People, Startup Analysis

The age of lifelong employees is dead: Why contractors are the future

Katie Osborne /

contractors

General manager of project services and agile delivery at Halcyon Knights. Source: Supplied.

As a high-level recruiter in Australia’s IT industry, you’d think my job would be to attract talented professionals for long-term tenure, especially as Australia’s tech industry grows with unprecedented speed.

Instead, I’m looking to grow the contracting arm of our agency. Because it doesn’t matter how cool a company’s job offer is, the talent they’re trying to hire are less and less interested in signing away years of their lives. In fact, new research shows almost one-in-three IT employees leave in two years or fewer.

We’re not the only ones thinking it. Patty McCord said the days of joining a company from university and building a career in one place are over (she led HR at Netflix for over a decade so we should probably listen to her). This is true for every industry, but tech is ahead of the curve.

Why? Simply because the IT opportunities are endless. Technology now exists in an era of agile delivery and rapid iteration. People want to deliver something amazing and then go on to something else. Complete one project, and another one awaits.

Plus, the mindsets of the modern workforce have evolved. Skilled workers are looking for experiences and growth rather than satiating an ingrained need for long-term stability. These same workers are often spending their evenings and weekends on home projects to develop their skills, so it’s unsurprising they opt out of staying in the same job for most of their careers.

Rather than fighting it, it’s time for businesses to accept the idea of the life-long employee is dead, and short-term contracts can be a way for them to remain competitive.

The war for the niche specialist  

Technology is evolving faster than our education programs can develop, meaning we’re often looking to hire experts before the first graduates of a niche skillset even emerge. The need for people to build their skills in real time, solving complex problems in real-life scenarios, is more prevalent than ever.

Companies want the best fit for job descriptions that didn’t exist five years ago. They have specialisations within specialisations within specialisations.

There’s a slice of the workforce — a highly qualified and technically gifted slice — who are increasingly choosing to dictate their terms of employment. The more in-demand your skills are, the more likely you are to be able to have your demands met.

But most companies can’t afford to employ such specialists. Our research reveals almost half of IT workers command salaries of more than $120,000 a year, with cybersecurity experts and data analysts driving the wage boom.

That’s where contracting comes in: startups and small business can’t compete when it comes to cash, so hiring contractors or freelancers gives them instant access to essential, urgent skills. Now any company can access specialised skills for one-off high-profile projects. By bringing experience and skills from multiple roles and industries, contractors provide fresh, diverse insights, and underpin a flexible and agile workforce.

Employers can also hire contractors in ‘squads’: whole teams for digital transformation projects or innovations. It’s a high-cost endeavour made more efficient through short-term contracts, meaning you’re only paying for what you need.

Getting the right people on board is integral to ensuring successful outcomes the first time around, and it comes down to a question of cost versus value — a project that goes into the red and runs over schedule is a huge risk and cost drain to the business. Contractors allow you to hire the best people for the project, not forever, and deliver it well the first time.

The craftsmanship mentality  

There’s this idea specialisation also benefits the contractor, who wants to work on the cutting-edge of their specialisation or in the grassroots of new technology, always upskilling before walking away saying ‘I did that’.

We need our tech community to be creative in their roles, which often requires giving them freedom and flexibility, all in the interest of innovation and disruption. I’m excited by the continued rise of contracting as it demands a craftmanship mentality in the industry, pushing people to be the best they can be, many times over.

The change is slow, but it’s coming. When I started in recruitment 10 years ago, clients would ask for a minimum tenure of five years, whereas now they are looking for 12 months. Especially in tech, most contract roles continue for 12, 24, or 36 months — the latter now equalling the average tenure of most permanent hires anyway.  

It is unlikely contracting will ever replace permanent work completely. Companies still need consistency from an IP perspective, and people who have a long tenure with a business can add enormous value in that area.

But I predict priorities will continue to will change. And the data agrees with me, with many labour economists predicting within a decade, contractors will outnumber full-time employees.

So, if you want to harness the brilliance of many people for shorter bursts of time to achieve great things, being open to permanent and contract employees will give you the best of both worlds and provide you access to some of the brightest minds in the business.

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Katie Osborne

Katie is the general manager of project services and agile delivery at Halcyon Knights.

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