Despite a global pandemic and uncertain economy, IT hiring is on the rise. A strong, aligned team is a reflection of a thriving business, but finding the right people to bring a company’s vision to life comes with various challenges. With over 160 million professionals in the U.S. labor force, finding talented applicants isn’t always the challenge—it’s determining what kind of employee is in line with your short- and long-term business goals and making sure you have the resources you need to support them.
Company leaders can get embroiled in the “build vs. buy” debate, where they are faced with the choice to either re-skill employees or find external talent. Forbes reports that “it can cost as much as 6-times more to hire from the outside than to build from within.” By paying for an employee to learn a new skill instead of hiring an outside candidate or collaborating with a contractor, you might be able to defer costs. The build mentality also poses challenges, however—the responsibility to train and transition your existing employee falls on you and your team.
If you have a position that you need to fill and are unsure of which direction to pursue, here are a few questions to ask that will help determine the best route for you and your company:
What’s my timeline?
It’s no secret that time is a scarce commodity in the fast-moving tech industry. An important question to ask yourself when you are looking to hire someone is: What’s my timeline?
Are you racing to the finish line for a project with a tight deadline and you realize your team doesn’t have the skills or bandwidth to execute on an essential function? The first step is to look internally—do you have an employee with the skills required for the task at hand? If not, training someone to step in might require a longer learning period. In this case, hiring a contractor with a specific skill set is likely the quickest way to address the issue. Contractors are generally hired for their expertise to work on a particular project for a set period of time.
Erik Lopez, Lead Technical Architect at CN Solutions Group, offers that hiring contractors is not necessarily a sign of a lack of internal talent. Lopez states that it is not a matter of whether your “internal team can’t handle something or that they are inadequate, but rather that they have more important internal projects to tackle, are key stakeholders and SMEs, or own the end product.”
Subsequently, hiring an external contractor can help speed up the process because you do not have to spend time training the candidate on the necessary skills or take away time from your existing teams. Keep in mind that searching for the right candidate can also take up a significant chunk of your own time and bandwidth.
If time is not of the essence, there are benefits to looking internally for talent and helping them develop new skills in order to fit the shoes of the role. Organizations who have established training and development for employees to move up the career ladder will have an easier time filling open positions, a higher employee retention rate, and a happier team. Standardized processes for internal hires and thoughtful onboarding helps create a seamless transition for the employee to move into their new role.
What’s my budget?
Budget discussions are an unavoidable topic during the hiring process. According to the Society for Human Resource Management, employers in the US spend an average of $4,129 on hiring for each job—and that is just where the investment in your new employee begins.
From health insurance to vacation days, pension and payroll taxes, bringing on a new employee means providing them with a suite of benefits—in 2019, Kaiser Family Foundation found that the average cost employers paid for premiums for family health plans was $14,961. Bloomberg Businessweek reports that employers could save up to 30% by bringing on contractors since they aren’t offered benefits. And as far as the salary goes, according to a study published in Administrative Science Quarterly, external candidates were paid on average 18% more than internal hires.
If you need to hire a full-time employee, looking internally can be the most cost-effective choice. Instead of adding another person to your headcount, you can invest in an existing employee’s development and train them to take on the new responsibilities. While you may have to backfill their existing position, you’ll be investing in your employees, which improves employee loyalty and satisfaction.
On the other hand, if you do not have an open headcount or if your funding is project-specific, hiring a contractor may be the most advantageous option. It is important to note that in order to search for an external contractor, you may have to pay fees to agencies and recruiters. Companies can go through an external recruiting agency which requires paying a fee or using their internal recruitment department to spend time searching for candidates. This often requires the use of recruiting software, which is another factor to consider.
Is this an opportunity to invest in employee growth?
As you look to fill a role, it is imperative to consider your objectives for company and employee growth.
If your goal is to grow your team and incorporate new ideas, you may want to consider hiring externally. Venkat Ranga, Head of Business Information Systems at Aryaka, posits that external hires can help drive transformational change by acting as subject matter experts at the initial stage of a project and then transition that knowledge to your employees later down the road. Another reason to hire external talent is if you are looking to increase diversity in skills, perspective, and employees in your company.
Mendy Ezagui, former CPO of Nucleus Technologies, asserts that while external hires can provide new skills and ideas, it is the people within your organization who are in tune with your “business, process, and technology.” Having an employee who is already well versed and ingrained in your organization’s culture can be an invaluable asset. Investing within your own organization and providing your existing employees with opportunities for mentorship and growth can increase employee satisfaction and help improve internal leadership.
While there has been a lot of debate over the “build vs. buy” approach to hiring, it’s imperative to remember that there is no one right answer. Rather, it is a matter of assessing your situation and choosing the candidate that helps you achieve your business goals.
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