Management of Contractors

In recent times, there has been a marked movement towards outsourcing positions within the organization to vendors who would supply resources for the said jobs. These positions and roles are deemed to be those that can be done by resources from outside. And it is here that the contractors step in to do the job that has been outsourced.

The phenomenon of using contractors for regular positions is gaining traction by the day and it is common to see many of these temporary workers doing the work that would have otherwise been done by resources employed full time by the organization.

The examples of organizations using contractors as a significant portion of their workforce range from the US Defense Department to Microsoft and in India, many IT organizations like IBM employ contractors to get the job done.

Historical Precedent for Temps

Till recently, the practice of hiring contractors or “temps” was restricted to the Administrative and Support functions like HR and Infrastructure management. However, it now encompasses the areas of regular work like project delivery and execution.

The reasons for using contractors range from less overheads to filling a temporary demand that does not need hiring permanent employees. The organization need not provide health benefits and pension benefits to the contractors and hence these costs can be saved.

Further, on completion of the project, the contractors can be reverted to their parent organization or the vendor. This means that the hiring organization is not burdened with excess staff.

Issues with Hiring Contractors

There are several issues that pertain to hiring and management of contractors. Many IT companies hold significant “bench” strength as a means of having a buffer when new projects come their way.

However, for many mid-sized and small-sized organizations, maintaining bench strength is often a luxury. So, if they anticipate new projects being entrusted to them, they immediately ask the vendor to supply them with the resources that are needed for the new projects.

Of course, in reality, there is often a lag between the request for new resources and the resources actually coming on board because of the time taken to screen the contractors and time taken to bring them up to speed regarding the work that needs to be done.

Managing the Vendors

Some issues that need to be considered before going in for contractors pertain to the way in which the liability arising out of non-performance of the contractors is handled, the extent of control that the managers have over vendors and the payment terms and conditions that organizations have with the vendors.

It has been found in studies and surveys that contractors and vendors operate in the “grey” areas of the employer-employee relationship and hence managers need to be on their guard when dealing with vendors.

Liabilities and punitive actions aimed at vendors usually end up being unresolved because of the way in which the contracts are worded. Hence, it becomes imperative for the organizations to do their “due diligence” before hiring vendors.

To conclude, the practice of hiring vendors is expected to increase and hence there is a need for both sides to sit down and discuss the modalities of the contractual relationship before committing themselves to the same. In this way, disputes over responsibility and accountability can be amicably resolved if the contracts are worded in such a way that there is little room for ambiguity.

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Human Resource Management