-paid benefits, retirement benefits, or profit-sharing. Contract employees can receive benefits —  but this is through the staffing or recruiting organization for which they are working, not directly from the company where they are placed.

8 Benefits of Working in a Contract Role

1. Learn new skills: Working at a new company offers the chance to learn new skills and tools, including new project management programs (think Basecamp, Workfront, JIRA, Trello, and more). You may use several different technologies and programs over time while working contract roles.

Adding these skills to your resume makes you marketable to future employers. Each industry and field has unique software skills or needs, and continuing to add these skills shows the ability to learn, which is important to employers.

2. Network and make connections: Working in a contract or temporary role allows you to work closely with professionals who have similar backgrounds as you. You could work with new teammates in software engineering, software development, administrative, HR, digital marketing, web development, systems analyst, accounting, customer service, or project management roles (to name a select few).

These are your new coworkers and teammates who someday could recommend you for a job or alert you of an opening with their organization. These employees may also move up in their careers.

And as they grow, your paths could connect again, perhaps as coworkers in different, new roles.

3. Fill in gaps in your resume: It happens. And employers are starting to realize it, too — today’s job seekers will have gaps in their resumes. Whether for three months, six months, a year, or longer, taking on a contract role can help bridge the gap between your last full-time permanent position and your next one. Employers value contract roles as much as they do permanent roles.

4. Keep working — get paid: This is simple. We all need to work. And working on a contract or temporary role allows you to make money. It’s that simple.

5. Continue to job search: The downside of all contract roles is that they end. That being said, you can continue to work on your permanent full-time job search while working a contract role. In addition, if you are working with a staffing agency that helped place you in this current position, they can help connect you with their clients for the next contract role.

Working full-time and searching for a job is hard, but since you are working, this can reduce stress and anxiety related to the pressure of finding a permanent full-time position. You may also be more selective and take a job you want versus a job you need.

6. Could lead to full-time opportunities: Many employers like to hire contract workers because they can see if they would be a fit for a full-time permanent role. There are thousands of workers who have started as contract employees and are now permanent employees with the same organization they first worked at as a contractor.

7. Test drive an employer: Working a contract role allows the job seeker to learn more about an organization without committing to a permanent position. A company could have a great reputation, but if you are stuck with a bad manager, it may be a sign this company isn’t for you. Or, a company could have a poor reputation, but you could have a great experience, which is what is most important.

8. Future references: That manager, coworker, and teammate you work with and meet at your contract job can become references who can speak highly of you as you pursue future opportunities.

“Overall, there is much to be said for considering contract work when seeking employment,” says Tash. “In the end, careful consideration of the pros and cons of contract versus permanent work is essential for deciding what is the best fit for you.”