Thanks, Liz. Yes, I do live in WA, USA.
And yes, employees have benefits - health care, 401K, bonus (some companies), stock options/awards, fitness programs, you name it. Base salary plus perks is the "cost to company" per employee. At least in the US, I can speak with certainty, the cost to company of an hourly contractor/consultant is typically two to three times more than that of a full-time employee, and if you take into account the overtime paid to the hourly workers (no overtime for employees), the cost to company skyrockets. This is the reason why when a company really wants to control costs, contract workers are the first to go.
The comparison is between contractors and full-time employees within the same grade of employment (e.g., a Developer Grade II – Contractor Vs. Employee). Therefore, if an employee is making $106K (plus 20% C to C) per year, an hourly contractor in the same grade at the same company would be billing at around $100 to $150 per hour ($208K to $312K per year).
That said, the current economic times, the ever-increasing supply of the workforce, and the desperation among the job seekers to find gainful employment have brought down the contractor rates significantly in the past year. What used to be a $75/hour contract is now fetching $35 to $45/hour.
Oh well. I believe we have moved far away from the topic of this post. However, this is an interesting discussion and an opportunity to learn perspectives and realities. If you want to continue, we can take this offline from this post to a private discussion.
Thanks for your thoughts.
Best regards,
--Som G
Hi Som
Being in Australia, that too WA, I could clearly support what Ash Mathew has pointed out is not only a scenario in India.
The other thing is I can certainly point out from my personal experience many employees that too Indians who are enjoying a salary above AU$106k per annum plus perks or you may say fringe benefits and other allowances which may amount to more than you can get being a consultant from a particular company before or after tax.
Also, all the employees (FTE or part-time) do receive perks or fringe benefits with or without salary sacrifice.
Som, you said you are a management consultant and aren't you aware of these benefits existing in Australia.
Regards
Liz