Why Are More Companies Choosing Contractual Hires Over Permanent Employees?

Why do companies nowadays prefer appointing employees on a contractual basis?

Companies now tend to favor hiring employees on a contractual basis for a variety of reasons. One key factor is the flexibility that contracts offer in terms of employment duration and specific project needs. This allows companies to adjust their workforce according to changing business requirements without the long-term commitment associated with permanent positions. Additionally, hiring on a contractual basis can be more cost-effective for companies, as they may not have to provide benefits or job security typically associated with permanent roles. This approach also enables companies to bring in specialized skills for specific projects without the need for a permanent hire.

Dear HR Member,

In the present scenario of competitiveness and in the presence of advanced IT culture, the scope for manual work is diminishing. Companies are striving for survival, and the primary focus is on profitability. The days of Mayo's concepts are long gone. The reliance on machine culture is increasing daily, leading to a neglect of the human element.

Furthermore, with the availability of a more literate workforce, continual hiring will become burdensome, pushing companies towards opting for temporary hires.

Hi! I would like some more inputs. Whether the contract is for all workers or only for workmen, or for technical personnel or administrative staff, please specify. The said contract is for whom.

Hi! I would like to add some more inputs. Whether the contract is for all skilled workers or only unskilled workmen, or for technical personnel or administrative staff, please specify. Who is the said contract for?

Dear Mihika,

Companies appoint employees on a contractual basis because in a contract, the job is defined. It covers the terms, responsibilities, and scale. Secondly, it gives the employer a chance to review and decide whether to renew the contract or terminate it, depending on the performance appraisals of employees.

Regards,
Fay

Dear All,

I am from the IT industry, and my employee turnover is high. Just like everyone else, we are hoping to start hiring employees on a contractual basis or on bond so that we know they will be with us for a specific time. The biggest problem is finding an effective contract agreement sample or bond letter/agreement so that I can start using it. Can someone help me with this and pass on the contracts if possible?

Looking forward to hearing from you all.

Regards,
Alex

Hi,

Entering into a contract through a staffing company is much better as they take care of complete employee administration on your behalf. They also provide benefits like mediclaim and personal accident insurance, etc.

Thank you.

Dear Mihika,

That's true. Nowadays, employers prefer to hire employees on a contract basis. It reduces the workload and necessary headaches of the Human Resource Department.

Main Benefits are:

1) You need not comply with the Employees' Provident Fund Organization and Employees' State Insurance Corporation. Your only responsibility is to check whether the Principal is deducting their PF and ESI or not.
2) You need not follow the long procedure of job appraisal. You need to evaluate contractual employees' performance but not for salary increment.
3) It's easy to terminate contractual employees.
4) Distribution of payment (salary) is easy.

There are lots more.

Thanks,
Debajyoti

Dear Alex,

Here is a contract letter. Please check if it meets your needs.

Regards,
Fay